True/False Questions

____ 11. Costs other than direct materials cost and direct labor cost incurred in the manufacturing process are classified as factory overhead cost.

____ 12. Differential analysis can aid management in making decisions on a variety of alternatives, including whether to discontinue an unprofitable segment and whether to replace usable plant assets.

____ 13. The excess of the cash flowing in from revenues over the cash flowing out for expenses is termed net cash flow.

____ 14. Purchase requisitions for Purchasing and the number of payroll checks for Payroll Accounting are examples of activity bases.

____ 15. Direct labor costs are included in the conversion costs of a product.

____ 16. If the standard to produce a given amount of product is 1,000 units of direct materials at $11 and the actual was 800 units at $12, the direct materials price variance was $800 unfavorable.

____ 17. A cost that will not be affected by later decisions is termed an opportunity cost.

____ 18. When manufactured goods are sold, their costs are transferred from Work in Process to Finished Goods.

____ 19. In preparing a master budget, once the sales budget is prepared, the production budget is normally prepared next.

____ 20. Currently attainable standards do not allow for reasonable production difficulties.