Manufacturing Part I

Question 1

A manufacturing concern still needs to prepare an income statement even if a schedule of cost of goods manufactured and sold had been prepared. True or False?

Answer 1

True

Question 2

Labor costs may be part of manufacturing overhead costs. True or False?

Answer 2

True

Question 3

Generally, companies which perform substantial alteration of goods are considered as manufacturing. True or False?

Answer 3

True

Question 4

A manufacturing company cannot sell partially-completed goods. True or False?

Answer 4

False. They can sell partially-completed goods

Question 5

The cost of direct materials used increases total manufacturing costs. True or False?

Answer 5

True

Question 6

For a manufacturing concern, inventories which remain on hand as at reporting date are considered as assets. True or False?

Answer 6

True

Question 7

There are different types of costs for different purposes. True or False?

Answer 7

True

Question 8

The company’s applied manufacturing overhead cost is computed by multiplying actual rate by estimated activity levels. True or False?

Answer 8

False. Estimated not actual

Question 9

All operating expenses are classified as period costs. True or False?

Answer 9

True

Question 10

A manufacturing concern cannot have a higher Finished Goods Inventory ending balance than its Work-in-Process Inventory. True or False?

Answer 10

False. They can

Question 11

The concept of fixed and variable costs is only applicable to manufacturing concern. True or False?

Answer 11

False. It can be applicable to any business type of concern

Question 12

A material can be classified as indirect, even if the said material can be traced to the final product. True or False?

Answer 12

True

Question 13

A manufacturing concern cannot have income other than sales. True or False?

Answer 13

False. They can have inventory, etc.

Question 14

A functional format income statement is more applicable to service and merchandising forms of business organization. True or False?

Answer 14

False. Why?

Question 15

All employees’ salaries are considered as product costs in a manufacturing concern. True or False?

Answer 15

False. Some are product costs (DL) and some are period costs (AC)

Question 16

Depreciation on store furniture is an example of an indirect product cost in a manufacturing concern. True or False?

Answer 16

False. Period cost under admin costs

Question 17

As cost objects expand in scope, more costs become direct than indirect. True or False?

Answer 17

True

Question 18

A company can only have variable or fixed costs, but not both. True or False?

Answer 18

False. They can have both

Question 19

Manufacturing is superior over service and merchandising types of business.

Answer 19

False. No type of business is superior than the other

Question 20

Period costs are presented in the income statement. True or False?

Answer 20

True

Question 21

The cost of sales section in a merchandising concern’s income statement is typically longer than that of a manufacturing concern. True or False?

Answer 21

False. Manufacturing has a longer one than merchandising

Question 22

Unlike merchandising, manufacturing companies produce the goods that they sell. True or False?

Answer 22

True

Question 23

Cost behavior can be used to classify costs in the income statement. True or False?

Answer 23

True

Question 24

Manufacturing has a longer accounting cycle than a merchandising type of business.