Acnt 2402 Study guides, Class notes & Summaries

1. Land held for possible plant expansion would not be included as an operating asset when computing return on investment (ROI). TRUE 2. When used in return on investment (ROI) calculations, operating assets do not include investments in land held for future use and investments in other companies. TRUE 3. A disadvantage of using ROI to evaluate performance is that it encourages the manager to reduce the investment in operating assets as well as increase net operating income. FALSE 4. Op...

1. Under variable costing, variable production costs are not treated as product costs. FALSE 2. Under variable costing, fixed manufacturing overhead cost is not treated as a product cost. TRUE 3. Under variable costing, product costs consist of direct materials, direct labor, and variable manufacturing overhead. TRUE 4. The costs assigned to units in inventory are typically lower under variable costing than under absorption costing. TRUE 5. Under variable costing, product cost does no...

Chapter 09 -- Performance Measurement in Decentralized Organizations – Study Guide 1. Land held for possible plant expansion would not be included as an operating asset when computing return on investment (ROI). TRUE 2. When used in return on investment (ROI) calculations, operating assets do not include investments in land held for future use and investments in other companies. TRUE 3. A disadvantage of using ROI to evaluate performance is that it encourages the manager to reduce the...

Chapter 8 – Flexible Budgets, Standard Costs, and Variance Analysis Study Guide 1. Comparing a static planning budget to actual costs is a good way to assess whether variable costs are under control. FALSE 2. Directly comparing a static planning budget to actual costs helps to distinguish between differences in costs that are due to changes in activity and differences that are due to how well costs were controlled. FALSE 3. Fixed costs should be ignored when evaluating how well a mana...

Chapter 02 Job-Order Costing 1. The use of a predetermined overhead rate in a job-order cost system makes it possible to compute the total cost of a job before production is begun. FALSE 2. If direct labor-hours is used as the allocation base in a job-order costing system, but overhead costs are not caused by direct-labor hours, then jobs with high direct labor requirements will tend to be undercosted relative to jobs with low direct labor requirements. FALSE 3. The formula for computi...

1. The use of a predetermined overhead rate in a job-order cost system makes it possible to compute the total cost of a job before production is begun. FALSE 2. If direct labor-hours is used as the allocation base in a job-order costing system, but overhead costs are not caused by direct-labor hours, then jobs with high direct labor requirements will tend to be undercosted relative to jobs with low direct labor requirements. FALSE 3. The formula for computing the predetermined overhead r...

Chapter 03 -- Activity-Based Costing - Study Guide 1. Batch-level activities are performed each time a batch of goods is processed. The cost of a batch-level activity is proportional to the number of units in the batch. FALSE 2. Activity-based costing involves a two-stage allocation process in which overhead costs are first assigned to departments and then allocated to products using activity measures. FALSE 3. In the second-stage allocation in activity-based costing, overhead costs are a...

Chapter 03 -- Activity-Based Costing - Study Guide 1. Batch-level activities are performed each time a batch of goods is processed. The cost of a batch-level activity is proportional to the number of units in the batch. FALSE 2. Activity-based costing involves a two-stage allocation process in which overhead costs are first assigned to departments and then allocated to products using activity measures. FALSE 3. In the second-stage allocation in activity-based costing, overhead costs are a...

1. The use of a predetermined overhead rate in a job-order cost system makes it possible to compute the total cost of a job before production is begun. FALSE 2. If direct labor-hours is used as the allocation base in a job-order costing system, but overhead costs are not caused by direct-labor hours, then jobs with high direct labor requirements will tend to be undercosted relative to jobs with low direct labor requirements. FALSE 3. The formula for computing the predetermined overhead r...