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11.Product costs are inventoried and treated as assets until: 
 

A. the next accounting period.

B. related liabilities no longer exist.

C. the period in which the products they relate to are sold.

D. none of these.

12.In the T-account cost flow diagram of balance sheet inventory accounts and the income statement cost of goods sold account: 
 

A. raw materials purchases are debited to work in process.

B. direct labor costs are credited to work in process.

C. cost of goods manufactured is debited to finished goods inventory.

D. cost of goods sold is debited to finished goods inventory.

13.The production cost of a single unit of a manufactured product is determined by: 
 

A. dividing total direct materials and direct labor for a production run by the number of units made.

B. dividing total direct materials, direct labor, and manufacturing overhead for a production run by the number of units made.

C. dividing total direct materials, direct labor, manufacturing overhead and selling expenses for a production run by the number of units made.

D. dividing the selling price by the gross profit ratio.

14.Cost of Goods Manufactured can be computed as: 
 

A. ending balance of work in process + raw materials used + direct labor costs incurred + manufacturing overhead costs applied ? beginning balance of work in process.

B. beginning balance of work in process + raw materials purchased + direct labor costs incurred + manufacturing overhead costs applied ? ending balance of work in process.

C. ending balance of work in process + raw materials purchased + direct labor costs incurred + manufacturing overhead costs applied ? beginning balance of work in process.

D. beginning balance of work in process + raw materials used + direct labor costs incurred + manufacturing overhead costs applied ? ending balance of work in process.

15.Costs may be allocated to a product or activity for many purposes, but care must be exercised when using allocated costs because: 
 

A. direct costs identified with the product or activity may not be accurately assigned.

B. fixed costs will change in total if the volume of activity changes.

C. all costs may not have been allocated to the product or activity.

D. arbitrarily allocated costs may not behave in the way assumed in the allocation method.

16.Cost accounting is a subset of: 
 

A. financial accounting.

B. process cost accounting.

C. job order cost accounting.

D. managerial accounting.

17.An example of a cost that is likely to have a direct relationship with products being manufactured is: 
 

A. sales force salaries.

B. depreciation of production equipment.

C. salaries of production supervisors.

D. production labor costs.

18.An example of a cost likely to have an indirect relationship with products being manufactured is: 
 

A. production labor costs.

B. raw material costs.

C. electricity costs for packaging equipment.

D. None of these.

19.An organization's value chain refers to: 
 

A. the process of using cost information to manage the activities of the organization.

B. the sequence of functions and related activities that add value for the customer.

C. the process of collecting and recording valuable information in the accounting information system.

D. None of these.

20.Common costs pertain to costs that: 
 

A. are directly traceable to a cost object.

B. are not directly traceable to a cost object.

C. are commonly incurred.

D. are direct costs.

13-1

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