Exam 4: Cost Management Systems and an Introduction to Activity-Based Costing

If ending finished goods inventory is larger than beginning finished goods inventory, then cost of goods sold is less than the sum of direct materials + direct labor + overhead.

Companies must assign all costs for internal management purposes.

In highly automated factories with a flexible workforce, there may be no direct-labor costs.

A cost driver used for allocating costs

Handling and storing inventories and transporting finished goods from one part of the plant to another are examples of non-value-added activities.

A _____ is not an example of a cost objective.

Unallocated costs have no identifiable relationship to a cost objective.

Traditional cost systems generally allocate only indirect production costs to the products.

_____ need cost accounting systems.

Costs included in work-in-process inventory are direct material, direct labor, and administrative.

Parts and materials included in a product are direct costs.

A cost pool is a group of individual costs that is allocated to cost objectives using a single cost driver.

Costs that do not have a relationship to a cost objective

A territory is an example of a cost objective.

Direct manufacturing costs are the same as manufacturing overhead costs.

Finished goods inventory for a manufacturer is the same as merchandise inventory for a merchandiser.

Cost accounting is that part of the cost management system that measures costs for the sole purpose of financial reporting.

Period costs include selling and administrative expenses.

Product costs include direct labor and conversion costs.

A merchandising company has direct materials inventory.