Question : 11) Managers use cost accumulation data to make decisions and : 1211953

11) Managers use cost accumulation data to make decisions and implement them.

12) Lucas Manufacturing has three cost objects that it uses to accumulate costs for its manufacturing plants. They are:

Cost object #1:The physical buildings and equipment

Cost object #2:The use of buildings and equipment

Cost object #3:The availability and use of manufacturing labor

The following manufacturing overhead cost categories are found in the accounting records:

a.Depreciation on buildings and equipment

b.Lubricants for machines

c.Property insurance

d.Supervisors salaries

e.Fringe benefits

f.Property taxes

g.Utilities

Required:

Assign each of the above costs to the most appropriate cost object.

Objective 2.2

1) Which of the following factors affect the direct/indirect classification of a cost?

A) the level of budgeted profit for the next year

B) the estimation of time required to complete the order

C) the ability to execute an order in the most cost-efficient manner

D) the design of the operation

2) The general term used to identify both the tracing and the allocation of accumulated costs to a cost object is ________.

A) cost accumulation

B) cost assignment

C) cost tracing

D) conversion costing

3) Cost accumulation is ________.

A) the collection of cost data in some organized way by means of an accounting system

B) anything for which a cost measurement is desired

C) anything for which a profit measurement is desired

D) the collection of profit data in some organized way by means of an accounting system

4) Which of the following statements about the direct/indirect cost classification is true?

A) Indirect costs are always traced.

B) Indirect costs are always allocated.

C) The design of sales target affects the direct/indirect classification.

D) The direct/indirect classification depends on the cost control measures.

5) Cost tracing is ________.

A) the assignment of direct costs to the chosen cost object

B) a function of cost allocation

C) the process of tracking both direct and indirect costs associated with a cost object

D) the process of determining the actual cost of the cost object

6) Cost allocation is ________.

A) the process of tracking both direct and indirect costs associated with a cost object

B) the process of determining the opportunity cost of a cost object chosen 

C) the assignment of indirect costs to the chosen cost object

D) made based on material acquisition document

7) The determination of a cost as either direct or indirect depends upon the ________.

A) accounting standards

B) tax system chosen

C) inventory valuation

D) cost object chosen

8) Classifying a cost as either direct or indirect depends upon ________.

A) the behavior of the cost in response to volume changes

B) whether the cost is expensed in the period in which it is incurred

C) whether the cost can be easily traced with the cost object

D) whether a cost is fixed or variable