Week 1 - Introduction

Which of the following statements is incorrect?

• Cost is a resource sacrificed or forgone to achieve a specific objective.

• Cost accounting is related to both managerial accounting and financial accounting.

• Financial accounting provides information to external users.

• Managerial accounting is bound by GAAP/ IFRS or any prescribed format.

Cost object is anything for which a measurement of cost is desired. Which of the following statements is incorrect?

• In order to measure the cost of providing a specific type of service, the cost object is the specific type of service.

• In order to measure the cost of operating a project, the cost object is the specific project.

• In order to measure the total cost of servicing a specific customer, the cost object is that specific customer.

• In order to measure the cost of production per unit of product A, the cost object is the factory that produces product A.

Which of the following statements is incorrect in terms of the benefit of cost information?

• Provide information required in business planning and control.

• Provide information relevant only for internal business decision, but not useful for any external users.

• Use in the valuation of cost of goods sold.

• Use in calculation of the cost of production and service.

Which of the following statements is incorrect regarding inventories?

• Merchandising companies have three types of inventories, namely material, WIP and Finished goods.

• Materials inventory represents materials held by a company, ready to be used in production.

• WIP refers to the costs of raw materials, labor, and overhead costs incurred for products that are still at various stages of the production, awaiting for completion.

• Finished goods is ready for sell goods that have not been sold.

Which of the following is not used in calculating the cost of goods sold for manufacturing business?

• Cost of goods manufactured.

• Beginning finished goods.

• Ending finished goods.

• Advertising cost.

ABC Co. Ltd. is a manufacturing business. The company has the information as follows:

Beginning finished goods                         12,000 USD

Cost of goods manufactured                   40,000 USD

Net Purchases 50,000 USD

Ending finished goods                               20,000 USD

Which one is cost of goods sold?

• 28,000 USD.

• 30,000 USD.

• 32,000 USD.

• 34,000 USD.

Which of the following is not part of the manufacturing costs?

• Direct materials

• Direct labor

• Manufacturing overhead

• Administrative Expenses

Which of the following is a direct cost in relation to the cost of providing a managerial accounting course in a college?

• The cost of papers given as handouts in the class

• The electricity cost of the college

• The cost of the registration system

• The cost of the financial aid department of the college

Cool Inc. manufactures refrigerators. Which of the following items is most likely considered an indirect material cost for Cool Inc.?

• Supplies used by the factory janitor

• Fuel consumed for machine used to manufacture refrigerators

• Glass shelves for the refrigerators

• Refrigerator motors

Which of the following is an example of a manufacturing overhead cost?

• Wages paid to security personnel at the corporate office building

• The cost of electricity used to run the oven in which Domino’s bakes its pizzas

• Cost of shipping product to customers

• The salary of the president of the company