Republic of the Philippines

BATANGAS STATE UNIVERSITY

MODULE IN MANAGEMENT ACCOUNTING

________________________________________________________________________________________________________
CHAPTER 2 :
Concepts and Classification

TRUE-FALSE QUESTIONS

Indicate whether the following statements are true or false by inserting in the blank space provided
a capital “T” for true or “F” for false.

___ 1. The materials, labor, and overhead costs incurred to produce a product are called period
costs.

___ 2. Marketing, Selling, and Administrative Cost are the three broad classifications of costs
incurred by a manufacturing company.

___ 3. Lumber can be both a finished product and a material.

___ 4. Product cost consists of the sum of prime cost and conversion cost.

___ 5. Total fixed cost decrease with increase in the number of its units produce

___ 6. Period costs are found in both merchandising and manufacturing firms.

___ 7. The three cost elements of manufactured good are direct materials, direct labor, and
marketing costs.

___ 8. A cost that is present under one alternative but absent in whole or part under another
alternative is known as a differential cost.

___ 9. Like product costs, period costs are not necessarily treated as expenses in the period in which
they are incurred.

___ 10. Variable Costs are costs that change, in total, in direct proportion to changes in the level of
activity.

___ 11. The salary paid to the manager in charge of a warehouse is probably a variable cost.

___ 12. Indirect materials/factory supplies are classifies as administrative expense.

___ 13. The salary paid to a factory foreman is classified as factory overhead.

___ 14. In a manufacturing setting, prime cost are fixed.

___ 15. Foxed cost remains constant if expressed on a unit basis.

___16. Differential costs can be either fixed or variable

___ 17. A fixed cost is constant per unit of product

1 Management Accounting-MEMORY AID

 Republic of the Philippines
BATANGAS STATE UNIVERSITY

MODULE IN MANAGEMENT ACCOUNTING

________________________________________________________________________________________________________
___18. A decrease in production will ordinarily result in an increase in fixed production cost per
unit.

___ 19. A factory supervisor’s salary would be classified as a direct cost of a unit of product.

___ 20. Factory rent is uncluded in manufacturing overhead, but office rent is a period cost.

___ 21. Proct costs are also known as manufacturing costs.

___ 22. Prime costs are always variable

___ 23. Cost accounting is not needed by a merchandising entity

___ 24. The statement of financial position of a service business is the same as that of a
manufacturing business

___ 25. Selling and administrative expenses are sometimes called non-manufacturing costs

2 Management Accounting-MEMORY AID