Chapter 1 Cost Classifications for Assigning Costs to Cost Objects
Cost Object - CORRECT ANSWERanything for which cost data are desired - including
products, customers, plants, office locations, and departments
Direct cost - CORRECT ANSWERa cost that can be easily and conveniently traced to a
specified cost object
Indirect Cost - CORRECT ANSWERCosts that cannot be easily and conveniently traced
to a unit of product or other cost object
Common Cost - CORRECT ANSWERa cost that is incurred to support a number of cost
objects but that cannot be traced to them individually. A common cost is a type of
indirect cost.
Direct Labor - CORRECT ANSWERlabor costs that can be easily traced to individual
units of product
Manufacturing Costs - CORRECT ANSWERDirect materials and direct labor are both
Direct Materials - CORRECT ANSWERMaterials that become an integral part of a
finished product and whose costs can be conveniently traced to it.
Touch Labor - CORRECT ANSWERanother name for direct labor
Manufacturing overhead - CORRECT ANSWERall manufacturing costs except direct
materials and direct labor
, Indirect Materials - CORRECT ANSWERRaw materials that do not physically become
part of the finished product or for which it is impractical to trace to the finished product
because their physical association with the finished product is too small.
Indirect Labor - CORRECT ANSWERThe labor costs of janitors, supervisors, materials
handlers, and other factory workers that cannot be conveniently traced to particular
products.
Conversion Cost - CORRECT ANSWERDirect Labor + Manufacturing Overhead
Selling Costs - CORRECT ANSWERall costs that are incurred to secure customer
orders and get the finished product or service into the hands of the customer
Salaries of factory supervisors and factory maintenance personnel are examples of
______ labor costs. - CORRECT ANSWERindirect
Prior to being recorded on the income statement, manufacturers' product costs flow
through ______. - CORRECT ANSWERraw materials, work in progress, finished goods
A company purchased a 12 month insurance policy on Oct 1 for $1200. On December
31 annual financial statements, - CORRECT ANSWER$300 is reported as an expense
and $900 is reported as an asset
Administrative Costs - CORRECT ANSWERall costs associated with the general
management of an organization rather than with manufacturing or selling
Administrative costs include - CORRECT ANSWERexecutive compensation and public
relations costs
Indirect labor costs include - CORRECT ANSWERfactory security guard wages,
assembly-line supervisor salary
Matching Principle - CORRECT ANSWERAccrual concept that costs incurred to
generate a particular revenue should be recognized as expenses in the same period
that the revenue is recognized.
Other names for manufacturing overhead include - CORRECT ANSWER1. Factory
burden
2. Factory overhead
3. Indirect manufacturing costs
Product Costs - CORRECT ANSWERdirect materials, direct labor, manufacturing
overhead
Manufacturing cost include - CORRECT ANSWER1. Direct Labor
2. Direct Materials
Cost Object - CORRECT ANSWERanything for which cost data are desired - including
products, customers, plants, office locations, and departments
Direct cost - CORRECT ANSWERa cost that can be easily and conveniently traced to a
specified cost object
Indirect Cost - CORRECT ANSWERCosts that cannot be easily and conveniently traced
to a unit of product or other cost object
Common Cost - CORRECT ANSWERa cost that is incurred to support a number of cost
objects but that cannot be traced to them individually. A common cost is a type of
indirect cost.
Direct Labor - CORRECT ANSWERlabor costs that can be easily traced to individual
units of product
Manufacturing Costs - CORRECT ANSWERDirect materials and direct labor are both
Direct Materials - CORRECT ANSWERMaterials that become an integral part of a
finished product and whose costs can be conveniently traced to it.
Touch Labor - CORRECT ANSWERanother name for direct labor
Manufacturing overhead - CORRECT ANSWERall manufacturing costs except direct
materials and direct labor
, Indirect Materials - CORRECT ANSWERRaw materials that do not physically become
part of the finished product or for which it is impractical to trace to the finished product
because their physical association with the finished product is too small.
Indirect Labor - CORRECT ANSWERThe labor costs of janitors, supervisors, materials
handlers, and other factory workers that cannot be conveniently traced to particular
products.
Conversion Cost - CORRECT ANSWERDirect Labor + Manufacturing Overhead
Selling Costs - CORRECT ANSWERall costs that are incurred to secure customer
orders and get the finished product or service into the hands of the customer
Salaries of factory supervisors and factory maintenance personnel are examples of
______ labor costs. - CORRECT ANSWERindirect
Prior to being recorded on the income statement, manufacturers' product costs flow
through ______. - CORRECT ANSWERraw materials, work in progress, finished goods
A company purchased a 12 month insurance policy on Oct 1 for $1200. On December
31 annual financial statements, - CORRECT ANSWER$300 is reported as an expense
and $900 is reported as an asset
Administrative Costs - CORRECT ANSWERall costs associated with the general
management of an organization rather than with manufacturing or selling
Administrative costs include - CORRECT ANSWERexecutive compensation and public
relations costs
Indirect labor costs include - CORRECT ANSWERfactory security guard wages,
assembly-line supervisor salary
Matching Principle - CORRECT ANSWERAccrual concept that costs incurred to
generate a particular revenue should be recognized as expenses in the same period
that the revenue is recognized.
Other names for manufacturing overhead include - CORRECT ANSWER1. Factory
burden
2. Factory overhead
3. Indirect manufacturing costs
Product Costs - CORRECT ANSWERdirect materials, direct labor, manufacturing
overhead
Manufacturing cost include - CORRECT ANSWER1. Direct Labor
2. Direct Materials
