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Chapter 2: Homework review

Terms in this set (26)

In order to classify a given cost as either direct or indirect, you must determine
the cost object to which the cost is being related
If you add the cost of goods manufactured to the balance in the beginning finished goods inventory, the total thus determined is know as the
Cost of goods available for sale for the period.
You have heard of full absorption costing. Many things are included as a product cost under that process of costing. Which of the the items listed below is not a product cost under that form of costing?
Salaries paid to the top management in the company
The process of assigning indirect costs to products, services, people, business units, etc., is:
Cost allocation
The process of cost allocation is a how the cost in the ____________ are assigned to a _________________..
cost pool; cost object
One of the items below is a period cost. Which one is it?
The wages of the workers on the shipping docks who load completed products onto outgoing trucks.
What do you call any end to which a cost is assigned?
a cost object
XYZ Company manufactures a single product. The product's prime costs consist of
direct material cost and direct labor
The cost of the direct labor will be treated as an expense on the income statement when the resulting:
products are sold
Inventoriable costs:
are regarded as assets until the units are sold.
The corporate controller's salary would be considered a(n)
administrative cost
Prime cost consists of direct materials combined with:
direct labor
Micro Computer Company has set up a toll-free telephone line for customer inquiries regarding computer hardware produced by the company. The cost of this toll-free line would be classified as which of the following?
period cost
Cost that varied with the volume of activity
variable cost
Sacrifice of resource
Cost
Cost charged against revenue in a particular accounting period
Expense
Cost that is a part of inventory
Product cost
Cost that can more easily be attributed to time intervals
Period cost
Past, present, or near future cashflow
Outlay cost
Lost benefit from the best foregone alternative
Opportunity cost
Cost used to compute inventory value according to GAAP
Full absorption cost
Cost that cannot be directly related to cost object
Indirect cost
Cost that can be directly related to cost object
Direct cost
Cost that does not vary with the volume of activity
Fixed cost
A company that manufactures custom rocking chairs has a toll free telephone number for customers to use to place orders. The cost to provide the telephone line would be properly classified as which of the following types of cost?
Period cost
Rollo manufactures custom racing wheels for street racers. One of the items below is a period cost for Rollo. Which one is it?
Wages of salespersons.
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