BEC - Cost Accounting Part 1 - Reading General Info

Question 1

All costs related to the manufacture of the product and its components consists of direct materials, direct labor, and manufacturing overhead. Not expensed until product sold.

Answer 1

Product Cost

Question 2

Cost includes selling, general, & administrative expense including interest

Answer 2

Period Cost

Question 3

A cost that is not easily traceable to cost pool or object and typically benefits two or more cost pools. Its also know as overhead classified as MOH.

Answer 3

Indirect Costs

Question 4

The sum of Direct Labor + Direct Material =

Answer 4

Prime Costs

Question 5

Direct Labor + Manufacturing overhead(Indirect labor &; indirect materials) =

Answer 5

Conversion Costs

Question 6

Pass Key: When traditional costing is used, the application of overhead is accomplished in two steps

Answer 6

1. Overhead rate = Budgeted overhead costs/Estimated cost drive.
2. Applied overhead = Actual cost driver x Overhead rate(from Step 1)

Question 7

Fixed vs. Variable Costs: Direct Material & Direct Labor

Answer 7

Are generally variable costs

Question 8

Fixed vs. Variable Costs: Indirect costs consist of

Answer 8

both fixed & variable costs

Question 9

Calculate Direct Material

Answer 9

Beginning Balance Direct Materials
(+) Plus purchases
(+) Plus transportation in
(-) Less: Purchase returns & allowances
= Materials available
Less Cost of Materials used
= Ending balance direct materials

Question 10

Cost of labor directly associated with the manufacturing of the finished product.

Answer 10

Direct Labor

Question 11

A cost that is fixed in total but varies per unit

Answer 11

Fixed Cost

Question 12

A cost that varies in total but is fixed per unit.

Answer 12

Variable Cost