Ch 2 Flashcards
Manufacturing companies
generate revenue by converting them
need to understand how much it cost to make the product and get it ready to sell in order to earn an adequate profit
listed on balance sheet: raw materials
work in process
finished goods
cost flow assumptions for a manufacturer
raw materials
work in process
finished goods
prime costs
direct materials + direct labor
prime ingredients for a product
conversion costs
direct labor + manufacturing overhead
costs to convert materials
All of the following relate to part of the value chain for a clothing company except
administrative costs
things related are:
- cost of shipping products to retailers
- salaries of clothing designers
- cost of advertising new products
Which of the following items is not used when calculating the cost of goods manufactured?
salesperson salaries
things used are:
- Direct labor
- Direct materials used
- Manufacturing overhead
Which type of company typically produces its own inventory?
Manufacturer
Direct labor for a company was $145,000; manufacturing overhead was $300,000; and direct materials were $270,000. Prime costs would total
415,000
Which of the following is not an example of an indirect cost incurred in manufacturing automobiles?
Cost of the automobile engines
- Machinery depreciation in the factory
- Plant utilities
- Plant supervisor salary
When deciding to buy a new computer, all of the following should be considered except for the
cost of the old computer
- warranty of the new computer
- cost of the new computer
- games that come with the new computer
Which of the following is an example of a period cost when manufacturing products?
Advertising expense
product cost examples
- Property taxes on the plant
- Depreciation expenses on factory equipment
- Indirect materials used in the factory
\ includes both, direct and indirect
How do fixed costs per unit behave?
they decrease as production increases
The cost of lighting the factory would be classified as ________ when determining the cost of a manufactured product
indirect cost
Research and development is needed to improve products and to design new products.
true
Schlabig & Associates, a public accounting firm that provides business consulting to a consumer, is what type of company?
service
