Chapter 1 - Cost Classifications

Question 1

product costs

Answer 1

any involved with making the product

Question 2

period costs

Answer 2

anything that isn’t a product cost

Question 3

direct materials (DM)

Answer 3

raw materials that are an important part of the finished product

Question 4

direct labor (DL)

Answer 4

labor costs that can be easily traced to individual units of product

Question 5

manufacturing overhead (MOH)

Answer 5

all manufacturing costs that aren’t direct materials or direct labor

Question 6

examples of direct materials

Answer 6

steering wheel for a car, battery for a cell phone

Question 7

cost object

Answer 7

any item for which cost data is desired

Question 8

manufacturing overhead

Answer 8

factory costs such as cleaning supplies,taxes,insurance, and janitor wages

Question 9

examples of product costs

Answer 9

direct materials, depreciation on factory equipment, indirect materials, direct labor

Question 10

examples of period costs

Answer 10

sales commissions, depreciation on delivery truck, administrative expense

Question 11

direct costs

Answer 11

costs that can be easily and conveniently traced to a specified cost object

Question 12

indirect costs

Answer 12

costs that cannot be easily and conveniently traced to specified cost object

Question 13

examples of direct costs

Answer 13

product managers salary, fabric for a dress

Question 14

examples of indirect costs

Answer 14

glue used in making furniture

Question 15

competence

Answer 15

maintain an appropriate level of professional leadership and expertise by enhancing knowledge and skills

Question 16

confidentiality

Answer 16

keep information confidential except when disclosure is authorized or legally required

Question 17

credibility

Answer 17

communicate information fairly and objectively

Question 18

integrity

Answer 18

refrain from engaging in any conduct that would prejudice carrying out duties ethically

Question 19

conversion costs

Answer 19

DL+OH

Question 20

total direct manufacturing costs (prime costs)

Answer 20

DM+DL