Chapter 14

Question 1

Product, process, department, or customer to which costs are assigned to

Answer 1

Cost object

Question 2

Traceable to a single cost object

e.g. wheels for a bike. cost object is the bike

Answer 2

Direct cost

Question 3

Cannot easily be traced to a single cost object

e.g. maintenance of department. cost object is the bike

Answer 3

Indirect cost

Question 4

Costs necessary to manufacture the product. Costs include direct materials, direct labor, overhead costs.

Answer 4

Product costs

Question 5

A radio for a car would be an example of _______ _________.

Answer 5

direct materials

Question 6

Wages for the workers on the assembly line of a car factory would be an example of __________ _________.

Answer 6

direct labor

Question 7

Utilities, janitor wages, insurance. Pretty much anything else that cannot be traced directly to units produced

Answer 7

Manufacturing overhead

Question 8

Cannot be assigned to the finished product, and they are not part of the manufacturing process. They are identified more with a time period. They include selling and general administrative expenses.

Answer 8

Period costs

Question 9

Selling Expenses, Advertising Expenses, Rent, Depreciation, Commissions, and Interest Expense are all examples of __________.

Answer 9

Period costs

Question 10

___________ companies produce goods from materials and labor.

Answer 10

Manufacturing

Question 11

___________, or ___________, companies buy goods ready for sale.

Answer 11

Non-manufacturing, merchandising

Question 12

Tangible components of a finished product

Answer 12

Direct materials

Question 13

Expenditures for direct materials (separately traced through the manufacturing process to finished goods)

Answer 13

Direct material costs

Question 14

The efforts of employees who physically convert materials to finished product

Answer 14

Direct labor

Question 15

Wage and salaries for direct labor that are separately and readily traced through the manufacturing process to finished goods

Answer 15

Direct labor costs

Question 16

Manufacturing workers’ efforts not linked to specific units or batches of the product (part of the factory overhead)

Answer 16

Indirect labor costs

Question 17

Consists of all manufacturing costs that are not direct materials or direct labor. These costs include indirect materials and indirect labor, costs not directly traceable to the product

Answer 17

Factory overhead costs

Question 18

Costs necessary to get an order and deliver a product. (ex. advertising, shipping to a customer)

Answer 18

Selling and marketing costs

Question 19

All executive, organizational, and clerical costs. (ex. accountant salary, office supplies)

Answer 19

Administrative costs

Question 20

Beginning Merchandise Inventory + Cost of Goods PURCHASED - Ending Merchandise Inventory = Cost of Goods Sold

Answer 20

Merchandiser income statement

Question 21

Beginning Finished Goods Inventory + Cost of Goods MANUFACTURED - Ending Finished Goods Inventory = Cost of Goods Sold

Answer 21

Manufacturer income statement