Cost Allocation Flashcards
What is the definition of a period cost?
A. A cost that relates to time
B. A cost that relates to units of production
C. A cost that is variable
D. A cost that does not change across time
A
What is the definition of a product cost?
A. A cost related to the sale of goods
B. A cost related to goods purchased
C. A cost relates to goods made
D. A cost related to corporate employees
C
Which of the following costs are included in inventory under variable costing?
A Direct labor
B Direct material
C Direct overhead
D All of the above
D
Which of the following statements regarding absorption costing is correct?
A Absorption costing includes fewer costs in inventory relative to variable costing
B Absorption costing is required under US GAAP
C Absorption costing is prohibited under IFRS
D Absorption costing must be used under pro forma financial statements
B
Under Activity-Based-Costing (ABC), companies allocate which of the following costs according to activities?
A Direct material
B Direct labor
C Inventory
D Overhead
D
