Handout 2

Question 1

These are the materials which are easily identifiable with the product and forms
part of the finished product.

Answer 1

Direct Materials

Question 2

These are the materials used in the production process but does not form part of the finished product.

Answer 2

Indirect Materials

Question 3

This refers to the shipping costs which must be paid by the buyer
of the merchandise depending on the agreed terms of payment.

Answer 3

Freight in costs

Can also be reffered as Transportation Cost

Question 4

This is used to record the movement of inventory. The entries in the stock card are made in chronological order according to the date of occurrence or purchase of raw materials.

Answer 4

Inventory stock card

Question 5

This serves as the basis for recording the issuance of raw materials.

Answer 5

Materials requisition form

Question 6

These are the defective or leftover materials in production. Scraps include fillings or excessive trimmings of materials after manufacturing operations

Answer 6

Scrap materials

Question 7

The actual cost of the goods purchased.

Answer 7

Purchase of item

Question 8

The costs incurred to import the goods from other countries.

Answer 8

Local taxes and duties

Question 9

The costs incurred to import the goods from other countries.

Answer 9

Local taxes and duties

Question 10

The cost for moving the goods from the source
to the buyer’s place.This involves any transport medium like trucking, shipping, air freight, or train.

Answer 10

Inward freight

Can also be called Freight in or Transportation Cost

Question 11

An additional reduction in the value of an invoice or billing that the seller allows the
buyer to pay in advance than the due date or normal payment scheme.

Answer 11

Cash discount

Question 12

The lower product cost being offered by the sellers to encourage bulk orders.

Answer 12

Volume discount

Question 13

The amount by which a manufacturer reduces the retail price or published rate of a product and/or other additional cost-saving propositions to increase sales or market share.

Answer 13

Trade discount

Question 14

The programs of sellers or the government to induce additional sales or patronization of products with corresponding terms and conditions.

Answer 14

Rebates and subsidies

Question 15

The total cost to pack and secure the goods during the delivery. This entails more than the goods’ main packaging like boxes or bags individually, as well as the crates, containers, etc.
to secure all the units ordered.

Answer 15

Packing expenses

Question 16

The appropriate reallocation of the total costs to the various materials if they shared a common costing like Inward Freight, Discounts, Packaging, etc.

Answer 16

Joint purchase cost

Question 17

The additional costs to consider in purchasing goods is the requirement of extra parts, accessories, spare parts, supplies and others to run or use the item accordingly.

Answer 17

Extra/spare parts

Question 18

A high-cost equipment/packaging to handle the products for delivery of bulk and high-volume goods. This can be returnable/refundable or not, thus should be accounted if to
be considered or not in costing.

Answer 18

Cost of containers

Question 19

The cost for keeping the materials for buffer use or holding.

Answer 19

Storage cost

Question 20

This is a cost flow process wherein the first goods purchased are also the first
goods sold. This is based on the assumption that goods are sold or used in the same chronological
order in which they are bought.

Answer 20

First in, First Out (FIFO)