M1-Cost Accounting: Part 1 Flashcards
Direct labor represents the cost of labor directly associated with the manufacturing of the finished product. The loom operators would qualify as direct labor, while the factory foremen and the machine mechanics would qualify as indirect labor, or overhead. (true or false)
true
Prime costs are normally defined as:
direct materials and direct labor
Direct labor and overhead are normally referred to as:
conversion costs
Period costs are costs that are expensed during a period. They are not charged to a product (capitalized), which is why they are expensed. (true or false)
true
In the relevant range, fixed costs are constant in total, but decrease per unit as production levels increase. (true or false)
true
Variable costs per unit remain unchanged in the relevant range, but increase in total as unit volume increases. (true or false)
true
A cost driver is a causal factor (the cause) that increases the cost (the effect) of a cost objective. (true or false)
true
Inventoriable costs are assets until sold, when they become “cost of goods sold.” (true or false)
true
A variable costs is one that varies in total but is fixed per unit. For example, if a starter is needed in the manufacture of an automobile, the cost of starters varies with the number of automobiles. The more automobiles, the greater the cost of starters. However, the cost for each starter remains constant. (true or false)
true
Cost allocation is the distribution of overhead or support costs based on any one of a variety of methods. (true or false)
true
Cost allocation is essential for measuring income and assets for external reporting. (true or false)
true
Relevant range is the range of activity within which the relationships of fixed costs and variable costs are meaningful and valid. (true or false)
true
Within this range the fixed costs will remain fixed and the variable cost per unit will not change.
