Product Costs and Period Costs Flashcards
What are the two main categories of costs in product costing?
Product Costs and Period Costs
Product costs include direct materials, direct labor, and manufacturing overhead. Period costs include selling and administrative expenses.
Define Direct Labor in the context of product costs.
Direct Labor refers to labor costs that can be directly traced to the production of specific goods or services
Examples include wages paid to workers who assemble products.
What is Direct Material?
Direct Material is the raw materials that are directly traceable to the finished product
Examples include wood used in furniture manufacturing.
What type of cost is glue in the context of product costs?
Variable, Indirect, Product
Glue is necessary for production but cannot be directly traced to a specific unit of product.
What type of cost is a factory’s depreciation?
Fixed, Indirect, Product
Depreciation is a fixed cost associated with the use of the factory over time.
What type of cost is advertising classified as?
Fixed, Indirect, Period
Advertising costs do not vary with production levels and are not tied to the manufacturing process.
Fill in the blank: Direct wages are classified as ______.
Variable, Direct, Product
Direct wages change with production volume and can be directly linked to the cost of goods manufactured.
What is the classification of a manager’s salary in product costing?
Fixed, Indirect, Product
A manager’s salary is a fixed cost that is not directly tied to the production of specific products.
What type of cost is sales commission?
Variable, Indirect, Period
Sales commissions vary with sales volume and are not related to production costs.
What are the two classifications of costs based on their behavior?
Variable and Fixed
Variable costs change with production levels, while fixed costs remain constant regardless of production.
What are the two classifications of costs based on traceability?
Direct and Indirect
Direct costs can be traced to specific products, while indirect costs cannot be directly linked.
What are the two classifications of costs based on their function?
Product and Period
Product costs are associated with manufacturing, while period costs are related to selling and administrative functions.
