section 11 Flashcards

1
Q

What are the 2 kinds of operating costs?

A

—product

—period

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2
Q

product cost

A

the cost of inventory purchased for resale

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3
Q

period costs

A

the selling and admin costs

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4
Q

product costs (manufacturing)

A

all costs of making the product to be sold by the business

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5
Q

manufacturing product costs typically include

A

—direct material costs
—direct labor costs
—manufacturing overhead costs

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6
Q

production & factory maintenance supplies are classified as

A

indirect material costs

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7
Q

indirect labor costs (4)

A

—manufacturing supervisors
—quality control inspectors
—equipment and maintenance personnel
—designers and engineers

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8
Q

other overhead costs (5)

A

—rent
—depreciation
—utilities
—insurance
—taxes

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9
Q

manufacturing product costs are accounted for as

A

part of the cost of INVENTORY
until the product is sold, then the costs are expensed as Cost of Goods Sold

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10
Q

how many phases or categories of inventory in a manufacturing business?

A

3

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11
Q

What are the 3 phases of inventory?

A

—Raw Materials Inventory
—Work in Process Inventory (WIP)
—Finished Goods Inventory

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12
Q

What are the 3 categories of cost?

A

direct material
direct labor
manufacturing overhead

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13
Q

When are the costs of manufacturing transferred to COGS?

A

upon the sale of a finished good

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14
Q

T/F both direct and indirect materials are included in raw materials inventory

A

true

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15
Q

All businesses have 2 kinds of costs:

A
  1. product
  2. period
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16
Q

The balance sheet of a manufacturing business will reflect inventory which includes

A

—finished goods
—work in progress/process
—raw materials

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17
Q

Period costs for a manufacturing business would be included in

A

selling and admin expenses

18
Q

Factory utility costs should be included as part of

A

product cost
—other overhead
—work in process

19
Q

the salary costs of manufacturing supervisors would be included in

A

manufacturing overhead costs

20
Q

indirect material costs are included in

A

MOC

21
Q

a service business has what kinds of costs

A

product & period

22
Q

What costs are found in a merchandising business?

A

period costs
product costs

23
Q

Direct labor costs are incurred in what type of business?

A

manufacturing

24
Q

product costs of a merchandising business include

A

all costs of inventory purchases

25
Q

T/F admin office supplies are a product cost

A

false

26
Q

managerial accounting info tends to be different from business to business based on

A

management needs

27
Q

the classification of cost accountant salary depends on

A

whether the job would be eliminated if the company purchased rather than manufactured its product

28
Q

Product costs are included in COGS when

A

finished goods are sold to customers

29
Q

Direct labor costs are always reflected as expenses

A

when the product is actually sold

30
Q

product costs of a MERCHANDISING business include

A

the cost of inventory purchases

freight costs associated with inventory purchases from suppliers

31
Q

period costs are also known as

A

operating expenses
or
selling and admin expenses

32
Q

product cost is the cost of the

A

inventory that is purchased for resale

33
Q

the outflow of inventory is reflected as

A

COGS

34
Q

when inventory is sold, the costs becomes an

A

expense

35
Q

T/F a product cost is the same as an expense

A

False
products costs are first assets, then expenses when sold

36
Q

T/F period costs are first assets

A

False
period costs are expenses

37
Q

in a merchandising business, selling and admin expenses are found

A

on the income statement under operating expenses

38
Q

Inventory is reflected on a

A

balance sheet under current assets

39
Q

COGS is reflected on the

A

income statement

40
Q

gross margin is

A

revenues—COGS