Accounting for Direct Labor and Costs

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Questions and Answers

Which of the following is not classified as direct labor?

Wages of supervisors (correct)

Bottles of beer in a brewery

Copy machine operators at a copy shop

Bakers in a Bakery

Manufacturing costs include?

Direct materials, direct labor, manufacturing overhead

Which of the following are period costs?

Direct materials and direct labor

Raw materials

Selling expenses (correct)

Direct labor and manufacturing overhead

Product costs consist of:

Direct materials, direct labor, manufacturing overhead Signup and view all the answers

The sum of DM costs, DL costs, and MO incurred is the:

Total manufacturing costs Signup and view all the answers

A cost which remains constant per unit at various levels of activities is a:

Variable cost Signup and view all the answers

Fixed costs will usually not include:

Direct labor Signup and view all the answers

Which one of the following types of costs is not related to inventory?

Period costs Signup and view all the answers

At what point are manufacturing costs expensed?

When finished goods are sold Signup and view all the answers

Direct materials are sometimes referred to as:

Raw materials Signup and view all the answers

Direct labor is considered a:

Variable cost Signup and view all the answers

A cost that a company incurs that is not a product cost is referred to as:

Non-manufacturing costs, period cost Signup and view all the answers

Period costs are associated with:

The administration of a business Signup and view all the answers

Period costs are expensed when?

Incurred Signup and view all the answers

Raw materials inventory increases when:

Materials are purchased Signup and view all the answers

Budgets assist managers in all the following aspects of management except:

Leading Signup and view all the answers

Development of the operating budget begins with the:

Sales budget Signup and view all the answers

The direct materials quantity variance is based on the amount of materials:

Used Signup and view all the answers

The direct materials price variance is based on the amount of materials:

Purchased Signup and view all the answers

The variance that captures the efficient use of activity based on the cost of variable overhead is the:

Variable overhead efficiency variance Signup and view all the answers

Study Notes

Direct Labor and Costs

Wages of supervisors are classified as indirect labor, not direct labor.
Direct materials, direct labor, and manufacturing overhead comprise manufacturing costs.
Selling expenses are categorized as period costs, separate from product costs.
Product costs consist of direct materials, direct labor, and manufacturing overhead.

Cost Classifications

Total manufacturing costs equal the sum of direct materials, direct labor, and manufacturing overhead incurred.
Variable costs remain constant per unit regardless of activity level.
Fixed costs do not typically include direct labor.

Inventory and Costs

Period costs, which are not related to inventory, include selling and administrative expenses.
Manufacturing costs are expensed at the point of sale when finished goods are sold.
Direct materials are also known as raw materials.

Non-Manufacturing Costs

Non-manufacturing costs refer to expenses that are not product costs and are considered period costs.
Period costs are tied to business administration and are expensed as incurred.
Raw materials inventory increases upon material purchases.

Budgeting and Variance Analysis

Budgets aid managers in planning, controlling, and evaluating, but not necessarily leading.
The development of the operating budget starts with the sales budget.
The direct materials quantity variance is calculated based on materials used.
The direct materials price variance considers the amount of materials purchased.
The variable overhead efficiency variance reflects efficient use regarding variable overhead costs.

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Description

This quiz covers the classifications of direct labor and costs in manufacturing accounting. It examines the differences between product costs and period costs, and explores how manufacturing overhead impacts total costs. Test your understanding of key concepts in cost accounting regarding inventory and non-manufacturing costs.