ACCT 201B Ch.1-3 Flashcards

Questions and Answers

Manufacturing costs include?

Direct materials and direct labor only.

Direct materials and manufacturing overhead only.

Direct materials, direct labor, and manufacturing overhead. (correct)

Direct labor and manufacturing overhead only.

Manufacturing costs that cannot be classified as either direct materials or direct labor are known as?

Nonmanufacturing costs.

Manufacturing overhead. (correct)

Period costs.

Selling and administrative expenses.

Manufacturing overhead applied is added to direct labor incurred and to what other item to equal total manufacturing costs for the period?

Raw materials purchased.

Goods available for sale.

Direct materials used. (correct)

Work in process.

Process costing is not used when?

Jobs have distinguishing characteristics. Signup and view all the answers

Process costing is used when?

The production process is continuous. Signup and view all the answers

Product costs consist of?

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

Sales commissions are classified as?

Period costs. Signup and view all the answers

The flow of costs in a job order cost system?

Involves accumulating manufacturing costs incurred and assigning the accumulated costs to work done. Signup and view all the answers

The high-low method is often employed in analyzing?

Mixed costs. Signup and view all the answers

The product cost that is most difficult to associate with a product is?

Manufacturing overhead. Signup and view all the answers

The relevant range of activity refers to the?

Levels of activity over which the company expects to operate. Signup and view all the answers

The two basic types of cost accounting systems are?

Job order and process cost systems. Signup and view all the answers

The two major steps in the flow of costs are?

Accumulating and assigning. Signup and view all the answers

The wages of a timekeeper in the factory would be classified as?

Indirect labor. Signup and view all the answers

The work of factory employees that can be physically and directly associated with converting raw materials into finished goods is?

Direct labor. Signup and view all the answers

When determining costs of jobs, how does a company account for indirect materials?

It is transferred out of raw materials into manufacturing overhead when used. Signup and view all the answers

Which of the following are period costs?

Selling expenses. Signup and view all the answers

Which of the following is not a cost classification?

Multiple. Signup and view all the answers

Which of the following is not a fixed cost?

Direct materials. Signup and view all the answers

Which of the following is not a manufacturing cost category?

Cost of goods sold. Signup and view all the answers

Which of the following is not another name for the term manufacturing overhead?

Pervasive costs. Signup and view all the answers

Which of the following is not classified as direct labor?

Wages of supervisors. Signup and view all the answers

Which of the following is not true about the graph of a mixed cost?

The variable cost portion of the graph is rectangular in shape. Signup and view all the answers

Which of the following is not viewed as part of accumulating manufacturing costs in a job order cost system?

Cost of goods sold is recognized. Signup and view all the answers

Which of the following would be accounted for using a job order cost system?

The construction of a new campus building. Signup and view all the answers

Which one of the following costs would not be inventoriable?

Period costs. Signup and view all the answers

Which one of the following is an example of a period cost?

A manager's salary for work that is done in the corporate head office. Signup and view all the answers

Which one of the following is not a cost element in manufacturing a product?

Office salaries. Signup and view all the answers

Which one of the following is not a direct material?

Lubricant for a ball-bearing joint for a large crane. Signup and view all the answers

Which one of the following is not considered as material costs?

Partially completed motor engines for a motorcycle plant. Signup and view all the answers

Which one of the following represents a period cost?

The VP of Sales' salary and benefits. Signup and view all the answers

Which one of the following would not be classified as manufacturing overhead?

Direct materials. Signup and view all the answers

Why is identification of a relevant range important?

Cost behavior outside of the relevant range is not linear, which distorts CVP analysis. Signup and view all the answers

Study Notes

Manufacturing Costs

Manufacturing costs encompass direct materials, direct labor, and manufacturing overhead.
Manufacturing overhead accounts for costs that are not classified as direct materials or direct labor.

Cost Systems

Process costing applies when a continuous production process is in place.
Job order costing is necessary for jobs with distinct characteristics or that produce unique products.

Product Costs

Product costs are comprised of direct materials, direct labor, and manufacturing overhead.
Selling expenses are categorized as period costs, not product costs.

Cost Flow

In job order cost systems, costs are accumulated and assigned to work completed.
Indirect materials are transferred to manufacturing overhead when utilized.

Cost Classifications

Mixed costs combine fixed and variable components, and understanding their graph is essential for cost behavior analysis.
Fixed costs remain constant within a relevant range, while variable costs fluctuate with activity levels.

Job Order Costing

Job order cost systems include costs incurred for raw materials, factory labor, and manufacturing overhead.
Period costs, like selling expenses, are not inventory costs and are recognized immediately.

Accountability in Costing

Certain jobs, such as construction projects, require a job order cost system to track their specific costs.
Wages of supervisors are classified as indirect labor, not direct labor.

Cost Elements

Elements in manufacturing costs include manufacturing overhead, direct materials, and direct labor, while office salaries do not count as material costs.
Identifying non-direct materials helps in assessing overall manufacturing costs.

Importance of Relevant Range

Recognizing the relevant range is crucial as cost behaviors become non-linear outside of this range, affecting cost-volume-profit analysis.

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Description

Test your knowledge of manufacturing costs as outlined in ACCT 201B Chapters 1 to 3. These flashcards cover essential terms and definitions related to direct materials, direct labor, and manufacturing overhead. Perfect for students looking to reinforce their understanding of accounting concepts.