ACCT Test 1, Chapter 1 Flashcards

Questions and Answers

Which of the following statements are true? (Select all that apply)

A factory supervisor's salary would be classified as an indirect cost with respect to a unit of product. (correct)

A direct cost is a cost that can be easily traced to the particular cost object under consideration. (correct)

A cost can be direct or indirect. The classification can change if the cost object changes. (correct)

Which of the following statements are true? (Select all that apply)

Indirect costs, such as manufacturing overhead, are variable costs.

Selling costs are indirect costs.

Administrative costs are indirect costs.

Wages paid to production supervisors would be classified as manufacturing overhead. (correct)

What are direct costs?

Costs that can be easily traced to a particular cost object.

Which of the following would most likely NOT be included as manufacturing overhead in a furniture factory?

The amount paid to the individual who stains a chair. Signup and view all the answers

What does manufacturing overhead include?

All manufacturing costs except direct labor and direct materials. Signup and view all the answers

How should materials used in a factory that are not an integral part of the final product, such as cleaning supplies, be classified?

Manufacturing overhead. Signup and view all the answers

The salary paid to the president of a company would be classified on the income statement as a(n):

Administrative expense. Signup and view all the answers

Which of the following is NOT a period cost? (Select one)

Depreciation of factory maintenance equipment. Signup and view all the answers

The cost of electricity for running production equipment is classified as:

Yes / No Signup and view all the answers

The cost of lubricants used to grease a production machine in a manufacturing company is an example of a(n):

Indirect material cost. Signup and view all the answers

Wages paid to the supervisor of the warehouse where raw materials and parts are temporarily stored before being used in production is considered an example of:

No / No Signup and view all the answers

Which of the following costs is classified as both a prime cost and a conversion cost?

Direct labor Signup and view all the answers

All of the following are examples of product costs except:

Depreciation on the company's retail outlets. Signup and view all the answers

Prime cost consists of:

Direct materials and direct labor. Signup and view all the answers

Within the relevant range, variable costs can be expected to:

Vary in total in direct proportion to changes in the activity level. Signup and view all the answers

Property taxes on a company's factory building would be classified as a(n):

Product cost. Signup and view all the answers

Fixed costs expressed on a per unit basis:

Decrease with increases in activity. Signup and view all the answers

Within the relevant range, a difference between variable costs and fixed costs is:

Variable costs per unit are constant and fixed costs per unit fluctuate. Signup and view all the answers

Study Notes

Cost Classification

Factory supervisor's salary is an indirect cost related to product.
Direct costs are easily traced to specific cost objects.
Costs can change classification depending on the cost object they relate to.

Manufacturing Overhead

Wages for production supervisors classify as manufacturing overhead.
Statement regarding indirect costs as variable costs is false.
Selling and administrative costs are categorized as indirect costs.

Direct and Indirect Costs

Direct costs can be directly linked to cost objects.
Manufacturing overhead excludes direct labor and materials.
Lubricants for machinery are categorized as indirect material costs.

Period Costs

Depreciation of factory maintenance equipment is NOT a period cost.
Salary for customer billing clerk is a period cost.
Insurance on showrooms counts as a period cost.

Cost Classifications for Equipment

Electricity for production equipment is classified as a conversion cost but not a period cost.
Warehouse supervisor wages are not considered direct labor or period costs.

Prime and Conversion Costs

Direct labor is both a prime cost and a conversion cost.
Prime costs encompass direct materials and direct labor.

Product Costs

Depreciation on retail outlets does not count as a product cost.
Product costs include salaries of plant managers and insurance on factory equipment.

Variable and Fixed Costs

Variable costs change in total proportionally with activity levels.
Property taxes on factory buildings are considered product costs.
Fixed costs per unit decrease when activity levels increase and fluctuate in per unit cost as production changes.

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Description

Test your knowledge of accounting concepts with these flashcards focused on Chapter 1 of Besser's text. The quiz covers key ideas about direct and indirect costs and their classification in relation to cost objects. Perfect for preparing for ACCT Test 1!