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Financial Statements and Manufacturing Costs Quiz

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Financial Statements and Manufacturing Costs Quiz

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Questions and Answers

Which statement is true about expired costs on the financial statement?

Expired costs are part of inventory.

Expired costs are listed on the balance sheet.

Expired costs are part of prime costs.

Expired costs are listed on the income statement. (correct)

Which costs are classified as unexpired on the financial statement?

Prime costs (correct)

Direct materials

Direct labor

Manufacturing overhead

What is the formula for prime costs?

Prime costs = Direct materials + Manufacturing overhead

Prime costs = Direct labor + Manufacturing overhead + Inventory

Prime costs = Direct materials + Direct labor (correct)

Prime costs = Direct labor + Manufacturing overhead

What is the formula for conversion costs?

<p>Conversion costs = Direct labor + Manufacturing overhead</p> Signup and view all the answers

Which statement is true about total step costs?

<p>Total step costs remain constant in total.</p> Signup and view all the answers

Study Notes

Cost Classification on Financial Statement

Expired costs are reported on the income statement as an expense.
Unexpired costs are reported on the balance sheet as an asset.

Cost Formulas

The formula for prime costs is: Direct Materials + Direct Labor.
The formula for conversion costs is: Direct Labor + Manufacturing Overhead.

Total Step Costs

Total step costs vary with each step or stage of production, rather than with the number of units produced.

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Description

Test your knowledge on cost object association, direct and indirect classification on financial statements, and the composition of manufacturing costs in this quiz. Explore concepts such as expired and unexpired costs, product cost vs. period cost, prime cost vs. conversion cost, and more.