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Questions and Answers
Which statement is true about expired costs on the financial statement?
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?
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?
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?
What is the formula for conversion costs?
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Which statement is true about total step costs?
Which statement is true about total step costs?
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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.
