Exam 2: An Introduction to Cost Terms and Purposes

Use the information below to answer the following question(s). Frazer Inc. had the following activities in the year: -Which of the following is true of period costs?

Use the information below to answer the following question(s). The following information pertains to Payton's Shoe Manufacturing: 99,500 pairs of shoes are sold during the year for $18. -What is Payton's manufacturing cost per pair of shoes?

Which one of the following examples could be classified as a direct cost?

Overtime premium is normally considered as a component of direct labour.

Office Supply Company manufactures office furniture. Recently the company decided to develop a formal cost accounting system. The company is currently converting all costs into classifications as related to its manufacturing processes. Required: For the following items, label each as being appropriate for • direct cost tracing of the finished furniture, • indirect cost allocation of an indirect manufacturing cost to the finished furniture, or • as a nonmanufacturing item.

When should the overtime premium of direct manufacturing labour be considered an indirect manufacturing cost? A direct manufacturing cost?

Which of the following statements about the key features of cost accounting and cost management is true?

What is the meaning of the term "cost object"? Give an example of a cost object that would be used in a manufacturing company, a merchandising company, and a service sector company?

Which of the following statements is true?

Work-in-process consists of partially completed goods not yet ready for sale.

Products, services, departments, and customers may be cost objects.

Prime costs consist of direct and indirect manufacturing labour.

Costs of Sales is another way of phrasing Cost of Goods Sold.

Each of the following items pertains to one of these companies: Bedell Electronics (a manufacturing company), Gregory Food Retailers (a merchandising company), and Larson Real Estate (a service sector company). Classify each item as either inventoriable (I) costs or period (P) costs.

Delivery charges are typically considered to be an indirect cost because it cannot be traced to each customer.

Total variable costs change in direct proportion to changes in cost drivers.

The total of the costs assigned to a particular product for a specific purpose is called

Fixed costs depend on the

Whether a company traces costs directly to an output unit or not depends upon

Answer the following question(s) using the information below. The West Company manufactures several different products. Unit costs associated with Product ORD203 are as follows: -What are the variable costs per unit associated with Product ORD203?