1) Direct costs:
A) are incurred to benefit a particular accounting period. B) are incurred due to a specific decision. C) can be easily traced to a particular cost object. D) are the variable costs of producing a product.
2) Which of the following is NOT a period cost?
A) Depreciation of factory maintenance equipment. B) Salary of a clerk who handles customer billing. C) Insurance on a company showroom where customers can view new prod D) Cost of a seminar concerning tax law updates that was attended by the company's controller.
3) Product costs that have become expenses can be found in:
A) period costs. B) selling expenses. (C) cost of goods sold. D) administrative expenses
4) The cost of direct materials is classified as a:
A) Choice A B) Choice B C) Choice D) Choice D
5) Which of the following is an example of a period cost in a company that makes clothing?
A) Fabric used to produce men's pants. B) Advertising cost for a new line of clothing. C) Factory supervisor's salary. D) Monthly depreciation on production equipment.
6) Depreciation on a personal computer used in the marketing department of a manufacturing company would be classified as:
A) a product cost that is fixed with respect to the company's output. B a period cost that is fixed with respect to the company's output. C) a product cost that is variable with respect to the company's output. D) a period cost that is variable with respect to the company's output. B) a period that is variable with the company's output
1) Option - C.
Direct cost are the cost which can be easily traceable in the object or in the level of the production.
2) OPTION - A.
Depreciation of factory maintenance equipment is not a period cost.
3)OPTION - C.
Cost of goods sold.
4)OPTION - C.
Choice C, No conversion cost and Yes prime cost.
5)OPTION - B.
Advertisement cost for a new line of clothing is an example of period cost.
6)OPTION - B.
Depreciation on a personal computer is a period cost that is fixed with respect to the company's output.