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Cost Classifications in Manufacturing

This document contains 25 true-false questions about concepts and classifications of costs in accounting. The questions cover topics such as the classification of different types of costs like direct materials, direct labor, overhead, variable costs, fixed costs, and period costs. They also address the differences between how costs are treated and classified in manufacturing vs. merchandising vs. service businesses.

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justine reine cornico
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312 views2 pages

Cost Classifications in Manufacturing

This document contains 25 true-false questions about concepts and classifications of costs in accounting. The questions cover topics such as the classification of different types of costs like direct materials, direct labor, overhead, variable costs, fixed costs, and period costs. They also address the differences between how costs are treated and classified in manufacturing vs. merchandising vs. service businesses.

Uploaded by

justine reine cornico
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

CHAPTER 2 :

Concepts and Classification

TRUE-FALSE QUESTIONS

Indicate whether the following statements are true or false by inserting in the blank space provided
a capital “T” for true or “F” for false.

___ 1. The materials, labor, and overhead costs incurred to produce a product are called period
costs.

___ 2. Marketing, Selling, and Administrative Cost are the three broad classifications of costs
incurred by a manufacturing company.

___ 3. Lumber can be both a finished product and a material.

___ 4. Product cost consists of the sum of prime cost and conversion cost.

___ 5. Total fixed cost decrease with increase in the number of its units produce

___ 6. Period costs are found in both merchandising and manufacturing firms.

___ 7. The three cost elements of manufactured good are direct materials, direct labor, and
marketing costs.

___ 8. A cost that is present under one alternative but absent in whole or part under another
alternative is known as a differential cost.

___ 9. Like product costs, period costs are not necessarily treated as expenses in the period in which
they are incurred.

___ 10. Variable Costs are costs that change, in total, in direct proportion to changes in the level of
activity.

___ 11. The salary paid to the manager in charge of a warehouse is probably a variable cost.

___ 12. Indirect materials/factory supplies are classifies as administrative expense.

___ 13. The salary paid to a factory foreman is classified as factory overhead.

___ 14. In a manufacturing setting, prime cost are fixed.

___ 15. Foxed cost remains constant if expressed on a unit basis.

___16. Differential costs can be either fixed or variable

___ 17. A fixed cost is constant per unit of product

___18. A decrease in production will ordinarily result in an increase in fixed production cost per
unit.

___ 19. A factory supervisor’s salary would be classified as a direct cost of a unit of product.

___ 20. Factory rent is uncluded in manufacturing overhead, but office rent is a period cost.

___ 21. Proct costs are also known as manufacturing costs.


___ 22. Prime costs are always variable

___ 23. Cost accounting is not needed by a merchandising entity

___ 24. The statement of financial position of a service business is the same as that of a
manufacturing business

___ 25. Selling and administrative expenses are sometimes called non-manufacturing costs

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