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Flashcards in Chapter 1 Deck (10):
1

___ are indirect costs incurred to support a number of cost objects?

Common Costs

2

What are products costs for Retailers? For Manufacturers?

Product Costs for:

Retailers
-all costs required to purchase inventory

Manufacturing
-all costs required to manufacture inventories

3

3 parts of Product Costs

DM
DL
OH

4

What are Raw Materials? Are they a product cost or selling and administrative cost?

Raw Materials
-includes Direct Materials(DM) that go into product
-includes Indirect Materials traced to final product (ex: oil for machines)


*Raw Materials are not Selling and Aministrative Costs or part of Product Costs

5

What is the treatment of Product Costs?

What is the treatment of Period Costs?

Product Costs
-expensed through COGS when Inventory is sold

Period Costs
-expensed in the period incurred

6

How are wages and salaries classified?

As Product Costs
-Salaries are OH
-Wages are DL

7

Selling and Administrative Costs?

rent on non-factory buildings
insurance on non-factory
depreciation non-factory equipment
property taxes
sales commissions

8

Mixed Costs

contain VC and FC

9

Cost Behavior

How a cost will react (inc./dec.) to changes in level of activity

10

Activity Base

The Cost Driver

thing that makes the cost go up or down

EX: buying more inventory