COST ACCOUNTING T1

Question 1

Direct costs

Answer 1

Costs that can be directly allocated to a cost object.

Question 2

Indirect Costs

Answer 2

Cost that cannot be allocated to a cost object directly.

Question 3

Product Costs

Answer 3

Sum of costs related to manufacturing costs (direct materials, direct labour,
manuf. overheads…).

Products Sold - COGS (Income Statement)

Unsold - Inventory (Balance Sheet)

Question 4

Period Costs

Answer 4

Costs not assigned to products but
treated as a cost of the period in which they are incurred (non-manufacturing costs; rent or office deprectiation).

Question 5

COGS Formula

Answer 5

Number of units sold * Unit product cost

Question 6

Unit product cost formula

Answer 6

Total Production Cost / Units Produced

Question 7

Inventory

Answer 7

Units Unsold * Unit Product Cost

Question 8

Cost Definition

Answer 8

They are resources given up to achieve a particular objective.

Question 9

Variable Cost

Answer 9

Costs that varies as the level of activity changes.

Question 10

Fixed cost

Answer 10

Costs that do not vary when activity
levels change.

Question 11

Semivariable Cost

Answer 11

A semi-variable cost stays partly constant (fixed) regardless of activity level, but also increases as output or usage increases beyond a certain point.

Question 12

Income Statement

Answer 12

Revenue= Price x Units Sold

• COGS

= Gross Margin

• Period Costs

= Operating Profit