COST CONCEPTS AND CLASSIFICATIONS 1

When classified according to traceability to cost objective, the cost of raw materials is considered a:

• Discretionary cost

• Direct cost

• Product cost

• Committed cost

Variable costs are costs that change regularly while fixed costs remain the same all the time.

• True

• False

Budgeted costs belong to which cost classification?

• Planning and control

• Decision making and other analytical purposes

• Managerial influence

• Time-frame perspective

If variable manufacturing costs = P100, variable non-manufacturing costs = P75, fixed manufacturing costs = P50 and fixed non-manufacturing costs = P25, how much is the total product cost under the direct costing method?

• P175

• P150

• P125

• P75

If variable manufacturing cost is P200, fixed manufacturing cost is P150, variable non-manufacturing cost is P100, and fixed non-manufacturing cost is P50, how much is the total product cost under absorption costing?

• P350

• P300

• P250

• P200

• Not in the choices

The cost associated with the next unit or the next project or incremental cost associated with an additional project as opposed to the next discrete unit.

• Out-of-pocket

• Historical

• Relevant

• Marginal

• Incremental

Which of the following is a variable cost in an insurance company?

• Office space rental fee

• Salary of the company president

• Property taxes

• Sales commissions

Which cost is also known as inventoriable cost?

• Product cost

• Period cost

• Manufacturing cost

• Non-manufacturing cost

Which does not belong to the group?

• Opportunity cost

• Relevant cost

• Out-of pocket cost

• Sunk cost

• Value-added cost

If direct materials = P200, direct labor = P150, and manufacturing overhead = P100, how much is the total conversion cost?

• P350

• P300

• P250

• P200

• Not in the choices