Cost Concepts

Property taxes and insurance premiums paid on a factory building are examples of manufacturing overhead

• TRUE

• FALSE

Variable costs are costs whose per unit costs vary as the activity level rises and falls

• TRUE

• FALSE

Advertising costs are considered product costs for external financial reports since they are incurred in order to promote specific products

• TRUE

• FALSE

Wages paid to a labor who was engaged in production activities can be termed as indirect cost

• TRUE

• FALSE

Indirect material used in production is classified as factory overhead

• TRUE

• FALSE

Prime cost includes direct materials and direct labor

• TRUE

• FALSE

Managerial accounting places less emphasis on precision and more emphasis on flexibility and relevance of data than does financial accounting

• TRUE

• FALSE

In external financial reports, factory utilities costs incurred may be included in an asset account on the balance sheet at the end of the period

• TRUE

• FALSE

Manufacturing overhead combined with direct materials is known as conversion cost

• TRUE

• FALSE

Variable costs

• are always indirect costs

• include most personnel costs and depreciation on machinery

• can always be traced directly to the cost object

• increase in total when the actual level of activity increases