Cost classification Review Quiz

All costs related to the manufacturing function in a company are

• prime costs
• period costs
• manufacturing overhead costs
• product costs

Which of the following costs would be considered production overhead in the production of bread?

• Flour
• Electricity
• Yeast
• Sugar

Prime costs consist of______

• direct labour
• direct labour+direct expenses
• direct materials+direct expenses
• direct materials+direct labour+direct expenses

For a manufacturing company, which of the following is a period, but not a product cost?

• Salary of accounts executive
• Salary of factory supervisors
• Rental cost of factory building
• Depreciation on factory machineries

Conversion costs do not include

• direct labour
• factory utilities
• direct materials
• property taxes on factory building

A cost that remains constant in total but varies on a per-unit basis with changes in activity is called a

• fixed cost
• period cost
• product cost
• variable cost

The direct materials and indirect materials used in the production of a motorcycle, combined with the direct labour costs and manufacturing overhead involved would be called as ______ costs

• direct
• period
• product
• conversion

Which of the following is most likely to be a variable cost?

• Property insurance premiums.

• Interest on bonded indebtedness.

• Rental payments on IBM requirement.

• Payment for raw materials purchased from Company Y.

Are costs that vary in total directly and proportionately with changes in the activity level.

• Fixed Cost

• Variable Cost

• Mixed Cost

• Irrelevant Cost

Cost that cannot be changed by any present and future decision, therefore irrelevant cost.

• Variable Cost

• Fixed Cost

• Sunk Cost

• Relevant Cost