Introduction to Cost Accounting

Prime Cost includes:

• All direct costs

• All indirect costs

• Direct material and all labor costs

• Conversion cost and factory overheads

In cost accounting, fixed costs are said to remain fixed for a (a)   .

The difference between factory cost and cost of production is:

• Raw materials consumed

• Office and administration overheads

• Selling and distribution overheads

• Cost of goods sold

Matters of pure financial nature are outside the purview of cost accounting. Such items are:

• Office rent & rates

• Goodwill written off

• Interest on debentures

• Advance income tax paid

• Director's fees

The manufacturing overheads include:

• Only indirect labor cost

• Indirect labor and overheads costs

• Indirect material, labor and overheads costs

• Direct material cost

All cost are controllable.

• Yes, depending on the level of management and time frame.

• No, some costs will always be uncontrollable.

The total cost of production includes:

• Only variable costs

• Fixed and variable costs

• Only fixed costs

• Direct costs only

Which of the following is not considered a part of manufacturing overhead?

• Utilities for the production facility

• Direct labor costs

• Indirect materials

• Depreciation on factory equipment

Conversion costs are defined as:

• Direct materials plus direct labor

• Only fixed manufacturing costs

• All costs incurred in production

• Direct labor plus manufacturing overhead

Which of the following costs is considered a variable cost?

• Depreciation on factory equipment

• Direct materials used in production

• Insurance for the production facility

• Salaries of permanent staff