Chapter 1 Review

A factory supervisor's salary would be classified as an indirect cost with respect to a unit of product.

• True

• False

A cost can be direct or indirect. The classification can change if the cost object changes.

• True

• False

Selling costs are...

• Indirect

• Direct

• Indirect or Direct

• Neither Indirect nor Direct

The sum of all manufacturing costs EXCEPT for direct materials and direct labor is called...

• Manufacturing Overhead

• Depreciation

• Selling Expense

• Period Cost

Administrative cost can be any of the following EXCEPT...

• Indirect Costs

• Direct Costs

• Period Costs

• Product Costs

Depreciation is always considered a period cost for external financial reporting purposes in a manufacturing company.

• True

• False

Advertising is not considered as a product cost even if it promotes a specific product.

• True

• False

Indirect costs, such as manufacturing overhead, are variable costs.

• True

• False

A fixed cost is a cost whose cost per unit varies as the activity level rises and falls.

• True

• False

The variable cost per unit depends on how many units are produced.

• True

• False