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

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

Future costs can never be sunk costs.

• True

• False

These are all the costs that are expensed on the income statement when they are incurred.

• Product costs

• Operating expenses

• Period costs

• Manufacturing costs

• Non-manufacturing costs

If we need to order 1,000 units, we will have higher total ordering cost if we order 200 units every time compared to if we order 250 units every time.

• True

• False

It is possible for both fixed cost and variable cost to be combined in only one cost.

• True

• False

The cost raw materials is recorded as product cost when:

• the raw materials are bought.

• the raw materials are sold.

• the raw materials are processed even if it is not yet finished.

• the finished goods are available.

• the finished goods are sold.