Cost Classification

A firm has to pay a 0.50$ per unit royalty of a device which it manufactures and sells.

How would royalty charge be classified in the firm's accounts?

• selling expenses

• direct expense

• production overhead

• administrative overhead

Which of the following can be included when valuing inventory?

i direct material

ii direct labour

iii administrative

iv production

• i, ii and iv

• i,ii and iii

• ii, iii and iv

• i, iii and iv

Which of the following is usually classified as step cost?

• supervisor's wage

• raw materials

• rates

• telephone

40. Which of the following is NOT a cost object?

• a cost center

• a customer

• a manager

• a product

Which is the following describes depreciation of fixtures?

• Not a cash cost so is ignored in the cost accounts

• part of overhead

• part of prime cost

• is a cash outflow

Which TWO of the following are included in the prime cost of a product?

• direct material

• direct labor

• administrative cost

• production overheads