COSTING METHOD: MATERIAL & LABOUR

What is the FIFO method used for?

What is the advantage of a time-based remuneration scheme?

• Easy for employees to understand

• Strong incentive to increase production

What is the advantage of a perpetual inventory system?

• Avoiding disruption caused by annual stocktaking

• Revealing deficiencies and losses soon

What is direct materials cost?

• The cost of material that can be easily identified with the unit of production

• The cost of material that is not directly traceable to the product

What are direct labour costs?

• The wages, benefits, and insurance paid to employees directly involved in manufacturing

• The labour of those not directly involved in production

________ are not directly connected to the production of the finished goods.

The total of the direct materials, direct labor, and manufacturing overhead costs associated with producing a specific product or batch of products is called _______ cost.

• overhead

• production

• prime

• total

All the following are examples of production cost EXCEPT ___________.

• Factory rent and rates

• Wages of machine operators

• Canteen expenses for office workers

• Production supervisor's salary

Match the following costs based on their function:

• Research and development cost

• Interest on loan

• Finance cost

• Salesman commissions

• Selling cost

• Depreciation of machine

• Distribution cost

• Petrol for delivery

• Production cost

• Materials used in lab research

Royalties paid for units sold of a product are classified as _______ cost (function).