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

(a)   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

• Production cost

• Depreciation of machine

• Distribution cost

• Salesman commissions

• Finance cost

• Materials used in lab research

• Selling cost

• Petrol for delivery

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