Cost Classification

The cost of the cushions that are used to manufacture sofas is best described as a:

• manufacturing overhead cost.                              

• period cost.

• variable cost

• conversion cost.

A security guard's wages at a factory would be an example of:

• 
• 
• 
• 

Manufacturing overhead includes:

• all direct material, direct labor and administrative costs.

• all manufacturing costs except direct labor.

• all manufacturing costs except direct labor and direct materials.

• all selling and administrative costs.

Which of the following is NOT a period cost?

• Monthly depreciation of the equipment in a fitness room used by factory workers.

• Salary of a billing clerk.

• Insurance on a company showroom, where current and potential customers can view new products.

• Cost of a seminar concerning tax law updates that was attended by the company's controller.

The annual insurance premium for the factory building would be a:

• fixed cost, period cost, and indirect cost with regard to units of product.

• fixed cost, product cost, and direct cost with regard to units of product.

• variable cost, product cost, direct cost with regard to units of product.

• fixed cost, product cost, indirect cost with regard to units of product.

Direct materials and direct labor are

• period costs.

• product costs.

• overhead costs.

• indirect costs.

If direct materials for one unit of product are P9.00, direct labor for one hour is P15.00,

manufacturing overhead costs are P5.00 per direct labor hour, and one-fourth hour of

direct labor is required to produce one unit of product, how much are the conversion

costs for one unit of product?

• P5.00.

• P2.50.

• P20.00.

• P15.00.

The idle time cost of assembly line workers in a manufacturing company is usually included as a part of:

• selling cost.

• direct labor cost.

• administrative cost.

• manufacturing overhead cost.

Indirect materials, indirect labor, and maintenance on factory facilities are all included in

manufacturing overhead.

• True

• False

Selling and administrative expenses are product costs.

• True

• False