Cost classification recap

What are the three main components that make up product cost?

• Materials, Labour, Selling
• Overhead, Labour, Distribution
• Materials, Labour, Overhead
• Materials, Distribution, Overhead

How can costs be classified in terms of behaviour?

• By colour, shape, size

• By element, nature, behaviour

• By weight, height, volume
• By product, process, function

How can costs be coded for easy identification?

• Using random letters
• Using different fonts
• Using numeric, alphabetic, alphanumeric coding systems
• Using only numbers

What is the difference between product costs and period costs?

• Product costs are for a specific time period, period costs are for specific products
• Product costs are fixed, period costs are variable
• Product costs are associated with production activities, period costs are associated with non-production activities
• Product costs are directly traceable to a product, period costs are not

What is one way to understand cost behaviour at different levels of output?

• Ignore changes in output level
• Analyse historical data

• Experiment with different costs
• Estimate costs based on intuition

What are costs that can be classified by their function?

• Variable costs, Fixed costs
• Direct costs, Indirect costs
• Manufacturing costs, Non-manufacturing costs
• Production costs, Distribution costs

How can costs be classified according to their nature?

• By weight, volume, size
• By element, nature, behaviour
• By function, activity, process
• By material, labour, overhead

Which coding system can be used to make costs easily identifiable?

• Using letters and symbols
• Using random numbers
• Using only numerals
• Using a combination of numbers and letters

What is the main difference between materials, labour, and overhead in terms of product cost?

• Materials are variable costs, labour are fixed costs, overhead are period costs
• Materials are used in production, labour is for distribution, overhead is for marketing

• Materials are raw inputs, labour is direct production, overhead supports production

• Materials are for manufacturing, labour is for sales, overhead is for finance