Cost Classifications Quiz

What does indirect labor refer to in a manufacturing facility?

• Employees whose costs can be traced to specific products.

• Employees such as janitors and supervisors.

• Employees who directly manufacture products.

• Employees who are not involved in the manufacturing process.

What is included in manufacturing overhead?

• Direct materials and direct labor.

• Only direct costs associated with products.

• Indirect costs associated with operating the factory.

• Costs that can be traced to finished products.

What are product costs?

• Costs that are incurred to generate revenue.

• Costs that are not included in the cost of goods sold.

• Costs that attach to a unit of product as it is manufactured.

• Costs that are always recognized as expenses immediately.

What are period costs?

• Costs that are included in product costs.

• Costs that are not product costs and are expensed in the period incurred.

• Costs that can be traced to specific products.

• Costs that are always direct costs.

What is the matching principle in financial accounting?

• Costs should be recognized as expenses in the period incurred.

• Costs should be matched with the revenue they generate.

• Costs should be recorded as assets until sold.

• Costs should be expensed immediately when paid.

What is the classification not used to predict cost behavior?

• Variable costs

• Fixed costs

• Mixed costs

• Predetermined cost

What is a variable cost?

• A cost that remains constant

• A cost that varies in direct proportion to changes in activity

• A cost that is fixed regardless of activity

What is the average fixed cost per guest when Grace hosts a party for 1,000 guests for Php 2,400,000?

• Php 2000

• Php 2400

• Php 240

• Answer not given

What happens to the average fixed cost per unit as the level of activity increases?

• It increases

• It decreases

• It remains constant

• Answer not given

What is the behavior of a fixed cost?

• It varies with activity

• It remains constant regardless of activity

• It decreases with activity