Comprehensive Cost Method Concepts

The video tutorial introduces the full cost method, a widely used approach in production economies to determine the complete cost of a product or service. Unlike the partial cost method, it does not differentiate between variable and fixed costs. The method involves three main steps: assigning direct costs, distributing indirect costs, and imputing these costs to each product or service. An example of calculating the full cost for manufacturing car doors is provided to illustrate the method's application.

What is the primary goal of the comprehensive cost method?

• To reduce the overall expenses of a company

• To identify the variable costs of production

• To calculate the complete cost of a product or service

• To determine the selling price of a product

Which costs are included in the comprehensive cost method?

• Only indirect costs

• Only direct costs

• Neither direct nor indirect costs

• Both direct and indirect costs

How does the comprehensive cost method differ from the partial cost method?

• It excludes all indirect costs

• It only includes fixed costs

• It only includes variable costs

• It includes both variable and fixed costs

What is the first step in the comprehensive cost method?

• Imputation of indirect costs

• Allocation of direct costs

• Repartition of indirect costs

• Calculation of total revenue

What is the second step in the comprehensive cost method?

• Imputation of indirect costs

• Calculation of total revenue

• Allocation of direct costs

• Repartition of indirect costs

What is the third step in the comprehensive cost method?

• Repartition of indirect costs

• Calculation of total revenue

• Allocation of direct costs

• Imputation of indirect costs

In the example provided, what is the manufacturer trying to verify?

• The cost of raw materials

• The selling price of the car door

• The profitability of manufacturing car doors

• The total revenue from car doors

What is the purpose of calculating the comprehensive cost of a car door?

• To reduce production costs

• To increase market share

• To determine the selling price

• To verify the profitability

Which of the following is NOT a step in the comprehensive cost method?

• Allocation of direct costs

• Repartition of indirect costs

• Imputation of indirect costs

• Calculation of total revenue