section 11

Question 1

What are the 2 kinds of operating costs?

Answer 1

—product

—period

Question 2

product cost

Answer 2

the cost of inventory purchased for resale

Question 3

period costs

Answer 3

the selling and admin costs

Question 4

product costs (manufacturing)

Answer 4

all costs of making the product to be sold by the business

Question 5

manufacturing product costs typically include

Answer 5

—direct material costs
—direct labor costs
—manufacturing overhead costs

Question 6

production & factory maintenance supplies are classified as

Answer 6

indirect material costs

Question 7

indirect labor costs (4)

Answer 7

—manufacturing supervisors
—quality control inspectors
—equipment and maintenance personnel
—designers and engineers

Question 8

other overhead costs (5)

Answer 8

—rent
—depreciation
—utilities
—insurance
—taxes

Question 9

manufacturing product costs are accounted for as

Answer 9

part of the cost of INVENTORY
until the product is sold, then the costs are expensed as Cost of Goods Sold

Question 10

how many phases or categories of inventory in a manufacturing business?

Answer 10

3

Question 11

What are the 3 phases of inventory?

Answer 11

—Raw Materials Inventory
—Work in Process Inventory (WIP)
—Finished Goods Inventory

Question 12

What are the 3 categories of cost?

Answer 12

direct material
direct labor
manufacturing overhead

Question 13

When are the costs of manufacturing transferred to COGS?

Answer 13

upon the sale of a finished good

Question 14

T/F both direct and indirect materials are included in raw materials inventory

Answer 14

true

Question 15

All businesses have 2 kinds of costs:

Answer 15

1. product
2. period

Question 16

The balance sheet of a manufacturing business will reflect inventory which includes

Answer 16

—finished goods
—work in progress/process
—raw materials

Question 17

Period costs for a manufacturing business would be included in

Answer 17

selling and admin expenses

Question 18

Factory utility costs should be included as part of

Answer 18

product cost
—other overhead
—work in process

Question 19

the salary costs of manufacturing supervisors would be included in

Answer 19

manufacturing overhead costs

Question 20

indirect material costs are included in

Answer 20

MOC

Question 21

a service business has what kinds of costs

Answer 21

product & period

Question 22

What costs are found in a merchandising business?

Answer 22

period costs
product costs

Question 23

Direct labor costs are incurred in what type of business?

Answer 23

manufacturing

Question 24

product costs of a merchandising business include

Answer 24

all costs of inventory purchases

Question 25

T/F admin office supplies are a product cost

Answer 25

false

Question 26

managerial accounting info tends to be different from business to business based on

Answer 26

management needs

Question 27

the classification of cost accountant salary depends on

Answer 27

whether the job would be eliminated if the company purchased rather than manufactured its product

Question 28

Product costs are included in COGS when

Answer 28

finished goods are sold to customers

Question 29

Direct labor costs are always reflected as expenses

Answer 29

when the product is actually sold

Question 30

product costs of a MERCHANDISING business include

Answer 30

the cost of inventory purchases freight costs associated with inventory purchases from suppliers

Question 31

period costs are also known as

Answer 31

operating expenses or selling and admin expenses

Question 32

product cost is the cost of the

Answer 32

inventory that is purchased for resale

Question 33

the outflow of inventory is reflected as

Answer 33

COGS

Question 34

when inventory is sold, the costs becomes an

Answer 34

expense

Question 35

T/F a product cost is the same as an expense

Answer 35

False products costs are first assets, then expenses when sold

Question 36

T/F period costs are first assets

Answer 36

False period costs are expenses

Question 37

in a merchandising business, selling and admin expenses are found

Answer 37

on the income statement under operating expenses

Question 38

Inventory is reflected on a

Answer 38

balance sheet under current assets

Question 39

COGS is reflected on the

Answer 39

income statement

Question 40

gross margin is

Answer 40

revenues—COGS