Chapter 1

All of a company's depreciation, property taxes, and insurance premiums are considered manufacturing overhead.

False

Selling costs include _______ a. sales commissions b. sales salaries c. administrative salaries d. advertising

administrative salaries

Period costs ___________. a. are expensed in the period incurred b. are included as part of the cost of goods c. flow through the inventory accounts d. include all costs that are not product costs

are expensed in the period incurred include all costs that are not product costs

Administrative costs include _________ a. factory maintenance workers' wages and factory supervisors' salaries b. executive compensation and public relations costs c. shipping costs and sales commissions d. sales commissions and factory supervisors' salaries

executive compensation and public relations costs

Within the relevant range of activity, __________ costs remain constant in total. Multiple choice question.

fixed

Product costs flow through the inventory accounts until the goods are sold, at which time they are matched against sales on the _________ a. income statement b. statement of cash flows c. balance sheet

income statement

Minor items such as nails and glue are usually considered to be ______ a. indirect materials b. administrative costs c. direct materials d. selling costs

indirect materials

Manufacturing overhead costs include ___________. a. direct materials, administrative taxes and insurance, and sales commissions b. indirect materials, factory supervisors' salaries, and factory depreciation c. administrative taxes and insurance, sales commissions, and factory assembly workers' wages d. direct materials, sales commissions, and factory assembly workers' wages

indirect materials, factory supervisors' salaries, and factory depreciation

Factory materials, such as cleaning supplies, that are not components of finished products are classified as ______. a. administrative costs b. direct materials c. manufacturing overhead d. period costs

manufacturing overhead

The accrual concept that costs incurred to generate a revenue are expensed in the same period the revenue is recognized is known as the __________ principle

matching

Cost behavior ___________ . a. refers to how a cost will change as activity level changes b. categorizes costs as fixed, mixed and variable c. is the relative proportion of each type of cost in an organization d. is a detailed analysis technique used to determine whether costs are fixed or variable

refers to how a cost will change as activity level changes categorizes costs as fixed, mixed and variable

Period costs are always expensed on the income statement in the period in which _________. a. they are incurred b. the related goods are sold c. the cash for the expense changes hands

they are incurred

Cost of goods sold for a merchandising company, direct materials and commissions are all examples of ____________ costs.

variable

How individual costs react to changes in activity level is referred to as cost ___________

behavior

Product costs are also called _______________ costs.

inventoriable or manufacturing