Question

e1 (Chapters 2-3) Open with Matching Match each cost term with its proper meaning 1) Manufacturing overhead a) executive, organizational, and clerical costs costs 2) Selling costs b) beginning inventory+purchases-ending inventory 3) Administrative costs c) costs involved in acquiring or making a product 4) Direct cost d) an increase in costs between two alternatives e) cost easily and conveniently traced to a specified cost object ) changes in direct proportion to changes in activity (constant per g) cost incurred and unchangeable by any future decision or event h) taken directly to the income statement when incurred i) potential benefit given up when one alternative is selected over 5) Opportunity cost 6) Sunk costs unit) 7) Product costs 8) Period costs 9) Fixed cost another 10) Costs of goods sold ) remains constant through changes in activity within the relevant range Page 1 3Q + 11) Variable cost s and deliver goods or services

Answer 1

	Match the following
Cost term	Proper meaning
1) manufacturing overhead	l) manufacturing costs-direct materials-direct labour
2) seeking costs	k) incurred to secure customer orders and deliver goods or services
3) administrative costs	a) executive, organisational and clerical costs
4) direct cost	e) cost easily and conveniently traced to a specified cost object
5) opportunity cost	i) potential benefit given up when one alternative is selected over another
6) sunk costs	g) cost incurred and unchangeable by any future decision or event
7) product costs	c) cost involved in acquiring or making a product
8) period costs	h) taken directly to the income statement
9) fixed cost	j) remains constant through changes in activity within the relevant range
10) cost of goods sold	b) beginning inventory+ purchases- ending inventory
11) variable cost	f) changes in direct proportion to changes in activity (constant per unit)
12) differential cost	d) an increase in cost between two alternatives

Fill in the blanks

1. Raw materials inventory-balance sheet
2. Work in progress inventory- balance sheet
3. Finished goods inventory-balance sheet
4. Cost of goods sold-income statement
5. Selling expenses- income statement

The items in 1,2 and 3 are closing balances and are also assets and hence they will be shown in the balance sheet.

The items in 4 and 5 are expenses and will be charged to the income statement.