Question

1. Which of the following is an example of a possible cost object? a. a product b. a customer c. a department d. All of these could be possible cost objects. 2. Which of the following is a product cost? a. advertising expenditures b. insurance on the office buildings c. depreciation of the salesmen's cars d. depreciation of the production facilities 3. The wages of a production equipment operator would be classified as a. direct materials. b. direct labour c. manufacturing overhead. d. selling and administrative costs. 4. In a traditional manufacturing company, product costs include a. direct materials only. b. direct materials, direct labour, and factory overhead. c. direct materials and direct labour only. d. direct labour only

Answer 1

B C D E F G H I J Possible Cost Object is the product or the department or the customers for which the cost is accumulated. In case of product, direct materials, direct labour and other related expeneses would be the cost object. In case of a customers, direct cost, selling cost, transportation cost would be the cost object. And for department, labour working would constitute the cost object. The correct answer is d, where all of these could be possible cost objects. Fm 7 Product Cost is the cost which is attributable to the product directly, and incurred exclusively for its production. Advertising expenditure, Insurance on the office buildings and depreciation of the salesman cars are the cost which are not direcly related to the product, hence would not be part of product cost. 2 The correct answer is d, depreciation of the production facilities. Wages of a production equipment operator would be part of direct labour and not others. 3 The correct answer is b. 10 11 12 13 In the traditional manufacturing company, products cost include, direct materials, direct labour and factory overhead. 4 The correct answer is b 15.