Question

1-1 What are the three major types of product costs in a manufacturing company? 1-2 Define the following: (a) direct materials, (b) indirect materials, (c) direct labor, (d) indirect labor, and (e) manufacturing overhead. Explain the difference between a product cost and a period 1-3 cost. 1-4 Distinguish between (a) a variable cost, (b) a fixed cost, and (c) a mixed cost. 1-5 What effect does an increase in the activity level have on- a. Unit fixed costs ? b. Unit variable costs? c. Total fixed costs? d. Total variable costs? 1–6 Define the following terms: (a) cost behavior and (b) relevant range. 1-7 What is meant by an activity base when dealing with variable costs? Give several examples of activity bases. 1–8 Managers often assume a strictly linear relationship between

Answer 1

1) direct material, direct labour, factory overhead,consumed supplies during production

2) a) direct material = materials which are identified in final goods

b)in direct material = materials which are used in product but cannot be identified in final product

C) direct labour = labour involved in production rather than administration

D) indirect labour = labour involved in administration etc

E) manufacturing overhead = indirect factory related cost used in production

3) product cost is cost which is initially recognised in inventory ex- direct material

Period cost = costs which are recognised periodically example = all fixed costs

4) variable cost = costs changes with production volume is called variable cost

Fixed cost = costs which do not change with production volume is called fixed cost

Mixed cost =costs which contain both fixed and variable element

5)unit fixed cost decrease with activity level

Unit variable cost does not change with activity level

Total fixed cost do not changes with activity level

Total variable cost increases with increase in activity level

6)cost behaviour =how costs will change with change in activity

Relavent range = activities which has particular bounds like minimum and maximum

7)which identifies activities in organisation and assignes costs to all products

According to HOMEWORKLIB POLICY when multiple questions are asked in a single question first four sub questions should be answered so kindly requesting you to post next 7 questions as different question