ACC 312 EXAM 1 STUDY GUIDE
Product Costs - Answers - Associated with goods for sale until time period during which
the products are sold; associated with getting a product ready for sale
Turn into COGS
Period Costs - Answers - Expensed during the time period in which they're incurred;
related to marketing/selling/administration
Turn into Operating Expenses
Raw Materials - Answers - Materials waiting to be processed
Work in Process - Answers - Materials already processed, not yet complete
Finish Goods - Answers - Completed and awaiting sale
Direct Material - Answers - Cost of raw material used to make, and that can be
conveniently traced, to finished product
Ex) steel used to make car
Direct Labor - Answers - Cost of salaries/wages/fringe benefits for personnel who work
directly on manufactured products
Ex) wages paid to an automobile assembly worker
Manufacturing overhead - Answers - All other manufacturing costs
Indirect material, indirect labor, other costs
Direct Costs - Answers - Can be easily/conveniently traced to a product or department
Ex) cost of paint in paint dept of auto assembly plant
Indirect Costs - Answers - Must be allocated in order to be assigned to a product or
department--overhead is ALWAYS indirect
Ex) cost of national advertising for airline is indirect to a particular flight
Sunk Costs - Answers - Incurred in the past and cannot be changed by any decision
made now or in the future
Should NOT be considered in decisions
Cost Classifications (3) - Answers - Cost Behavior
Total Variable Costs
Total Fixed Costs
Cost behavior - Answers - How a cost will react to changes in level of business activity
Product Costs - Answers - Associated with goods for sale until time period during which
the products are sold; associated with getting a product ready for sale
Turn into COGS
Period Costs - Answers - Expensed during the time period in which they're incurred;
related to marketing/selling/administration
Turn into Operating Expenses
Raw Materials - Answers - Materials waiting to be processed
Work in Process - Answers - Materials already processed, not yet complete
Finish Goods - Answers - Completed and awaiting sale
Direct Material - Answers - Cost of raw material used to make, and that can be
conveniently traced, to finished product
Ex) steel used to make car
Direct Labor - Answers - Cost of salaries/wages/fringe benefits for personnel who work
directly on manufactured products
Ex) wages paid to an automobile assembly worker
Manufacturing overhead - Answers - All other manufacturing costs
Indirect material, indirect labor, other costs
Direct Costs - Answers - Can be easily/conveniently traced to a product or department
Ex) cost of paint in paint dept of auto assembly plant
Indirect Costs - Answers - Must be allocated in order to be assigned to a product or
department--overhead is ALWAYS indirect
Ex) cost of national advertising for airline is indirect to a particular flight
Sunk Costs - Answers - Incurred in the past and cannot be changed by any decision
made now or in the future
Should NOT be considered in decisions
Cost Classifications (3) - Answers - Cost Behavior
Total Variable Costs
Total Fixed Costs
Cost behavior - Answers - How a cost will react to changes in level of business activity
