CHAPTER 18: MANAGERIAL ACCOUNTING QUESTIONS AND ANSWERS WITH SOLUTIONS 2024

CHAPTER 18: MANAGERIAL
ACCOUNTING QUESTIONS AND
ANSWERS WITH SOLUTIONS 2024
Product costs - ANSWER Capitalized as inventory because they are necessary and integral to finished
products

Includes:

-Direct materials

-Direct labor

-Factory overhead



Direct materials - ANSWER The cost of materials that physically make up the unit



Direct labor - ANSWER The cost of employing workers that physically work on the unit



Factory Overhead - ANSWER All other factory costs not included in direct materials and direct labor

Includes:

-Indirect materials (not attached to unit, or insignificant in cost)

-Indirect labor (technicians, supervisors, etc.)

-Occupancy costs



Prime costs - ANSWER Costs directly associated with manufacture of finished goods

Direct materials + Direct labor



Conversion costs - ANSWER Costs incurred in the process of converting raw materials to finished goods

Direct labor + Factory Overhead



Period Costs - ANSWER Expenses during the time that product is finished. Generally not related to
manufacturing process.

Selling, General and Administrative