Chapter 1 Managerial Accounting and
Cost Concepts Questions And Answers
Raw Materials - ANS materials that go into the final product; the finished product of one
company can become the raw materials of another company; MAY INCLUDE DIRECT AND
INDIRECT MATERIALS
Direct Materials - ANS those materials that become a integral part of the finished product
and whose cost can be conveniently traced to the finished products: ex. seats purchased from a
subcontractor to install in it airline
Indirect Materials - ANS are includes as part of manufacturing overhead. ex. glue to make
a chair
Direct Labor - ANS labor that can be easily traced to individual units of product
Indirect Labor - ANS labor cost that cannot be physically traced to particular products;
treated as manufacturing overhead.
ex. janitors, supervisors, night security
*impossible to accurately trace their cost to specific units of product*
Manufacturing Overhead - ANS includes all manufacturing costs except direct materials
and direct labor.
Elements of manufacturing costs - ANS 1. Direct materials
2. direct labor
3. manufacturing overhead
Manufacturing Costs - ANS 1. Selling costs
2. admin. costs.
Selling costs - ANS include all costs that are incurred to secure customer orders and get
the finished product.
ex. advertising, sales travel, sales commissions
administrative costs - ANS include all costs associated with the general management of an
organization rather than with man. or selling.
ex. compensation, general accounting, public relations,
Cost Concepts Questions And Answers
Raw Materials - ANS materials that go into the final product; the finished product of one
company can become the raw materials of another company; MAY INCLUDE DIRECT AND
INDIRECT MATERIALS
Direct Materials - ANS those materials that become a integral part of the finished product
and whose cost can be conveniently traced to the finished products: ex. seats purchased from a
subcontractor to install in it airline
Indirect Materials - ANS are includes as part of manufacturing overhead. ex. glue to make
a chair
Direct Labor - ANS labor that can be easily traced to individual units of product
Indirect Labor - ANS labor cost that cannot be physically traced to particular products;
treated as manufacturing overhead.
ex. janitors, supervisors, night security
*impossible to accurately trace their cost to specific units of product*
Manufacturing Overhead - ANS includes all manufacturing costs except direct materials
and direct labor.
Elements of manufacturing costs - ANS 1. Direct materials
2. direct labor
3. manufacturing overhead
Manufacturing Costs - ANS 1. Selling costs
2. admin. costs.
Selling costs - ANS include all costs that are incurred to secure customer orders and get
the finished product.
ex. advertising, sales travel, sales commissions
administrative costs - ANS include all costs associated with the general management of an
organization rather than with man. or selling.
ex. compensation, general accounting, public relations,
