MANAGEMENT AND COST ACCOUNTING
ACTUAL TEST QUESTIONS AND SOLUTIONS
COMPREHENSIVE REVIEW PACKAGE
●● What are the purposes of cost classification?
Answer: Assigning costs to cost objects, accounting for costs in
manufacturing, preparing financial statements, predicting cost behavior,
and making decisions.
●● Define a cost object.
Answer: Anything for which cost data is desired, such as a product, job,
or organization unit.
●● What are direct costs?
Answer: Costs that can be easily and conveniently traced to a unit of
product or other cost object.
●● Provide an example of a direct cost.
Answer: Factory manager's salary for the manufacturing department.
●● What are indirect costs?
Answer: Costs that cannot be easily and conveniently traced to a unit of
product or other cost object.
, ●● Give an example of an indirect cost.
Answer: Factory manager's salary for a particular product.
●● What are common costs?
Answer: Indirect costs incurred to support multiple cost objects that
cannot be traced to any individual cost object.
●● What is the classification of costs based on their traceability?
Answer: Direct costs and indirect costs.
●● What are the three basic manufacturing cost categories?
Answer: Direct materials, direct labor, and manufacturing overhead.
●● Define direct materials.
Answer: Raw materials that become an integral part of the product and
can be conveniently traced directly to it.
●● What is direct labor?
Answer: Labor costs that can be easily traced to individual units of
product, also known as touch labor.
●● What does manufacturing overhead include?
ACTUAL TEST QUESTIONS AND SOLUTIONS
COMPREHENSIVE REVIEW PACKAGE
●● What are the purposes of cost classification?
Answer: Assigning costs to cost objects, accounting for costs in
manufacturing, preparing financial statements, predicting cost behavior,
and making decisions.
●● Define a cost object.
Answer: Anything for which cost data is desired, such as a product, job,
or organization unit.
●● What are direct costs?
Answer: Costs that can be easily and conveniently traced to a unit of
product or other cost object.
●● Provide an example of a direct cost.
Answer: Factory manager's salary for the manufacturing department.
●● What are indirect costs?
Answer: Costs that cannot be easily and conveniently traced to a unit of
product or other cost object.
, ●● Give an example of an indirect cost.
Answer: Factory manager's salary for a particular product.
●● What are common costs?
Answer: Indirect costs incurred to support multiple cost objects that
cannot be traced to any individual cost object.
●● What is the classification of costs based on their traceability?
Answer: Direct costs and indirect costs.
●● What are the three basic manufacturing cost categories?
Answer: Direct materials, direct labor, and manufacturing overhead.
●● Define direct materials.
Answer: Raw materials that become an integral part of the product and
can be conveniently traced directly to it.
●● What is direct labor?
Answer: Labor costs that can be easily traced to individual units of
product, also known as touch labor.
●● What does manufacturing overhead include?
