Product Costing Systems (1-10)

1. Which of the following costs are treated as period costs under direct costing?

(a) Only direct cost

(b) Fixed selling and administrative expenses

(c) Fixed manufacturing overhead

(d) Both fixed manufacturing overhead and fixed selling and administrative expenses

Correct! Wrong!

2. Materials requisitioned from the storeroom included Rs. 1,000 of direct materials and Rs. 2,000 of indirect materials. Manufacturing overhead should be debited for what amount to record the transaction?

(a) Rs. 1,000

(b) Rs. 2,000

(c) Rs. 3,000

(d) Rs. 0

Correct! Wrong!

3. At what point are manufacturing costs expensed?

(a) When finished goods are sold

(b) When they are transferred out of Work in Process

(c) When they are entered into production

(d) At the end of the accounting period

Correct! Wrong!

4. Costs a company incurs that are not product costs are referred to as?

(a) Contribution costs

(b) Period costs

(c) Accrued costs

(d) None of the above

Correct! Wrong!

5. Which of the following accounts does not appear on the Balance Sheet?

(a) Cost of Goods Sold

(b) Raw Materials

(c) Work in Process

(d) Finished Goods

Correct! Wrong!

6. The three components of product cost include?

(a) Direct material, indirect material, and labor

(b) Material, direct labor, and indirect labor

(c) Direct material, direct labor, and overhead

(d) Indirect material, indirect labor, and overhead

Correct! Wrong!

7. Which of the following is not classified as a fixed product cost?

(a) Machine depreciation

(b) Electricity

(c) Factory rent

(d) Production manager’s salary

Correct! Wrong!

8. When direct materials are used, which of the following accounts increases?

(a) Raw Materials Inventory

(b) Work in Process Inventory

(c) Finished Goods Inventory

(d) Manufacturing Overhead

Correct! Wrong!

9. Finished Goods Inventory includes which of the following costs?

(a) Direct material

(b) Direct labor

(c) Overhead

(d) All of the above

Correct! Wrong!

10. When a product is sold to a customer, which of the following inventory accounts is increased or decreased?

(a) Work in Process is decreased and Finished Goods is increased

(b) Finished Goods is increased and Cost of Goods Sold is decreased

(c) Finished Goods is decreased and Cost of Goods Sold is increased

(d) Raw Materials is decreased and Cost of Goods Sold is increased

Correct! Wrong!

1. Which of the following costs are treated as period costs under direct costing?

2. Materials requisitioned from the storeroom included Rs. 1,000 of direct materials and Rs. 2,000 of indirect materials. Manufacturing overhead should be debited for what amount to record the transaction?

3. At what point are manufacturing costs expensed?

4. Costs a company incurs that are not product costs are referred to as?

5. Which of the following accounts does not appear on the Balance Sheet?

6. The three components of product cost include?

7. Which of the following is not classified as a fixed product cost?

8. When direct materials are used, which of the following accounts increases?

9. Finished Goods Inventory includes which of the following costs?

10. When a product is sold to a customer, which of the following inventory accounts is increased or decreased?

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