Exam 4: Cost Management Systems and an Introduction to Activity-Based Costing

A manufacturer has three classes of inventories: direct materials, work-in-process, and merchandise inventory.

Companies must assign all production costs and only production costs for external financial reporting purposes.

Costs can denote an asset and an expense.

Cost assignment is the tracing or allocating of costs to one or more cost objectives, such as activities and departments.

Product costs appear on either the balance sheet or income statement, but not both.

A system that identifies how management's decisions affect cost

Costs that can be traced specifically and exclusively to the manufactured goods in an economically feasible way

_____ is not a type of cost allocation.

Collecting costs by a "natural" classification

The necessary cost of an activity that cannot be eliminated without affecting a product's value to the customer

Cost of goods manufactured is computed as _____.

Forklift operators and factory security guards are examples of direct-labor costs.

The following information was extracted from the accounting records of Petunia Manufacturing Company: Direct materials purchased \ 95,000 Direct material s used 76,000 Direct manufacturing labor costs 10,000 Indirect manufacturing labor costs 12,000 Sales sal aries 33,000 Other factory expenses 22,000 Selling and administrative expenses 40,000 The cost of goods manufactured is _____.

Products or services are the final cost objectives.

Companies do not make strategic and operational control decisions simultaneously.

The best cost driver for janitorial services is square feet.

Square feet is the best cost driver for depreciation of heating and air conditioning equipment.

Goods fully completed but not yet sold

_____ is not a primary purpose of a cost management system.

For a merchandising company, factory insurance and depreciation are product costs.