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1. An example of a cost object is: a bicycle an individual fast food franchise the produce department of a grocery store All of the above are correct. 2. Nonmanufacturing costs: include only fixed costs seldom influence financial success or failure include the cost of selling, distribution, and after-sales costs for customers are considered by GAAP to be an element of product costs 3. Product costs for a wool carpet: include the cost of television advertising include only direct materials such as the wool and direct labor such as the wages paid to the workers who run the machines that weave the carpets include indirect costs such as depreciation on the manufacturing facility include nonmanufacturing costs such as sales commissions 4. For external reporting: costs are classified as either product or period costs costs reflect current values there are no prescribed rules since no one is exactly sure how the investors and creditors will use these numbers expenses include amounts that reflect current and future benefits 5. Product costs are expensed on the income statement when: raw materials for the product are purchased raw materials are requisitioned for the product the product completes the manufacturing process the product is sold 6. A plant manufactures several different products. The wages of the maintenance staff in the plant can be classified as a (an): direct cost product cost opportunity cost nonmanufacturing cost 7. The terms "direct cost" and "indirect cost" are commonly used in cost accounting. Classifying a cost as either direct or indirect depends upon: the behavior of the cost in response to volume changes whether the cost is expended in the period in which it is incurred whether the cost can be related readily to resources consumed for a cost object whether an expenditure is unavoidable because it cannot be changed regardless of any action taken 8. Indirect manufacturing costs: can be traced to the product that created the costs may have a cause-and-effect relationship with capacity rather than with individual units of production generally include the cost of material and the cost of labor are included in period costs 9. A manufacturing plant for Vanguard produces two product lines: Optimist sailboats and 420 sailboats. An indirect cost for the Optimist line is the: cloth used to make Optimist sails labor to pour 420 hull molds shift supervisor for the Optimist line plant supervisor 10. Cost behavior refers to: how costs react to a change in the level of activity whether a cost is incurred in a manufacturing, merchandising, or service company classifying costs as either product or period costs whether a particular expense has been ethically incurred
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