1. One way management considers their costs is as average costs. Under this approach, managers can calculate both average fixed and average variable costs. Average fixed cost (AFC) is the total fixed costs divided by the total number of units produced, which results in a per-unit cost. Average variable cost (AVC) is the total variable costs divided by the total number of units produced, which results in a per-unit cost. Management knows that long as the price they receive for their products is greater than the per-unit AVC, they are not only covering the variable cost of production, but each boat is making a contribution toward covering fixed costs. True / False 2. Product costs are all those associated with the acquisition or production of goods and products. When products are purchased for resale, the cost of goods is recorded as an asset on the company’s balance sheet. It is not until the products are sold that they become an expense on the income statement. By moving product costs to the expense account for the cost of goods sold, they are easily matched to the sales revenue income account. Period costs are simply all of the expenses that are not product costs, such as all selling and administrative expenses. Period costs are treated as expenses in the period in which they occur. They follow the rules of accrual accounting practice by recognizing the cost (expense) in the period in which they occur regardless of when the cash changes hands. True / False
1. One way management considers their costs is as average costs. Under this approach, managers can calculate both average fixed and average variable costs. Average fixed cost (AFC) is the total fixed costs divided by the total number of units produced, which results in a per-unit cost.
True / False
2. Product costs are all those associated with the acquisition or production of goods and products.
When products are purchased for resale, the cost of goods is recorded as an asset on the company’s balance sheet.
It is not until the products are sold that they become an expense on the income statement.
By moving product costs to the expense account for the cost of goods sold, they are easily matched to the sales revenue income account.
Period costs are simply all of the expenses that are not product costs, such as all selling and administrative expenses.
Period costs are treated as expenses in the period in which they occur. They follow the rules of accrual accounting practice by recognizing the cost (expense) in the period in which they occur regardless of when the cash changes hands.
True / False
Please help me with these two true and false questions . Thank you
1. true
2. true
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