Concept introduction:
There are three types of costs according to the unit of production; Variable, Fixed and Mixed. Variable costs change proportionally with the number of units produced and variable cost per unit remains constant. Fixed Cost remains same in totality irrespective of the number of units produced. The mixed cost is the mix of variable and fixed cost, some of its part is fixed and some variable.
To indicate:
What triggers the product costs from an asset on the
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Loose-leaf For Managerial Accounting
- Accumulating costs means that a. costs must be summed and entered on the income statement. b. each cost must be linked to some cost object. c. costs must be measured and tracked. d. costs must be allocated to units of production. e. costs have expired and must be transferred from the balance sheet to the income statement.arrow_forwardWhich of the following represents the components of the income statement for a manufacturing business? A. Sales Revenue - Cost of Goods Sold = gross profit B. Service Revenue - Operating Expenses = gross profit C. Service Revenue - Cost of Goods Manufactured = gross profit D. Sales Revenue - Cost of Goods Manufactured = gross profitarrow_forwardWhy are product costs assigned to the product and period costs immediately expensed?arrow_forward
- Which of the following represents the components of the income statement for a service business Sales Revenue - Cost of Goods Sold = gross profit Service Revenue - Operating Expenses = operating income Sales Revenue - Cost of Goods Manufactured = gross profit Service Revenue - Cost of Goods Purchased = gross profitarrow_forwardWhat is the effect on the current period income statement and the balance sheet when inventories are written down using the lower of cost or market method? What is the effect on future period income statements and balance sheets?arrow_forwardA multi-step income statement ________. A. separates cost of goods sold from operating expenses B. considers interest revenue an operating activity C. is another name for a simple income statement D. combines cost of goods sold and operating expensesarrow_forward
- If a company capitalizes costs that should be expensed, how is its income statement for the current period impacted? A. Assets understated B. Net Income understated C. Expenses understated D. Revenues understatedarrow_forwardWhat are the components of cost of goods available for sale and cost of goods sold?arrow_forwardExplain the difference between the flow of cost and the flow of goods as it relates to inventory.arrow_forward
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