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From the choices presented in parentheses, choose the appropriate term for completing each of the following sentences: a. A product, sales territory, department, or activity to which costs are traced is called a (direct cost, cost object). b. Advertising costs are usually viewed as (period, product) costs. c. Factory overhead costs combined with direct labor costs are called (prime, conversion) costs. d. Feedback is often used to (improve, direct) operations. e. A sacrifice made to obtain some benefit is a (cost, expense). f. The balance sheet of a manufacturer would include an account for (cost of goods sold, work in process inventory). g. The implementation of automatic, robotic factory equipment normally (increases, decreases) the direct labor component of product costs.

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Managerial Accounting

15th Edition
Carl Warren + 1 other
Publisher: South-Western College Pub
ISBN: 9781337912020

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BuyFindarrow_forward

Managerial Accounting

15th Edition
Carl Warren + 1 other
Publisher: South-Western College Pub
ISBN: 9781337912020
Chapter 1, Problem 5E
Textbook Problem
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From the choices presented in parentheses, choose the appropriate term for completing each of the following sentences:

  1. a. A product, sales territory, department, or activity to which costs are traced is called a (direct cost, cost object).
  2. b. Advertising costs are usually viewed as (period, product) costs.
  3. c. Factory overhead costs combined with direct labor costs are called (prime, conversion) costs.
  4. d. Feedback is often used to (improve, direct) operations.
  5. e. A sacrifice made to obtain some benefit is a (cost, expense).
  6. f. The balance sheet of a manufacturer would include an account for (cost of goods sold, work in process inventory).
  7. g. The implementation of automatic, robotic factory equipment normally (increases, decreases) the direct labor component of product costs.

To determine

Choose the appropriate term for completing each of the given sentences.

Explanation of Solution

Period costs:

Period costs are the costs other than the product costs. These costs are not incurred in manufacturing the goods. These costs include the administrative expenses, and selling expenses.

Cost object:

A cost object is something to which costs are assigned, it is often a product lines or customers department for which costs are accumulated or measured by the management.

Conversion cost:

A conversion cost refers to the cost of converting the raw materials into a finished product. Conversion cost includes direct labor as well as factory overhead costs.

The appropriate term for completing each of the given sentences as follows:

a.Cost object
b.Period
c.Conversion
d.Improve
e.Costs
f.Work in process inventory
g.Decreases

Table (1)

a. Generally, a cost object is something to which the costs are assigned, it is often a product lines or customers department for which costs are accumulated or measured by the management. Hence, costs traced in a product, sales territory, department or activity is called as a cost object.

b. Period costs include the administration costs, and the selling costs. The advertising costs come under the selling expenses as they are not directly incurred in manufacturing, but are incurred in marketing, and delivering the finished goods to the customers...

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Chapter 1 Solutions

Managerial Accounting
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Ch. 1 - Management process Three phases of the management...Ch. 1 - Direct materials, direct labor, and factory...Ch. 1 - Prime and conversion costs Identify the following...Ch. 1 - Product and period costs Identify the following...Ch. 1 - Cost of goods sold, cost of goods manufactured...Ch. 1 - Jakes Cabins is a small motel chain with locations...Ch. 1 - Indicate whether each of the following costs of an...Ch. 1 - Indicate whether the following costs of Procter ...Ch. 1 - Which of the following items are properly...Ch. 1 - For apparel manufacturer Abercrombie Fitch, Inc....Ch. 1 - From the choices presented in parentheses, choose...Ch. 1 - From the choices presented in parentheses, choose...Ch. 1 - Classifying costs In a service company A partial...Ch. 1 - Classifying costs The following is a manufacturing...Ch. 1 - Financial statements of a manufacturing firm The...Ch. 1 - Manufacturing company balance sheet Partial...Ch. 1 - Cost of direct materials used in production for a...Ch. 1 - Cost of goods manufactured for a manufacturing...Ch. 1 - Cost of goods manufactured for a manufacturing...Ch. 1 - Income statement for a manufacturing company Two...Ch. 1 - Statement of cost of goods manufactured for a...Ch. 1 - Cost of goods sold, profit margin, and net income...Ch. 1 - Cost flow relationships The following information...Ch. 1 - The following is a list of costs that were...Ch. 1 - The following is a list of costs incurred by...Ch. 1 - A partial list of Foothills Medical Centers costs...Ch. 1 - Manufacturing income statement, statement of cost...Ch. 1 - Statement of cost of goods manufactured and income...Ch. 1 - The following is a list of costs that were...Ch. 1 - The following is a list of costs incurred by...Ch. 1 - A partial list of The Grand Hotels costs follows:...Ch. 1 - Several items are omitted from the income...Ch. 1 - Statement of cost of goods manufactured and income...Ch. 1 - Comfort Plus, Inc., has a hotel with 300 rooms in...Ch. 1 - Hilton Hotels and Marriott International:...Ch. 1 - Comparing occupancy for two hotels Sunrise Suites...Ch. 1 - Occupancy for a Hospital The Valley Hospital...Ch. 1 - Passenger load on a flight Eastern Skies Airlines...Ch. 1 - Ethics in Action Avett Manufacturing Company...Ch. 1 - Communication Todd Johnson is the Vice President...Ch. 1 - For each of the following managers, describe how...Ch. 1 - The following situations describe scenarios that...Ch. 1 - Geek Chic Company provides computer repair...Ch. 1 - Which of the following items would not be...Ch. 1 - A review of Plunkett Corporations accounting...Ch. 1 - A firm has 100,000 in direct materials costs,...Ch. 1 - In practice, items such as wood screws and glue...

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