Costs that can be directly traced to a cost object are called direct costs.

Direct Material and direct labor costs are referred to as direct costs or prime costs.

Costs that can not be directly traced to a cost object are called indirect costs.

Indirect costs are also called manufacturing overhead.

Conversion costs = direct labor + manufacturing overhead.

Product costs include ?

All costs that have expired, been used up, or consumed in the generation of income are called expenses.

Which of the following are normally period expenses ?

Costs that vary (fluctuate) in direct proprtion to some level of manufacturing activity (direct hours) are called fixed costs.

Only future costs matter in decision making.

Sunk costs are those costs already incurred that can not be changed by any decision.

A job order costing system is widely used by service and manufacturing companies.

A job order costing system is normally used when a business produces several different products or services.

Process costing systems are normally used when a business continually mass produces products.

The break even level (point) is when total revenue equals total costs.

The contribution margin is the difference between sales and fixed costs.

Management accounting's primary purpose is to provide information for decision making.

A job cost sheet (record) is a document often used for accumulating all costs of a job or batch.

A cost object is something that we want to know the cost of such as a product, service, or department.

When products are completed, all related costs are transferred from work in process inventory to finished goods invemtory.

Presentation of the financial statements for a manufacturing company contain additional inventory and cost categories and differ from those for a merchandising or service business.