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Which one of the following best describes direct labor?
A period cost.
A prime cost.
A product cost.
Both a product cost and a prime cost.

Cost drivers are
A mechanical basis, such as machine hours,computer time, size of equipment, or square footage of factory, used to assign costs to activities.
Accounting techniques used to control costs.
Accounting measurements used to evaluatewhether or not performance is proceedingaccording to plan.
Activities that cause costs to increase as the activity increases.

Which of the following is a period cost rather than a product cost of a manufacturer?
Direct materials.
Variable overhead.
Fixed overhead.
Abnormal spoilage.

In cost terminology, conversion costs consist of
Direct and indirect labor.
Direct labor and direct materials.
Direct labor and factory overhead.
Indirect labor and variable factory overhead.

Inventoriable costs
Include only the prime costs of manufacturinga product.
Include only the conversion costs ofManufacturing a product.
Are expensed when products become part of finished goods inventory.
Are regarded as assets before the productsare sold.

What is the journal entry to record the purchase of materials on account?
Raw materials inventory$XX Accounts payable $XX
Accounts payable $XX Raw materials inventory$XX
Accounts receivable$XX Accounts payable $XX
Raw materials inventory$XX Cash $XX

Which one of the following statements is true regarding absorption costing and variable costing?
Overhead costs are treated in the same manner under both costing methods.
If finished goods inventory increases, absorption costing results in higher income.
Variable manufacturing costs are lower under variable costing.
Gross margins are the same under both costing methods.

When the amount of overapplied factory overhead is significant, the entry to close overapplied factory overhead will most likely require
A debit to cost of goods sold.
Debits to cost of goods sold, finished goodsinventory, and work-in-process inventory.
A credit to cost of goods sold.
Credits to cost of goods sold, finished goodsinventory, and work-in-process inventory.

The difference between the sales price and total variable costs is
Gross operating profit.
Net profit.
The breakeven point.
The contribution margin.

Which method of inventory costing treats direct manufacturing costs and manufacturing overhead costs, both variable and fixed, as inventoriable costs?
Direct costing.
Variable costing.
Absorption costing.
Conversion costing.

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