Question 1

An example of a period cost is:
A)fire insurance on a factory building.
B)salary of a factory supervisor.
C)direct materials.
D)rent on a headquarters building.

Accepted Answer

Rent on a headquarters building is an example of a period cost because it is a cost that is incurred over a period of time, regardless of the level of production or sales activity. It is not directly related to the production of goods or services.

Question 2

The cost of fire insurance for a manufacturing plant is generally considered to be a:
A)product cost.
B)period cost.
C)variable cost.
D)all of these.

Accepted Answer

The answer of The cost of fire insurance for a...

Question 3

Which terms below correctly describe the cost of the black paint used to paint the dots on a pair of dice? 
A)Choice A
B)Choice B
C)Choice C
D)Choice D

Accepted Answer

Choice B, "direct cost," is the best description of the cost of the black paint used to paint the dots on the dice. It is a cost directly related to the production of the dice and can be easily traced to the final product. The other choices do not accurately describe the cost of the black paint. "Indirect cost" (Choice A) refers to a cost that cannot be directly traced to the production of the dice, such as rent or administrative expenses. "Fixed cost" (Choice C) refers to a cost that remains the same regardless of the volume of production, such as rent or salaries. "Variable cost" (Choice D) refers to a cost that varies with the volume of production, such as raw materials or labor.

Question 4

Micro Computer Company has set up a toll-free telephone line for customer inquiries regarding computer hardware produced by the company.The cost of this toll-free line would be classified as which of the following?
A)Product cost
B)Manufacturing overhead
C)Direct labor
D)Period cost

Accepted Answer

The cost of setting up a toll-free telephone line for customer inquiries is considered a period cost because it is not directly related to the production of a specific product. Period costs are expenses incurred during a specific accounting period and are not directly related to the production of goods or services. Examples of period costs include selling, general, and administrative expenses, such as advertising, salaries, and rent.

Question 5

Transportation costs incurred by a manufacturing company to ship its product to its customers would be classified as which of the following?
A)Product cost
B)Manufacturing overhead
C)Period cost
D)Administrative cost

Accepted Answer

Transportation costs incurred to ship products to customers are considered part of period costs, which are expensed as incurred and are not included in the cost of goods sold or the product's cost.

Quiz 2: Cost Concepts and Behavior

An example of a period cost is:

The cost of fire insurance for a manufacturing plant is generally considered to be a:

Which terms below correctly describe the cost of the black paint used to paint the dots on a pair of dice?

Micro Computer Company has set up a toll-free telephone line for customer inquiries regarding computer hardware produced by the company.The cost of this toll-free line would be classified as which of the following?

Transportation costs incurred by a manufacturing company to ship its product to its customers would be classified as which of the following?