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Match the Following Definitions with the Appropriate Terms

Question 198

Matching

Match the following definitions with the appropriate terms

Premises:

Responses:

Costs that flow directly to the current income statement as expenses.

Sunk costs

Costs that change in proportion to changes in volume of activity.

Indirect costs

The potential benefit lost by choosing a specific action from two or more alternatives.

Product costs

Manufacturing expenditures that cannot be separately or readily traced to finished goods.

Prime costs

Expenditures necessary and integral to finished products.

Fixed costs

Expenditures incurred in the process of converting raw materials to finished products; include direct labor and factory overhead.

Opportunity costs

Costs that have already been incurred and cannot be avoided or changed.

Period costs

Expenditures directly associated with the manufacture of finished products; include direct materials and direct labor.

Conversion costs

Costs that do not change with changes in the volume of activity.

Factory overhead

Costs that are incurred for the benefit of more than one cost object.

Variable costs

Premises:

Costs that flow directly to the current income statement as expenses.

Costs that change in proportion to changes in volume of activity.

The potential benefit lost by choosing a specific action from two or more alternatives.

Manufacturing expenditures that cannot be separately or readily traced to finished goods.

Expenditures necessary and integral to finished products.

Expenditures incurred in the process of converting raw materials to finished products; include direct labor and factory overhead.

Costs that have already been incurred and cannot be avoided or changed.

Expenditures directly associated with the manufacture of finished products; include direct materials and direct labor.

Costs that do not change with changes in the volume of activity.

Costs that are incurred for the benefit of more than one cost object.

Responses:

Sunk costs

Indirect costs

Product costs

Prime costs

Fixed costs

Opportunity costs

Period costs

Conversion costs

Factory overhead

Variable costs

Correct Answer:

Premises:

Responses:

Costs that flow directly to the current income statement as expenses.

Costs that change in proportion to changes in volume of activity.

The potential benefit lost by choosing a specific action from two or more alternatives.

Manufacturing expenditures that cannot be separately or readily traced to finished goods.

Expenditures necessary and integral to finished products.

Expenditures incurred in the process of converting raw materials to finished products; include direct labor and factory overhead.

Costs that have already been incurred and cannot be avoided or changed.

Expenditures directly associated with the manufacture of finished products; include direct materials and direct labor.

Costs that do not change with changes in the volume of activity.

Costs that are incurred for the benefit of more than one cost object.