Cost Terms, Concepts, and Classifications

1. What would be the classification of corporate controller's salary? A. Manufacturing cost.B. Product cost.C. Administrative cost.D. Selling cost. Blooms: UnderstandCPA Competency: 3.3.1 Evaluates cost classifications and costing methods for management of ongoing operations.Difficulty: EasyLearning Objective: 02-01 Identify and give examples of each of the three basic manufacturing cost categories.Topic: 02-08 Non-manufacturing Costs 2. How should the cost of the fire insurance for a manufacturing plant be classified? A. Prime cost.B. Product cost.C. Period cost.D. Variable cost. Blooms: UnderstandCPA Competency: 3.3.1 Evaluates cost classifications and costing methods for management of ongoing operations.Difficulty: MediumLearning Objective: 02-01 Identify and give examples of each of the three basic manufacturing cost categories.Learning Objective: 02-02 Distinguish between product costs and period costs; and give examples of each.Topic: 02-06 Manufacturing OverheadTopic: 02-10 Product CostsTopic: 02-11 Period Costs 3. How would the cost of rent for a manufacturing plant generally be classified? A. A product cost but not a prime cost.B. Neither a product nor prime cost.C. A prime cost but not a product cost.D. Both a prime cost and product cost. Blooms: UnderstandCPA Competency: 3.3.1 Evaluates cost classifications and costing methods for management of ongoing operations.Difficulty: MediumLearning Objective: 02-01 Identify and give examples of each of the three basic manufacturing cost categories.Learning Objective: 02-02 Distinguish between product costs and period costs; and give examples of each.Topic: 02-06 Manufacturing OverheadTopic: 02-10 Product CostsTopic: 02-11 Period Costs 4. For a lamp manufacturing company, the cost of the insurance on its vehicles that deliver lamps to customers is best described as a: A. Prime cost.B. Manufacturing overhead cost.C. Period cost.D. Differential cost of a lamp. Blooms: UnderstandCPA Competency: 3.3.1 Evaluates cost classifications and costing methods for management of ongoing operations.Difficulty: MediumLearning Objective: 02-02 Distinguish between product costs and period costs; and give examples of each.Topic: 02-10 Product CostsTopic: 02-11 Period Costs 5. For a manufacturing company, which of the following is an example of a period cost rather than a product cost? A. Depreciation of factory equipment.B. Wages of salespersons.C. Wages of machine operators. D. Insurance on factory equipment. Blooms: UnderstandCPA Competency: 3.3.1 Evaluates cost classifications and costing methods for management of ongoing operations.Difficulty: EasyLearning Objective: 02-02 Distinguish between product costs and period costs; and give examples of each.Topic: 02-10 Product CostsTopic: 02-11 Period Costs 6. Which of the following would be considered a product cost for external financial reporting purposes? A. Cost of a warehouse used to store finished goods.B. Cost of guided public tours through the company's facilities. C. Cost of travel necessary to sell the manufactured product.D. Cost of sand spread on the factory floor to absorb oil from manufacturing machines.