44) Which of the following statements is true? A) Product costs are expensed on

Question

44) Which of the following statements is true?

A) Product costs are expensed on the income statement in the period incurred.

B) Direct labor is a manufacturing cost and product cost

C) Conversion costs include direct labor and indirect labor.

D) Some nonmanufacturing costs are included in product cost.

45) Which of the following statements is true?

A) Indirect materials and direct labor are included in manufacturing overhead.

B) Examples of manufacturing overhead include: depreciation on manufacturing equipment and the costs of operating finished goods warehouses.

C) For financial accounting purposes, product costs include direct materials, direct labor, and manufacturing overhead.

D) For financial accounting purposes, period costs are also referred to as inventoriable costs.

46) Which of the following statements is not a common assumption underlying cost-volume profit analysis?

A) The total variable costs remain constant as the level of sales fluctuates.

B) The selling price per unit remains constant.
C) The fixed costs are constant within the relevant range.

D) The variable cost per unit remains constant.

Explanation / Answer

44) B is correct.

Product costs are expensed in the year of sale of product for which they are incurred as it can be observed from income statement where product costs of opening inventory are added and that of closing inventory is deducted.

Direct labor is a manufacturing as well as product cost because it involves in conversion of raw materials and assigned to products as a cost.

Indirect labor costs of selling department and administrative department are not included in conversion costs.

Only manufacturing costs are included in product costs others are treated as period costs.

45) C is correct.

Indirect materials used by other than manufacturing department is not included in manufacturing overhead

Costs of operating finished goods warehouse is not a manufacturing cost because not incurred in production process .

For financial accounting purposes direct materials direct labor manufacturing overhead are treated as product costs are inventoriable costs.

46) A is correct

Total variable expenses change as volume incrrases because variable cost per unit is constant.

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