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Match the Following Terms with the Appropriate Definition

Question 193

Matching

Match the following terms with the appropriate definition.

Premises:

Responses:

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

Variable costs

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

Prime costs

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

Sunk costs

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

Period costs

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

Fixed costs

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

Indirect costs

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

Product costs

Expenditures necessary and integral to finished products.

Conversion costs

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

Factory overhead

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

Opportunity costs

Premises:

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

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

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

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

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

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

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

Expenditures necessary and integral to finished products.

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

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

Responses:

Variable costs

Prime costs

Sunk costs

Period costs

Fixed costs

Indirect costs

Product costs

Conversion costs

Factory overhead

Opportunity costs

Correct Answer:

Premises:

Responses:

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

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

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

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

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

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

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

Expenditures necessary and integral to finished products.

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

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