Absorption costing is a method whereby overhead costs are charged to cost centres.
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What is prime cost?
All the direct costs used in a manufacturing process
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What is an indirect cost and give one example?
Any cost that cannot be directly traced back to the production of a good or service and an example may be insurance, electricity costs or supervisor salary
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What are the sections that make up the manufacturing account?
All direct costs (Prime costs) + Manufacturing Overheads (Indirect Costs) + Work In Progress
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The production cost of goods completed is transferred to the income statement when doing manufacturing accounts is this statement true or false?
True
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What is a unit cost?
All the cost included in making a single product
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What is a cost center? And give one example
Any part of a business where costs are absorbed. For example a K9 unit in a police station
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ALL Material costs belongs in the manufacturing account true or false?
True
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A manager overseeing the work of the machine employees is considered a form of direct labor true or false?
False
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If the total cost to produce 1000 Chairs was $100,000 what is the unit cost?
100,000 / 1000 =$100
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If Materials cost $1000, Machine worker wages cost $2000 and Direct expenses cost $1000 what is prime cost?
$4000 (1000+1000+2000
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Depreciation on plant equipment, fuel and power, general factory expenses are all considered indirect manufacturing costs True or False?
True
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Carriage outwards is part of the manufacturing costs of an organization True or False?
False
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The inventory found in the balance sheet contains Raw Materials, Finished goods and Work in Progress ending balances True or False
True
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Administration expenses are found in the manufacturing account True or False?
False
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Selling and distribution expenses are found under the income statement of a manufacturing organization True or False