1. Costs are often classified by their relationship to a segment of operations, called:

A. direct cost

B. cost object

C. Indirect cost

D. factory expenses

2. Costs of converting the materials into a finished product are:

A. Conversion costs

B. Prime costs

C. Product costs

D. Period costs

3. Direct materials, direct labour, and factory overhead costs for products that have entered the manufacturing process, but are not yet completed are:

A. Direct materials inventory

B. Direct materials and work in process

C. Work in process inventory

D. Finished goods

4. The factory costs other than direct materials and direct labour are:

A. Direct materials costs

B. Direct labours costs

C. Product costs

D. Manufacturing overhead costs

5. How can a Manager classify a cost as either direct or indirect depends upon:

A. The behaviour of the cost in response to volume changes

B. Whether the cost is expensed in the period in which it is incurred

C. Whether the cost can be easily identified with the cost object

D. Whether an expenditure is avoidable or not in the future

6. When an overhead is charged specific to a cost centre, this is called:

A. Apportionment

B. Allocation

C. Absorption

D. ABC costing