6. Identify and Apply Basic Cost Behavior Patterns a. Costs behave in different ways. Some costs are activity changes, while other costs are and do not change as the volume of and do change with the volume of activity. I b. fixed costs stay the same, but the fixed cost per unit changes. If the volume of production increases, the fixed cost per unit will (increase or decrease?). c. Total variable costs will increase if the volume of production activity (increases or decreases?), but the variable cost stays the same. tot d. Label the lines on the following graph: s -C B I Units A B. costs have both fixed and variable components. costs are f. Manufacturing costs may be classified as either product or period costs. treated as expenses in the period in which they are incurred. as inventory costs until the product is sold, then as costs are treated which is f. Manufacturing costs may be classified as either product or period costs. costs are treated as expenses in the period in which they are incurred. costs are treated as inventory costs until the product is sold, then as which is subtracted from sales revenue, g. Period costs consists of mainly expenses, such as marketing costs, sales staff salaries and commission, administration office expenses, and company officers' salaries. I h. Product costs consist of direct direct and , which includes indirect indirect and general manufacturing overhead. Direct costs can be traced directly to the product, while indirect costs (overhead) must be allocated based on a _costs consist of direct costs only (direct materials and direct labor). costs include direct labor, Indirect labor, and overhead costs that are used to convert raw materials to finished products. 7. Estimate a Variable and Fixed Cost Equation and Predict Future Costs a. The total cost equation is where "y" is the total costa" is the cost, "b" is the cost, and "x" is the level of activity b. If Smith Company has fixed costs of $1,000 and variable costs of $15 per unit, what will the total cost be if they manufacture 150 units? il. 8. Define job order costing and distinguish it from process costing. _traces costs directly to a job or service, while _traces costs to a department within a manufacturing process. I b. Identify the following types of companies as being most likely to use job order or process costing: Custom Home Builder paper clip manufacturer off-the-rack clothing manufacturer fashion designer florist vi. craft beer brewery c. In a job order costing system, job costs are recorded on a a process costing system, a to analyze and account for costs. lii. iv. V. In is used a. 9. Identify and describe the three major components of product costs in a job order costing system. - raw materials used in the actual product b. -- work performed by people directly producing the actual product - costs that are not directly traceable to a job, but are related to production and must be allocated to jobs; indirect costs d. Identify the following costs as DM, DL, or OH, used in the building a custom home: I 1. boards depreciation on fork lifts carpenters' wages tile project manager's salary bricks spray adhesive liability insurance 10. Use job order costing to trace product costs through the inventory accounts. is the inventory account used to accumulate the costs of raw materials that have been purchased but have not been used in production. ii. II. iv. V. VI. vii. vill