Choose one of the cost type for each of the following cost items:

Cost item

Cost type

1-The cost of handling materials in a manufacturing company is an example of a(n):

Period cost

Direct material cost

Indirect material cost.

None

2- The salary paid to the CEO of Alaskan Company would be classified on the income statement as a(n):

Administrative expense

Direct labor cost

Manufacturing overhead cost.

Selling expense

3- Prime cost consists of:

Direct labor and manufacturing overhead

Direct materials and manufacturing overhead.

Direct materials and direct labor.

Direct materials, direct labor and manufacturing overhead.

4- Product costs are all except:

Property taxes on factory equipment.

Depreciation on factory machinery.

Salaries of the salesmen.

Wages of machine operators

5- Fixed costs per unit

Will increase with increases in activity.

Will decrease with increases in activity.

Are not affected by activity.

Should be ignored in making decisions since they cannot change