Following are a number of cost terms: Variable cost Fixed cost Prime cost Opportunity cost Product cost Sunk cost Conversion cost Period cost Choose the term or terms that most appropriately describe the cost identified in each of the following situations. A term can be used more than once. 1 Lake Company produces a tote bag that is very popular with students. The cloth used in the manufacture of the bag would be called direct materials and classified as a(n) cost. In terms of cost behaviour, the cloth could also be described as a(n) cost 2 The direct labour cost required to produce the tote bags, combined with the manufacturing overhead cost involved, would be known as a(n) cost 3. The company could have taken the funds that it has invested in production equipment and invested them in interest-bearing securities instead. The interest forgone on the securities would be called a(n) cost 4 Taken together, the direct materials cost and the direct labour cost required to produce tote bags would be called a(n) cost 5. The company used to produce a smaller tote bag that was not very popular Some 300 of these smaller bags are stored in one of the company's warehouses. The amount invested in these bags would be called a(n) cost 6. The tote bags are sold through agents who are paid a commission on each bag sold These commissions would be. classified by Lake Company as a(n) cost. 8 A cost. In terms of cost behaviour, commissions would be classified as a(n) 7. Depreciation on the equipment used to produce tote bags would be classified by Lake Company as a(n) However, depreciation on any equipment used by the company in selling and administrative activities would be classified as a(n) cost. In terms of cost behaviour, depreciation would probably be classified as a(n) cost is also known as an inventoriable cost, since such costs go into the work-in-process inventory account cost cost

Following are a number of cost temis. Choose the tiem or terms that most appropriately describe the cost identised in each of the following sitisations A term can be used more than once