Following is a list of cost items described in the chapter as well as a list of brief descriptive settings

for each item.

Cost terms:

a$.$ Opportunity cost

b$.$ Period cost

c$.$ Product cost

d$.$ Direct labour cost

e$.$ Selling cost

f$.$ Conversion cost

g$.$ Prime cost

h$.$ Direct materials cost

i$.$ Manufacturing overhead cost

j$.$ Administrative cost

Settings:

$1.$ Marcus Burbosa, manager of Timmins Optical, estimated that the cost of plastic, wages of

the technician producing the lenses, and overhead totalled $$30$ per pair of single$-$vision lenses.

$2.$ Linda was having a hard time deciding whether to return to school. She was concerned about

the salary she would have to give up for the next four years.

$3.$ Randy Harris is the finished goods warehouse manager for a medium$-$sized manufacturing

firm. He is paid a salary of $$90,000$ per year. As he studied the financial statements prepared

by a local CPA, he wondered how his salary was treated.

$4.$ Jamie Young is in charge of the legal department at company headquarters. Her salary is

$$95,000$ per year. She reports to the chief executive officer.

$5.$ This category includes all factory costs that are not classified as direct materials or direct labour.

$6.$ The new product required machining, assembly, and painting. The design engineer asked

the accounting department to estimate the labour cost of each of the three operations. The

engineer supplied the estimated labour hours for each operation.

$7.$ After obtaining the estimate of direct labour cost, the design engineer estimated the cost of

the materials that would be used for the new product.

$8.$ The design engineer totalled the costs of materials and direct labour for the new product.

$9.$ The design engineer also estimated the cost of converting the raw materials into their final form.

$10.$ The auditor for a soft drink bottling plant