1.Product costs consist of direct labor, direct materials, and overhead.
2.Manufacturing overhead costs are those that can be traced directly to the product.
3.The traditional costing approach assigns all manufacturing costs to products.
4.Absorption costing is permitted under GAAP.
5.The use of absorption costing can result in misleading product cost information.
6.Variable costing treats fixed overhead cost as a period cost.
7.The biggest problems with producing too much are lost sales and customer dissatisfaction.
8.Many companies link manager bonuses to income computed under absorption costing because this is how income is reported to shareholders.
9.Under absorption costing, a company had the following unit costs when 10,000 units were produced:
10.Assume a company had the following production costs: