EX 15-5 Concepts and terminology Obj. 1, 2, 4 From the choices presented in parentheses, choose the appropriate term for completing each of the following sentences: Advertising costs are usually...

EX 15-5 Concepts and terminology Obj. 1, 2, 4

From the choices presented in parentheses, choose the appropriate term for completing each of the following sentences:

1. Advertising costs are usually viewed as (period, product) costs.


2. Feedback is often used to (improve, direct) operations.


3. Payments of cash or the commitment to pay cash in the future for the purpose of generating revenues are (costs, expenses).


4. A product, sales territory, department, or activity to which costs are traced is called a (direct cost, cost object).


5. The balance sheet of a manufacturer would include an account for (cost of goods sold, work in process inventory).


6. Factory overhead costs combined with direct labor costs are called (prime, conversion) costs.


7. The implementation of automatic, robotic factory equipment normally (increases, decreases) the direct labor

EX 15-7 Classifying costs in a service company Obj. 2

A partial list of the costs for Wisconsin and Minnesota Railroad, a short hauler of freight, fol-lows. Classify each cost as either indirect or direct. For purposes of classifying each cost, use the train as the cost object.

1. Cost to lease (rent) railroad cars Direct


2. Cost of track and bed (ballast) replacement Indirect


3. Diesel fuel costs Direct


4. Cost to lease (rent) train locomotives Direct


5. Depreciation of terminal facilities Indirect


6. Maintenance costs of right of way, bridges, and buildings Direct


7. Salaries of dispatching and communications personnel Direct


8. Headquarters information technology support staff salaries Indirect


9. Safety training costs Direct


10. Wages of train engineers Direct


11. Wages of switch and classification yard personnel Indirect


12. Costs of accident cleanup Indirect