1 minute read
Chapter 2: Basic Cost Management Concepts
8. The three methods of cost assignment are direct tracing, driver tracing, and allocation.
a. True b. False ANSWER: True a. True b. False ANSWER: False a. True b. False ANSWER: True a. True b. False ANSWER: True a. True b. False ANSWER: False a. True b. False ANSWER: True a. True b. False ANSWER: False
Advertisement
9. Assigning costs accurately to cost objects is of low priority. Accuracy is not evaluated based on knowledge of some underlying “true cost”.
10. The most precise of the three methods of cost assignment is direct tracing since it relies on observable causal relationships.
11. Services differ from tangible products on three dimension: intangibility, perishability, and inseparability.
12. Intangible products are goods produced by converting raw material into finished products through the use of labor and capital inputs.
13. Production costs are costs associated with manufacturing goods or providing services and are classified as direct materials, direct labor, and overhead.
14. Conversion cost is the sum of direct materials and direct labor cost and prime cost is the sum of direct labor and overhead cost.
