🎯Manufacturing Costs TF

Raw materials are basic natural resources, such as crude oil and iron ore.

A supervisor’s salary is classified as direct labor.

Nonmanufacturing costs consist of selling costs and administrative costs.

All selling and administrative costs are pe­riod costs.

The terms product cost and manufacturing cost are synonyms.

A fixed cost is constant per unit of product.

A variable cost is a cost that changes, in total, in proportion to changes in the activity level.

In cost analysis, activity is the dependent variable and cost is the independent variable.

Within the relevant range, the higher the activity level, the lower the average fixed cost per unit.

Discretionary fixed costs arise from annual decisions by management to spend in certain areas.

Advertising is a committed fixed cost.

A mixed cost is a cost that contains both manufacturing and non-manufacturing costs.

In order for a cost to be variable, it must vary with either units produced or services provided.

Manufacturing overhead is an indirect cost with respect to units of product.

Property taxes on factory land and insur­ance on a factory building are examples of manufac­turing overhead.