Concepts and Terminology From the choices presented in paren

Concepts and Terminology From the choices presented in parentheses, choose the appropriate term for completing each of the following sentences: Appropriate term for completing sentence Sentence a. Advertising costs are usually viewed as (period, product) costs b. Feedback is often used to (improve, direct) operations c. Payments of cash or the commitment to pay cash in the future for the purpose of generating revenues are (costs, expenses) d. A product, sales territory, department, or activity to which costs are traced is called a (direct cost, cost object) e. The balance sheet of a manufacturer would include an account for (cost of goods sold, work in process inventory) f. Factory overhead costs combined with direct labor costs are called (prime, conversion) costs g. The implementation of automatic, robotic factory equipment normally (increases, decreases) the direct labor component of product costs.

Solution

Answer

Advertisement is an expense which helps the company in long run, so its for a period i.e. It will help the business in long run to generate revenue, so it is a Period Cost.

Feedback helps the business to get people reaction to their product or Services; It helps the business to find mistakes or the point where the business has to focus to improve its services.

This will be classified as Costs.

Direct cost are the cost which is incurred to that specific department or activity but here we needs to trace the total cost back to a specific department or activity, so this will be classified as Cost Object.

A manufacturer has Work in progress inventory, as Work in progress inventory is the inventory which is not 100% completed till the date of Balance Sheet.

Cost of Goods sold doesn’t come in Balance Sheet, it comes in Income Statement while calculating the Net income of the Company

Prime Cost is Direct Material plus Labor plus Direct expenses, It doesnot contain Factory Overhead Cost.

As this will help the company to get automatic i.e. making of product through machines so this will reduce dependence on Labor and helps the company to reduce the Direct Labor Component.