SECTION A: TRUE$-$FALSE$-$CONCEPTUAL

A cost object is anything for which a cost measurement is

desired.

An actual cost is the cost incurred$-$a historical or past cost.

A cost is a resource sacrificed or forgone to achieve a specific

objective.

Variable costs per unit vary with the level of production or

sales volume.

Wood used to manufacture chairs is considered a direct

variable cost when the cost object is the chair.

Merchandising companies purchase products and sell them to

customers without changing their basic form.

Manufacturing companies hold only one type of inventory:

direct material.

Indirect manufacturing costs include the compensation of all

manufacturing labor that can be traced to the cost object in an

economically feasible way.

Direct manufacturing cost labor includes plant rent and

salaries paid to plant supervisors.

Inventoriable costs are reported as a liability on the balance

sheet when incurred and expensed on the income statement

when the product is sold.

All manufacturing costs are period costs.

All costs reported on the income statement of a service$-$

sector company are inventoriable costs.

Indirect manufacturing costs are also referred to as

manufacturing overhead costs or factory overhead costs.

Conversion costs include all direct manufacturing costs and

some of the period costs including research and development

costs and customer service.