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Chapter 2 - Rob Oostendorp Chapter 2 Questions 1 2 3 10 13...

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Rob Oostendorp January 15, 2002 Chapter 2 Questions: 1, 2, 3, 10, 13 1. Direct Materials, Direct Labor, Manufacturing Overhead. 2. Direct materials are materials that can be conveniently traced to a product while indirect materials are materials that cannot be conveniently traced to a product, like solder or glue. Direct labor is labor costs that can conveniently be traced to a individual unit of production. Indirect labor is labor costs that cannot be conveniently traced to a individual product, like security and janitors. Manufacturing overhead is everything except direct materials and direct labor. 3. Product costs are costs that are involved in getting or creating a product. Period costs are costs that are not included in the product costs like rent or sales commissions. 10. Disagree. A variable cost is one that varies in total while a fixed cost’s total stay’s constant to production. 13. Differential cost – The difference between two alternatives. Opportunity cost – The highest potential benefit that is given up when one alternative is chosen over another. Sunk cost A cost that has been previously incurred and that cannot be changed by any decision made now (or in the future).
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Rob Oostendorp January 17, 2002 Chapter 2 Exercises: 3, 5 Problems 9, 13, 15, 16 Exercise 3: 1 & 2. Cost Account Raw Materials $4000 Balance Sheet Work In Process $7500 Balance Sheet Finished Goods $20250 Balance Sheet
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