Chapter 2, Problem 2.5SE

Prime costs	Cost objects	Product costs
Assigned	Direct costs	Fringe benefits
Period costs	Assets	Cost of goods sold
Indirect costs	Conversion costs	Total costs

1. a. _____are the costs of transforming direct materials into finished goods.
2. b. _____include R&D, marketing, distribution, and customer service costs.
3. c. Direct material plus direct labor equals _____.
4. d. Steel, tires, engines, upholstery, carpet, and dashboard instruments are used in the assembly of a car. Since the manufacturer can trace the cost of these materials (including freight-in and import duties) to specific units or batches of vehicles, they are considered _____of the vehicles.
5. e. Costs that can be traced directly to a(n)_____are called _____.
6. f. _____are initially treated as _____on the balance sheet.
7. g. The allocation process results in a less precise cost figure being _____to the_____.
8. h. _____cannot be directly traced to a(n) _____.
9. i. _____include the costs of all resources used throughout the value chain.
10. j. U.S. GAAP requires companies to use only _____for inventory reported on external financial statements.
11. k. Company-paid _____may include health insurance, retirement plan contributions, payroll taxes, and paid vacations.
12. l. When manufacturing companies sell their finished products, the costs of those finished products are removed from inventory and expensed as _____.