Cost Classification Quiz

Which category does factory rent belong to?

• Manufacturing

• Non-manufacturing

Answer explanation

Factory rent belongs to the Manufacturing category.

Identify the cost type for advertising expenses.

• Manufacturing

• Non-manufacturing

Answer explanation

Advertising expenses are classified as Non-manufacturing costs. These costs are incurred to promote products or services and are not directly related to the manufacturing process.

Classify office supplies as direct or indirect.

• Direct

• Indirect

Answer explanation

Office supplies can be classified as direct or indirect. In this case, the correct choice is 'Direct'.

Is direct labor a direct or indirect cost?

• Direct

• Indirect

Answer explanation

Direct labor is a direct cost because it can be easily traced to a specific product or service. It includes wages and benefits for employees directly involved in production.

Is the cost of raw materials typically fixed or variable?

• Fixed

• Variable

Answer explanation

The cost of raw materials is typically variable, meaning it can fluctuate based on factors such as market demand and availability.

Choose a fixed cost from the options below:

• Sales commissions

• CEO's Salary

Answer explanation

The fixed cost option is CEO's Salary.

Which cost is considered a period cost?

• Direct labor

• Selling expenses

Answer explanation

Selling expenses are considered period costs because they are incurred to promote and sell products, rather than directly producing them.

Identify a product cost from the following:

• Administrative expenses

• Direct materials

Answer explanation

Direct materials are a product cost. They are directly used in the production process and can be easily traced to the final product.