The Assignment of Direct and Indirect Materials to Cost Objects

question 288

Multiple Choice

The assignment of direct and indirect materials to cost objects reduces

• A)finished goods inventory.
• B)raw materials inventory.
• C)manufacturing overhead.
• D)work in process inventory.

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Definitions:

Cost of Land

The purchase price and all associated costs, such as legal fees and surveying, of acquiring land for business use.

Asset's Cost

The total amount of money or the value exchanged to acquire, maintain, improve, or replace an asset.

Intended Use

The purpose for which a product or service is specifically designed or for which it is intended to be used.

Average Total Assets

Average total assets are calculated by taking the sum of total assets at the beginning and end of an accounting period, then dividing by two, used for analyzing a company's asset efficiency.