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Job A3B was ordered by a customer on September 25. During the month of September, Jaycee Corporation requisitioned $2,300
of direct materials and used $3,800 of direct labor. The job was not finished by the end of the month, but needed an additional
$2,800 of direct materials and additional direct labor of $6,100 to finish the job in October. The company applies overhead at
the end of each month at a rate of 200% of the direct labor cost incurred. What is the balance in the Work in Process account at
the end of September relative to Job A3B?
 
Multiple Choice
 
$4,900
$11,300
$7,100
$8,100
$3,900
 
Manufacturing Overheads = Direct Labor (2)
Work-in-process = Direct Material + Direct Labor (2)
ans. $8100
   
A company has an overhead application rate of 127% of direct labor costs.
How much overhead would be allocated to a job if it required total labor costing $19,000?
 
$241,300.
$12,065.
$19,000.
$24,130.
$14,961.
 
overhead allocated = overhead application rate (Total Labor Costs)
127% (19000)
ans. $24,130
   
Using the following accounts and an overhead rate of 90% of direct labor cost, determine the amount of applied overhead.
 
Work in Process Inventory
Beginning WIP 21,800                  
Direct Materials               65,400                  
Direct Labor                       ?                               
Applied Overhead           ?                               
To Finished Goods                           ?
Ending WIP                         44,750  
                 
Finished Goods                 Inventory
Beginning FG                     6,100                     
Ending FG                            162,150                                                                                
 
$63,000.
$56,700.
$119,700.
$42,450.
$45,895.
 
Ending FG - Beginning WIP - Direct Materials + Ending WIP = Direct Labor + Applied Overhead
162150 - 21800 - 65400 + 44,750 = Direct Labor + Applied Overhead
119700 = Direct Labor + Applied Overhead
119700 = Direct Labor = .9(Direct Labor)
119700 = 1.9(Direct Labor)
Divide by 1.9
Applied Overhead = 63,000
   
The Work in Process Inventory account of a manufacturing company that uses an overhead rate based on direct labor cost has a
$4,000 debit balance after all posting is completed. The cost sheet of the one job still in process shows direct material cost
of $1,880 and direct labor cost of $740. Therefore, the amount of the applied overhead is:
 
$2,620.
$740.
$1,380.
$3,260.
$2,120.
 
4000 – 1880 – 740 = 1,380
   
Adams Manufacturing allocates overhead to production on the basis of direct labor costs. At the beginning of the year,
Adams estimated total overhead of $276,900; materials of $403,000 and direct labor of $213,000. During the year Adams
incurred $411,000 in materials costs, $414,600 in overhead costs and $217,000 in direct labor costs.
Compute the overhead application rate.
 
 
69%.
191%.
188%.
77%.
130%
 
276,900 ÷ 213,000 = 1.3
ans. 130%
   
Andrew Industries purchased $158,000 of raw materials on account during the month of March.
The beginning Raw Materials Inventory balance was $20,600, and the materials used to complete jobs during the month were
$134,700 of direct materials and $12,300 of indirect materials. What is the ending Raw Materials Inventory balance for March?
 
Multiple Choice
 
$31,600.
$23,300.
$43,900.
$9,600.
$8,300.
 
Raw Materials Inventory balance =
Beginning raw materials inventory
+ Purchases during the month of March
- Raw materials used during the month
ans. $43,900
   
Mango Company applies overhead based on direct labor costs. For the current year, Mango Company estimated total overhead costs to
be $360,000, and direct labor costs to be $180,000. Actual overhead costs for the year totaled $387,000, and actual direct labor costs
totaled $203,000. At year-end, Factory Overhead account is:
 
Overapplied by $19,000.
Overapplied by $203,000.
Underapplied by $19,000.
Overapplied by $23,000.
Neither overapplied nor underapplied
 
year-end, Factory Overhead account is =
estimated total overhead costs ÷
direct labor costs (actual direct labor costs)
- Actual overhead costs
 
ans. Overapplied by $19,000
   
Kayak Company uses a job order costing system and allocates its overhead on the basis of direct labor costs.
Kayak Company's production costs for the year were: direct labor, $35,000; direct materials, $55,000;
and factory overhead applied $6,500. The overhead application rate was:
 
11.82%.
5.38%.
538.46%.
15.71%.
18.57%.
 
Overhead application rate =
Applied overhead ÷  direct labor costs
 
ans. 18.57%
   
Finished goods inventory is $186,000. If overhead applied to these goods is $78,000, and the overhead rate is 120% of direct labor,
how much direct materials cost was incurred in producing the inventory?
(Round your intermediate calculations and final answer to nearest whole dollar.)
 
$14,400.
$93,600.
$65,000.
$41,000.
$43,000.
 
direct materials cost =
Finished goods inventory
- (overhead applied ÷  overhead rate)
- overhead applied
 
ans. $43,000
   
Adams Manufacturing allocates overhead to production on the basis of direct labor costs. At the beginning of the year,
Adams estimated total overhead of $412,200; materials of $419,000 and direct labor of $229,000.
During the year Adams incurred $436,000 in materials costs, $430,300 in overhead costs and $233,000 in direct labor costs.
Compute the amount of under- or overapplied overhead for the year.
 
$10,900 underapplied.
$5,700 underapplied.
$18,100 underapplied.
$18,100 overapplied.
$10,900 overapplied
 
estimated total overhead ÷
direct labor (direct labor) - overhead costs
ans. $18,100 underapplied
   
Mesa Corp. allocates overhead to production on the basis of direct labor costs.
Mesa’s total estimated overhead is $275,000 and estimated direct labor is $110,000.
Determine the amount of overhead applied to a job which used $30,000 of direct labor.
 
$30,000.
$105,000.
$75,000.
$135,000.
$12,000.
 
 
Estimated Overhead ÷
Estimated Direct Labor (Total Direct labor cost)
ans. $75,000
   
Copy Center pays an average wage of $12 per hour to employees for printing and copying jobs, and allocates $18 of overhead for each employee
hour worked. Materials are assigned to each job according to actual cost. Jobs are marked up 15% above cost to determine the selling price.
If Job M-47 used $365 of materials and took 20 hours of labor to complete, what is the selling price of the job?
 
$696.
$690.
$972.
$834.
$1,110
 
  Direct material
+ Direct labor (average wage x hours of labor)
+ Overhead (overhead for each employee hour worked x hours of labor)
x 100% + marked up costs (1.15)
Ans. $1,110
   
Cosi Company uses a job order costing system and allocates its overhead on the basis of direct labor costs.
Cosi expects to incur $830,000 of overhead during the next period, and expects to use 53,000 labor hours at a cost of $10.00 per hour.
What is Cosi Company's overhead application rate?
 
63.9%.
1566%.
68%.
6.39%.
157%
 
overhead application rate = Estimated Overhead ÷ Estimated Direct Labor cost
Direct Labor cost ÷ estimated labor hours (hourly wage)
ans. 157%
   
If one unit of Product Z2 used $2.10 of direct materials and $3.30 of direct labor, sold for $10.00, and was assigned overhead at the rate of
26% of direct labor costs, how much gross profit was realized from this sale?
(Round your intermediate calculations and final answer to two decimal places.)
 
$4.60.
$5.40.
$10.00.
$.86.
$3.74.
 
Sale price –
direct materials –
direct labor (overhead rate) –
direct labor
 
ans. $3.74
   
Lowden Company has an overhead application rate of 156% and allocates overhead based on direct material cost.
During the current period, direct labor cost is $59,000 and direct materials used cost $89,000.
Determine the amount of overhead Lowden Company should record in the current period.
 
$57,051.
$59,000.
$37,821.
$138,840.
$89,000
 
direct materials used (overhead application rate)
ans. $138,840
   
Clemmens Company applies overhead based on direct labor cost. Estimated overhead and direct labor costs for the year were $120,500 and $125,800,
respectively. During the year, actual overhead was $108,200 and actual direct labor cost was $113,600. The entry to close the over- or underapplied
overhead at year-end, assuming an immaterial amount, would include
(Round predetermined overhead rate to nearest whole percentage.):
 
Multiple Choice
 
A debit to Cost of Goods Sold for $856.
A credit to Finished Goods Inventory for $856.
A debit to Work in Process Inventory for $856.
A credit to Factory Overhead for $856.
A credit to Cost of Goods Sold for $856
 
actual overhead –
Estimated overhead ÷
Estimated [rounded before] (actual direct labor cost)
 
ans. A debit to Work in Process Inventory for $856
   
Morris Company applies overhead based on direct labor costs. For the current year, Morris Company estimated total overhead costs to be $472,000, and direct labor costs to be $2,360,000. Actual overhead costs for the year totaled $434,000, and actual direct labor costs totaled $1,980,000. At year-end, the balance in the Factory Overhead account is a:
 
$38,000 Debit balance.
$434,000 Debit balance.
$396,000 Debit balance.
$38,000 Credit balance.
$472,000 Credit balance
 
Estimated overhead costs ÷
Estimated direct labor costs (actual direct labor costs) –
Actual overhead costs
 
ans. $38,000 Debit balance
   
Using the following accounts and an overhead rate of 150% of direct labor cost, compute the amount of applied overhead.
 
Work in Process                                Inventory
Beginning WIP:                  35,300                  
Direct materials:                               55,500                  
Direct labor                                         ?                               
Factory Overhead                            ?                               
To Finished Goods:                           213,300
Ending WIP                                         25,300   
                 
Finished Goods                 Inventory
Beginning FG                                      5,300                     
Cost of Goods Mfg'd                        213,300                                
                                                 
Multiple Choice
 
$83,250.
$88,680.
$147,800.
$59,120.
$90,800.
 
Cost of Goods Mfg'd (213,300) –
Beginning WIP (35,300) +
Ending WIP (25,300)
 = 203,300
 
203300 - Direct materials (55500) ÷ (1.5 + 1.0)
 
ans. 59120
   
The B&T Company's production costs for May are: direct labor, $12,000; indirect labor, $6,400; direct materials, $14,800;
property taxes on production facility, $800; factory heat, lights and power, $980; and insurance on plant and equipment,
$180. B&T Company's factory overhead incurred for May is:
 
$1,960.
$6,400.
$35,160.
$8,360.
$21,200.
 
Indirect labor +
property taxes +
factory heat, lights and power +
insurance on plant and equipment
 
ans. $8,360
   
The ending inventory of finished goods has a total cost of $11,500 and consists of 700 units.
If the overhead applied to these goods is $3,900, and the overhead rate is 65% of direct labor
 how much direct materials cost was incurred in producing these units?
 
Multiple Choice
 
$6,016.
$1,216.
$4,800.
$10,000.
$4,661.
 
Total Cost = Direct Material + (overhead applied ÷ overhead rate is) +
Overhead applied
 
11500 = DM + (3900/.65) + 3900
11500 = DM + 6000 + 3900
11500 = DM + 9900
10000 = Direct Material + 4800 + 3984
10000 = 8784X
DM = $1,216
ans. $1,216
   
The Work in Process Inventory account for DG Manufacturing follows. Compute the cost of jobs completed and transferred to Finished Goods Inventory.
 
Work in Process                Inventory
Beginning WIP:                  4,500
Direct materials:                               47,100
Direct labor:                                       29,600
Applied overhead:                            15,800
Total Mfg. costs:                                97,000
To finished goods                             ?
Ending WIP:                                        8,900                     
 
88,100
91,000
67,000
21,000
 
Beginning WIP +
Direct materials +
Direct labor +
Applied overheads –
Ending WIP
 
ans. $88,100
   
Minstrel Manufacturing uses a job order costing system. During one month Minstrel purchased $219,600 of raw materials on credit;
issued materials to production of $213,000 of which $35,400 were indirect. Minstrel incurred a factory payroll of $160,800, paid in cash,
of which $45,400 was indirect labor. Minstrel uses a predetermined overhead application rate of 150% of direct labor cost.
Minstrel's beginning and ending Work in Process Inventory are $17,300 and $30,600 respectively.
Compute the cost of product transferred to Finished Goods Inventory:
 
$610,700.
$481,400.
$450,800.
$452,800.
 
 
Total manufacturing costs =
Direct material +
direct labor +
manufacturing overheads
 
ans. 452,800.
   
What kind of costs are assigned to units of product in absorption costing?
fixed and variable manufacturing costs
   
Which of the following is a cost that car manufacturers incur that can be directly traced to the product?
factory GPS system
   
Labor costs that are easily traced to a job are called _____ labor costs
direct
   
A predetermined overhead rate is calculated by dividing the _______ total manufacturing overhead by
the _______ total amount of the allocation base.
estimated, estimated
   
Categories of manufacturing overhead include:
direct materials, direct labor, manufacturing overhead
   
The formula for applying overhead to a specific job is:
Predetermined overhead rate x Amount of allocation base incurred by job
   
Which accounts are debited in the journal entry to record manufacturing labor costs?
work in process and manufacturing overhead
   
Factory labor charges that cannot be easily traced to a job are treated as:
manufacturing overhead
   
Any purchased materials that will go into the finished product are first recorded in the _______ _________ inventory account.
raw materials
   
The schedule of cost of goods __________ summarizes costs that remain in Work in progress inventory and that
have been transferred to Finished goods inventory.
manufactured
   
When a job is completed, the job costs are transferred out of:
work in progress
   
Which of the following types of companies would have work in process inventory?
Manufacturing
   
Which of the following is not an activity in the value chain?
Administration
   
A cost that can be traced to a cost object is known as a
direct cost.
   
Period costs are often referred to as
operating expenses.
   
Conversion costs consist of
direct labor and manufacturing overhead.
   
Which of the following is not part of manufacturing overhead?
Period costs, such as depreciation on office computers
   
Which of the following is a calculated amount, rather than a general ledger account?
Cost of goods manufactured
   
Which of the following types of companies will always have the Cost of Goods Sold account on their income statements?
Merchandising and manufacturing companies
   
Which of the following is false?
Sunk costs are generally relevant to decisions.
   
Which of the following is true?
Fixed costs stay constant in total over a wide range of activity levels.
   
Total Product Cost
direct materials + direct labor +manufacturing overhead
 
3 Types of Inventory for Manufacturing Companies
raw materials, work in process, finished goods
   
Period Costs
R&D, design, marketing, distribution, and customer service also known as operating expenses
   
Merchandising COGS
beginning inventory + purchases - ending inventory
   
Manufacturing COGS
beginning finished goods inventory + cost of goods manufactured – ending finished goods inventory
   
A particular cost may be direct or indirect depending on the cost object
True
   
In an automobile manufacturing plant, the assembly-line workers are considered to be ___________ ___________.
direct labor
   
Which of the following are examples of indirect labor costs?
Assembly-line supervisor salary
Factory security guard wages
   
Period cost =
Selling Expenses + Administrative Expenses
   
Materials that become an important component of the finished product and their cost can be easily and conveniently
traced to the finished product are _________ materials.
direct (raw)
   
Which of the following are most likely fixed costs?
Administrative Salaries
Factory rent
Factory insurance
   
A _________ cost changes in direct proportion to changes in the activity level
Variable
   
A dress manufacturer would consider the cost of relatively inexpensive items like thread to be part of:
manufacturing overhead
indirect materials
   
Manufacturing costs can be divided into three categories: direct materials, direct ___________ and ___________ ___________.
direct labor and manufacturing overhead
   
Variable costs remain fixed in total within the relevant range of activity.
False
   
A __________ __________ can be easily and conveniently traced to a specific cost object.
direct cost
   
A laptop computer manufacturer would consider the computer's processor chip to be a(n):
direct material cost
   
Cost objects:
may be assigned costs to help spending
can be products, customers, or jobs (a cost object is anything for which cost data is desired)
   
The level of activity within which variable and fixed cost assumptions are valid is known as the _________ ________.
relevant range
   
Indirect materials can be easily and inexpensively traced to a specific product.
false
   
Manufacturing costs include:
1. indirect labor
2. direct labor
3. direct materials (administrative costs and selling costs are non-manufacturing costs)
   
Factory materials, such as cleaning supplies, that are not components of finished products are classified as:
manufacturing overhead
   
Which of the following statements are true?
period costs are expensed in the same period in which they are incurred
non-manufacturing costs are period costs
   
Within the relevant range of activity, variable costs:
remain constant per unit
vary in total
   
There are two broad classifications of costs: manufacturing costs and __________ costs.
non-manufacturing
   
Administrative costs include:
executive compensation and public relations costs
   
The materials that go into the final product are called ________ materials.
raw (direct)
   
Cost behavior:
refers to how a cost will change as activity level changes
   
Which of the following statements are true?
advertising and sales commissions are period costs
direct labor and indirect labor are product costs (indirect labor is part of manufacturing overhead)
   
Within the relevant range, _________ costs remain constant on a per unit basis.
variable
   
Direct materials, direct labor, and manufacturing overhead are all _________ costs.
product
   
In the equation Y = a + bX, Y is the :
total mixed cost
   
Opportunity costs:
are benefits that are given up when selecting one alternative over another
should be considered in decision making
   
Marginal cost is:
the cost incurred to produce one more unit of a product
   
Which of the following statements are true?
the equation for a straight-line can be used to express the relationship between mixed costs and the level of activity
mixed costs contain both fixed and variable cost elements
   
A change in revenues between two alternative is known as __________ revenue or incremental revenue
differential
   
The difference in costs between two alternatives is called a(n) __________ cost.
differential
   
The revenue obtained from selling one additional unit of product is called ___________ revenue.
marginal
   
Which of the following are examples of common activity bases?
machine hours
number of purchase orders
direct labor hours
   
Costs that are shared by multiple cost objects in a company are known as _______ costs.
common
   
Costs that have already been incurred and can not be changed by decisions made in the current period or in
the future periods are called __________ costs.
sunk
   
Manufacturing costs can be divided into three categories: direct materials, direct __________ and _________ _________.
labor and manufacturing overhead
   
Variable costs:
remain constant per unit and vary in total
   
Which of the following is not a COST CLASSIFICATION associated with decision making?
Indirect costs
   
Another term for direct materials is raw materials.
False
   
Which of the following are examples of committed fixed costs?
top management salaries
real estate taxes
   
Inventoriable costs is another term for _________ costs.
product
   
The components of prime costs are:
direct labor
direct materials
   
Which of the following statements are true?
step-variable costs can be adjusted quickly as conditions change
total salaried employee expense may be a step-variable cost
   
Differential costs are also known as ___________ costs.
incremental
   
The materials that go into the final product are called _________ materials.
raw
   
Direct labor and overhead costs incurred to change raw materials into finished products are known as _________ costs.
conversion
   
True or False: Presenting fixed costs on an average per unit basis can be misleading.
True
   
What kind of costs are assigned to units of product in absorption costing?
fixed and variable manufacturing costs
   
Which of the following is a cost that car manufacturers incur that can be directly traced to the product?
factory GPS system
   
Labor costs that are easily traced to a job are called _____ labor costs
direct
   
A predetermined overhead rate is calculated by dividing the _______ total manufacturing overhead by
the _______ total amount of the allocation base.
estimated, estimated
   
Categories of manufacturing overhead include:
direct materials, direct labor, manufacturing overhead
   
The formula for applying overhead to a specific job is:
Predetermined overhead rate x Amount of allocation base incurred by job
   
Which accounts are debited in the journal entry to record manufacturing labor costs?
work in process and manufacturing overhead
   
Factory labor charges that cannot be easily traced to a job are treated as:
manufacturing overhead
   
Any purchased materials that will go into the finished product are first recorded in the _______ _________ inventory account.
raw materials
   
The schedule of cost of goods __________ summarizes costs that remain in work in progress inventory
and that have been transferred to finished goods inventory.
manufactured
   
When a job is completed, the job costs are transferred out of:
work in progress
   
Which of the following types of companies would have work in process inventory?
Manufacturing
   
Which of the following is not an activity in the value chain?
Administration
   
A cost that can be traced to a cost object is known as a
direct cost.
   
Period costs are often referred to as
operating expenses.
   
Conversion costs consist of
direct labor and manufacturing overhead.
   
Which of the following is not part of manufacturing overhead?
Period costs, such as depreciation on office computers
   
Which of the following is a calculated amount, rather than a general ledger account?
Cost of goods manufactured
   
Which of the following types of companies will always have the Cost of Goods Sold account on their income statements?
Merchandising and manufacturing companies
   
Which of the following is false?
Sunk costs are generally relevant to decisions.
   
Which of the following is true?
Fixed costs stay constant in total over a wide range of activity levels.
   
Total Product Cost
direct materials + direct labor +manufacturing overhead
   
3 Types of Inventory for Manufacturing Companies
raw materials, work in process, finished goods
   
Period Costs R&D, design, marketing, distribution, and customer service also known as
operating expenses
   
Merchandising COGS
beginning inventory + purchases - ending inventory
   
True or False: A particular cost may be direct or indirect depending on the cost object
True
   
In an automobile manufacturing plant, the assembly-line workers are considered to be ___________ ___________.
direct labor
   
Which of the following are examples of indirect labor costs?
Assembly-line supervisor salary
Factory security guard wages
   
Period cost =
Selling Expenses + Administrative Expenses
   
Materials that become an important component of the finished product and
their cost can be easily and conveniently traced to the finished product
are _________ materials.
direct (raw)
   
Which of the following are most likely fixed costs?
Administrative Salaries
Factory rent
Factory insurance
   
A _________ cost changes in direct proportion to changes in the activity level
Variable
   
A dress manufacturer would consider the cost of relatively inexpensive items like thread to be part of:
manufacturing overhead
indirect materials
   
Manufacturing costs can be divided into three categories: direct materials, direct ___________ and ___________ ___________.
labor;  manufacturing; overhead
   
True or False: Variable costs remain fixed in total within the relevant range of activity.
False
   
A __________ __________ can be easily and conveniently traced to a specific cost object.
direct cost
   
A laptop computer manufacturer would consider the computer's processor chip to be a(n):
direct material cost
   
Cost objects may be assigned costs to help spending
can be products, customers, or jobs (a cost object is anything for which cost data is desired)
   
The level of activity within which variable and fixed cost assumptions are valid is known as the _________ ________.
relevant range
   
Indirect materials can be easily and inexpensively traced to a specific product.
false
   
Manufacturing costs include:
indirect labor
direct labor
direct materials
   
Factory materials, such as cleaning supplies, that are not components of finished products are classified as:
manufacturing overhead
   
Which of the following statements are true?
period costs are expensed in the same period in which they are incurred
non-manufacturing costs are period costs
   
Within the relevant range of activity, variable costs:
remain constant per unit
vary in total
   
There are two broad classifications of costs: manufacturing costs and __________ costs.
non-manufacturing
   
Administrative costs include:
executive compensation and public relations costs
   
The materials that go into the final product are called ________ materials.
raw (direct)
   
Cost behavior:
refers to how a cost will change as activity level changes
   
Which of the following statements are true?
advertising and sales commissions are period costs
direct labor and indirect labor are product costs
   
Within the relevant range, _________ costs remain constant on a per unit basis.
variable
   
Direct materials, direct labor, and manufacturing overhead are all _________ costs.
product
   
In the equation Y = a + bX, Y is the :
total mixed cost
   
Opportunity costs:
are benefits that are given up when selecting one alternative over another
should be considered in decision making
   
Marginal cost is:
the cost incurred to produce one more unit of a product
   
Which of the following statements are true?
the equation for a straight-line can be used to express the relationship between mixed costs and the level of activity
mixed costs contain both fixed and variable cost elements
   
A change in revenues between two alternative is known as __________ revenue or incremental revenue
differential
   
The difference in costs between two alternatives is called a(n)__________ cost.
differential
   
The revenue obtained from selling one additional unit of product is called ___________ revenue.
marginal
   
Which of the following are examples of common activity bases?
machine hours
number of purchase orders
direct labor hours
   
Costs that are shared by multiple cost objects in a company are known as _______ costs.
common
   
Costs that have already been incurred and can not be changed by decisions made in the current period or
in the future periods are called __________ costs.
sunk
   
Manufacturing costs can be divided into three categories: direct materials, direct __________ and _________ _________.
labor and manufacturing overhead
   
Variable costs:
remain constant per unit and vary in total
   
Which of the following is not a COST CLASSIFICATION associated with decision making?
Indirect costs
   
True or False:
Another term for direct materials is raw materials.
False
   
Which of the following are discretionary fixed costs?
advertising
management training periods
   
Which of the following are examples of committed fixed costs?
top management salaries
real estate taxes
   
Inventoriable costs is another term for _________ costs.
product
   
The components of prime costs are:
direct labor
direct materials
   
Which of the following statements are true?
step-variable costs can be adjusted quickly as conditions change
total salaried employee expense may be a step-variable cost
   
We Ship It, Inc. is considering changing its shipping methods, which they believe will attract new customers. The following information relates to the present and proposed methods.
 
Present Proposed.
Rev.                       140,000               190,000
Var.Cost                60,000                 70,000
Fix.Cost                20,000                 25,000
 
Calculate the differential net income or loss from the proposal.
 
$35,000 differential net income
   
Differential costs are also known as ___________ costs.
incremental
   
The materials that go into the final product are called _________ materials.
raw
   
Direct labor and overhead costs incurred to change raw materials into finished products are known as _________ costs.
conversion
   
Presenting fixed costs on an average per unit basis can be misleading.
True

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