Answer:
6. D. Contains a combination of fixed costs and variable costs.
7. B. Does not change with changes in the volume of activity within the relevant range.
8. C. Direct materials, direct labor, and factory overhead.
9. A. Finished goods inventory.
10. D. Work-in-Process inventory.
11. B. Cost of goods purchased.
Explanation:
6. Mixed cost is a combination of fixed costs and variable costs. Therefore, the option "D" is the correct answer. However, it is not directly traceable to a cost object. The mixed cost has not been incurred until the manufacturer uses it. It cannot change up to a specific volume, but mixed cost increases after that limit — for example - Telephone bill or Electric bill.
7. Fixed cost is the cost that does not change as the volume changes within the relevant range. Therefore, option <em>B</em> is right, and option <em>D</em> is incorrect. Because it does not require the future outlay of cash for decision making, it is not directly traceable to a cost object. If the manufacturer does not rent a house for administrative purposes, it can be avoided.
8. The three major cost components of a manufactured product are-
Direct materials, direct labor, and factory overhead. Those are the combination of manufacturing cost. So, <em>C</em> is the answer. Indirect labor and materials are not major cost components, so <em>B</em> is incorrect. Opportunity cost and sunk costs are decision-making costs, so <em>D</em> is wrong. Selling, administrative, and marketing costs are non-manufacturing costs, so <em>A</em> and <em>E</em> are wrong.
9. When the manufacturing firm has completed the production of a specific product but has not yet sold to the customers or third parties, it is termed as the finished goods inventory. In short, it states that the number of manufactured products that are available for sale. It is a current asset for the manufacturer because those can be sold within a year.
10. Work-in-process inventory is such a type of manufacturing inventory or cost that has not yet been manufactured or partially manufactured or in the process of manufacturing. It is not a conversion costs because it may incur the direct labor and manufacturing overhead. It cannot be a finished good or cost of goods sold.
11. A manufacturing firm's cost of goods manufactured is equivalent to a merchandising firm's cost of goods purchased. Therefore, the option "B" is correct.
The cost of goods sold is measured with the help of the cost of goods purchased. So, option <em>A</em> is incorrect. After adding the costs of goods manufactured with the beginning finished goods inventory, we can get the costs of goods available for sale. Therefore, <em>C</em><em>, </em><em>D</em><em>, </em>and<em> </em><em>E</em> cannot be the answer.
