Learning Objectives

After studying Chapter 1, you should be able to:

Identify and give examples of each of the three basic manufacturing cost categories.

Distinguish between product costs and period costs and give examples of each.

Prepare an income statement including calculation of the cost of goods sold.

Prepare a schedule of cost of goods manufactured.

Define and give examples of variable costs and fixed costs.

Define and give examples of direct and indirect costs.

Define and give examples of cost classifications used in making decisions: differential costs, opportunity costs, and sunk costs.

(Appendix 1A) Identify the four types of quality costs and explain how they interact.

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