Accounting Chapter 1

sales revenue minus variable expenses equals ------ -----

contribution margin

Direct labor and overhead costs incurred to change raw materials into finished products are known as ----- costs

conversion

Any item for which cost data is desired is called a ------ ------

cost object

costs that can be easily and conveniently traced to a specific product are called ----- costs

direct

materials that become an important component of the finished product whose cost can be easily and conveniently traced to the finished product are ------ materials

direct

in an automobile manufacturing plant, the assembly-line workers are classified as ------- ------- cost

direct labor

manufacturing costs include (3)

direct labor, direct materials, manufacturing overhead

which of the following is not a cost classification associated with decision making: A) sunk costs B) indirect costs C) opportunity costs D) differential costs

indirect costs

A dress manufacturer would consider the cost of relatively inexpensive items like thread to be part of ------- ------- and -------- -------

indirect materials; manufacturing overhead

indirect materials and indirect labor are classified as -------- --------

manufacturing overhead

the materials that go into the final product are called ----- materials

raw

period costs are always expensed on the income statement in the period in which -----------

they are incurred

selling and administrative costs are: A) always indirect B) direct or indirect C) always direct

direct or indirect

administrative costs include:

executive compensation and public relations costs

the contribution approach to constructing income statements distinguishes between ------------ costs

fixed and variable

the accrual concept that costs incurred to generate a revenue are expensed in the same period as the revenue is known as the ----- principle

matching

direct materials, direct labor, and manufacturing overhead are all ------ costs

product

true or false: the finished product of one company can become raw materials for another company

true

the contribution approach to constructing income statements: A) aids in decision making B) distinguishes between fixed and variable costs C) distinguishes between product and period costs D) is used primarily for external reporting

A and B

indirect labor costs include: A) administrative assistant salary B) assembly-line worker wages C) factory security guard wages D) assembly-line supervisor salary

C and D

a type of indirect cost incurred to benefit more than one cost object is a(n) ------ cost

common

costs that have already been incurred and can not be changed by decisions made in the current period or in future periods are called ----- costs

sunk

A serious limitation of using a traditional income statement for internal reporting purposes is that it does not distinguish between --------- costs

fixed and variable

a manufacturing cost that cannot be easily traced to a specific cost object is a(n) ------ cost

indirect

order-getting and order-filling are other names for ------ cost

selling

prior to being recorded on the income statement, manufacturers' product costs flow through: A) work in process B) finished goods C) raw materials D) cost of goods sold

A, B, C

Which of the following statements are true? A) A direct cost is sometimes referred to as a common cost. B) A regional sales manager's salary would be a direct cost of the regional office in which the sales manager works. C) A direct cost can be easily and conveniently traced to a specific cost object. D) An individual cost is either direct or indirect, regardless of cost object

B and C

true or false: removing expenses that do not differ between alternatives could alter a decision

false

non-manufacturing costs include: A) assembly-line worker wages B) company president's salary C) sales commissions D) insurance on plant equipment

B and C

other names for manufacturing overhead include: A) prime manufacturing costs B) indirect manufacturing costs C) factory overhead D) factory burden

B, C, D

Prime costs are: A) manufacturing overhead B) direct materials C) direct labor D) selling and administrative expenses

D and C