ACCT 203 CH 1 vocab

Given: Sales of $360,000, Gross Margin of $140,000, Contribution Margin of $110,000, and Total Selling & Administrative Exp. of $60,000, net income using the traditional income statement format equals Blank______.

$80,000 (Gross Margin of $140,000 - Total Selling & Admin. Exp. of $60,000 = $80,000.)

A bill of materials contains the _____

-type of each direct material needed to complete a unit of product -quantity of each direct material needed to complete a unit of product

All manufacturing costs are assigned to units of product and all nonmanufacturing costs are treated as period cost under

absorption costing

Selling costs include Blank______.

advertising, sales commissions, sales salaries

How to compute the predetermined overhead rate...

divide the total manufacturing overhead cost for the period by the estimated total amount of the allocation base

Costs that remain constant in total and vary per unit are costs?

fixed costs

differential cost can be

fixed or variable

what si the focus on contribution format statements?

focus on cost behavior and make it easier to predict how decisions affect the future.

what is the focus of traditional income statements?

focus on cost classifications. and cost of goods sold includes both fixed and variable costs gross margin is reported

A cost that contains both variable and fixed cost elements is a(n) _____ _____

mixed cost

A potential benefit that is forfeited or lost when one decision is chosen over another is called a(n)

opportunity cost

Costs taken directly to the income statement as expenses in the period incurred or accrued. All selling and administrative expenses

period costs

The formula for applying overhead to a specific job is?

predetermined overhead rate × actual amount of allocation base incurred by the job.

"attach" to units of product as they are produced or purchased for resale and are also called inventoriable costs

product costs

Which of the following is not a COST CLASSIFICATION associated with decision making? Indirect costs Opportunity costs Sunk costs Differential costs

indirect

Selling and administrative costs are ______ costs. Multiple choice question.

indirect or indirect

Companies that use job-order costing make

many different products

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

matching principle

Direct materials costs are recorded on the job cost sheet when the ______.

materials are issued to the job

An income statement focusing on product and period costs has been prepared using a(n) _____ format, while a(n) _____ format income statement makes a distinction between fixed and variable costs.

traditional OR GAAP, contribution OR contribution margin

All hours on computerized time tickets are automatically posted directly to job cost sheets??

No

an allocation base is an?

common measure used to assign overhead costs to products and services. the most common ones are direct labor hours and costs, machine hours, and unit of product

manufacturing overhead consists of?

consists of many different types of costs is an indirect cost contains both fixed and variable costs

Sales revenue minus variable expenses equals ____ ___

contribution margin

How individual costs react to changes in activity level is referred to as

cost behavior

On a traditional format income statement ______.

cost of goods sold includes both fixed and variable costs gross margin is reported

Differential costs, opportunity costs and incremental costs are all cost classifications used in?

decision making

A change in revenues between two alternatives is known as _____ revenue or incremental revenue.

differential

Companies that make many different products each period use what?

job-order costing

A job cost sheet contains Blank______ the job. selling costs charged to manufacturing overhead charged to labor costs charged to the selling price of materials costs charged to

manufacturing overhead charged to labor costs charged to materials costs charged to

The assumption that cost behavior is strictly linear is reasonably valid within _____ _____ the of activity.

relevant range

contribution margin is

sales revenue minus variable costs

Selling costs include ______.

sales salaries, sales commissions, and advertising

Within the relevant range, a cost that changes in direct proportion to changes in the activity level is a

variable cost