ACIS 2116 Ch 1 Book

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______. $190,000 $50,000 $160,000 $80,000

80,000

Prior to being recorded on the income statement, manufacturers' product costs flow through Blank______.

Work in Process Raw Materials Finished Goods

Cost of goods sold for a merchandising company, direct materials and commissions are all examples of____ costs. (Enter only one word per blank.)

variable

A fixed cost remains fixed ______ within the relevant range of activity. Multiple choice question. in total per unit

in total

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

Indirect Costs

Contribution margin is Blank______. all revenues minus all costs sales revenue minus variable costs sales revenue minus fixed costs sales revenue minus cost of goods sold

sales revenue minus variable costs

What type of cost is never relevant and should be disregarded when making decisions? Incremental Marginal Sunk Opportunity

Sunk

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. (Enter only one word per blank).

Traditional, contribution

opportunity cost____

are benefits lost when choosing one option over another should be considered in decision making

Within the relevant range of activity Blank______. fixed costs remain constant in total and vary per unit the assumption that cost behavior is strictly linear is reasonably valid variable costs do not change in total, only per unit

costs and activity can be approximated by a straight line fixed costs remain constant in total

Differential costs, opportunity costs and incremental costs are all cost classifications used in Blank______. financial statements account analysis predicting cost behavior decision making

decision making

A change in revenues between two alternatives is known as revenue or incremental revenue. (Enter only one word per blank.)

differential

Differential costs are also known as costs. (Enter only one word per blank.)

incremental

cost that contains both variable and fixed costs elements is called a ___ cost. (Enter only one word per blank.)

mixed

A potential benefit that is forfeited or lost when one decision is chosen over another is called a(n) . ____ ____(Enter only one word per blank.)

opportunity, cost

On a traditional income statement, cost of goods sold reports the___ costs attached to merchandise sold during the period, while selling and administrative expenses report all ____costs that have been expensed as incurred. (Enter only one word per blank.)

product, period