Chapter 1 Smartbook

Manufacturing costs can be divided into three categories:

Direct Materials, Direct Labor, Manufacturing Overhead

A cost may be direct or indirect, depending on the cost object.

True

Which type of cost changes in total, in direct proportion to changes in activity level?

Variable

A(n) __ __ is anything for which cost data are desired—including products, customers, plants, office locations, and departments.

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

Labor costs that can be easily and conveniently traced to specific products are ___ ___ costs

direct labor

A laptop computer manufacturer would consider the computer's processor chip to be a(n) ____ ____ cost

direct material

Within the relevant range of activity, ______ costs remain constant in total.

fixed

The rise-over-run formula for the slope of a straight line is the basis of the ____ method

high-low

Product costs flow through the inventory accounts until the goods are sold, at which time they are matched against sales on the ___ ___

income statement

Inventoriable costs is another term for ___ costs

product/manufacturing

Direct labor is also called ___ labor

touch

An income statement focusing on product and period costs has been prepared using a _____ format

traditional

Cost of goods sold for a merchandising company, direct materials and commissions are all examples of ___ costs

variable

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

behavior

A ____ format income statement makes a distinction between fixed and variable costs

contribution