Managerial Accounting Exam #1
Bill of materials
a document that lists the type and quantity of each type of direct material needed to complete a unit of product
cost-plus pricing occurs when.......
a markup percentage is added to the cost of a job
Absorption Costing
all manufacturing costs, both fixed and variable, are assigned to units of product-units are said to fully absorb manufacturing costs
Within the relevant range of activity, ______ costs remain constant in total
fixed
A company purchased a 12 month insurance policy on October 1 for $1,200. On the December 31 annual financial statements, ______. Multiple choice question.
$300 is reported as a expense and $900 is reported as an asset
Manufacturing Costs include...
DM,DL and indirect: MOH
Bill materials
The type and quantity of each type of direct material needed to complete a unit of product is listed on the
Activity-based costing
When a company creates overhead rates based on the actions it performs, it is employing an approach called
Cost object
any item for which cost data is desired- products, customers, plants, office locations, and departments
A manufacturing cost that cannot be easily traced to a specific cost object is a ____________ cost
common, indirect, overhead, shared`
How individual costs react to changes in activity level is referred to as cost __________________
cost behavior
Within the relevant range of activity ______
costs and activity can be approximated by a straight line fixed costs remain constant in total
Cost objects include ______
customers, anything for which cost data is desired, organizational subunits
Differential costs, opportunity costs and sunk costs are all cost classifications used in ______.
decision making
differential cost is also known as......
incremental cost
Selling and administrative costs are ______ costs.
indirect or direct
Product costs are also called_____________ costs
inventoriable costs or manufacturing
Analysis of mixed cost
is a detailed analysis technique used to determine whether costs are fixed or variable
Period costs are expensed when incurred. Period costs do not flow through the inventory accounts.
know this
Allocation base
must be common to all the company's products and services
Matching Principle
recognize expenses in the same period as the revenues they help to generate
The assumption that cost behavior is strictly linear is reasonably valid within the _______________ , _____________________ of activity
relevant range
Contribution Margin
sales revenue minus variable costs
Nonmanufacturing costs
selling costs and administrative costs
Opportunity cost
the potential benefit that is given up when one alternative is selected over another
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, contribution
A cost that changes in direct proportion to changes in the activity level is a ______ cost.
variable cost
Selling Cost
0 Fixed selling expense$3.90 Fixed administrative expense$2.00 Sales commissions$1.00 Variable administrative expense$0.50 Foundational 1-3 (Algo) 3. If 8,000 units are produced and sold, what is the variable cost per unit produced and sold?
Cost of goods sold for a merchandising company, direct materials and commissions are all examples of _______________
variable costs