Managerial Accounting MOD 1

which of the following is for S&P Enterprises for the month of July. Total prime cost for the month of july was?

$116,000 prime cost is the direct materials plus the direct labor

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

1. manufacturing overhead 2. indirect materials

True or False: The impact of customer ill will is generally not found on quality control reports and measuring and reporting quality costs does not solve quality problems

True

True or False: The relevant range of activity is approximated by a straight line. within the relevant range of activity, fixed costs remain constant in total

True

differential cost is

a difference in cost between two alternatives also known as an incremental cost

Which of the following statements are true?

a regional sales manager's salary would be a direct cost of the regional office in which the sales manager works. a direct cost can be easily and conveniently traced to a specific cost object.

Selling costs include

advertising, sales commissions, and sales salaries

costs incurred to identify defective products before they are shipped to customers are __________ costs

appraisal

maintenance and depreciation of test equipment are examples of

appraisal costs

costs incurred to identify defective products before they are shipped to customers are called _______ or ________

appraisal or inspection

costs incurred to identify defective products before they are shipped to customers are called _______ or ____ costs

appraisal or inspection costs

how individual costs react to changes in activity level is referred to as cost _______________

behavior

Contribution Approach Income Statement

can assist with management decision making separates costs into their fixed and variable components

step-variable costs

can be adjusted quickly as conditions change and may include total salaried employee expense

fixed costs that cannot easily be changed and often lock a company into a multi-year decision are _______ fixed costs

committed

costs that are shared by multiple cost objects in a company are known as ________ costs

common

sales revenue minus variable expenses equals

contribution margin

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

conversion costs

the relative proportion of each type of cost in an organization is known as the company's

cost structure

prevention, appraisal, internal failure, external failure

costs of quality

cost objects include

customers organizational subunits anything for which cost data is desired

The difference in costs between two alternatives is called a(n) __________ cost.

differential

the difference in revenue between two alternatives is called

differential revenue

fantastic furniture makes custom order couches. The material used to make a couch is a ________ cost of the customer placing the order.

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

a cost that can be easily and conveniently traced to a specified cost object

direct cost

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

direct costs

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

direct labor cost

When a company recalls a defective product a _______ _______ cost is incurred

external failure

other names for manufacturing overhead include

factory overhead, factory burden, indirect manufacturing costs

indirect labor costs include

factory security guard wages, assembly-line supervisor salary

true or false: the term quality costs refers to the cost of the quality of material used to make a product.

false

quality cost information reports

give managers an idea or where to focus quality control efforts show managers if quality control costs are poorly distributed help identify the financial cost of defects

The purpose of statistical process control is to identify processes that are ___ or ____ of control

in or out

as the level of activity moves outside of the relevant range fixed costs

increase or decrease in discrete steps

differential costs are also known as

incremental costs

a cost that cannot be easily and conveniently traced to a specified cost object

indirect cost

which of the following is not a cost classification associated with decision making?

indirect costs

manufacturing overhead costs include

indirect materials, factory supervisors' salaries, and factory depreciation

costs that result from identifying defects before products are shipped to customers and include the cost of scrap and rework are

internal failure costs

Product costs are also called

inventoriable costs

discretionary fixed costs include

management training programs and advertising

direct materials and direct labor are both

manufacturing costs

Indirect materials and indirect labor are classified as

manufacturing overhead

indirect materials and indirect labor are classified as

manufacturing overhead

The revenue obtained from selling one additional unit of product is called ___________ revenue.

marginal

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

matching

when the quality of conformance is low

most of the quality cost in internal and external failure cost total quality cost is high

There are two broad classifications of costs: manufacturing costs and ______

non manufacturing

Which of the following statements is true?

period costs are expensed when incurred and period costs do not flow through the inventory accounts

costs incurred in an attempt to lower the number of products manufactured with defects are

prevention costs

typical prevention costs include

quality circles and statistical process control

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

raw

Cost assumptions are reasonably valid within ___________ ______________ of activity.

relevant range

within the relevant range fixed costs

remain constant in total regardless of changes in activity generally include rent and supervisor salaries should not be expressed on a per unit basis when making decisions

Variable costs

remain constant per unit and vary in total

Which of the following statements is true?

sales commissions are period costs, period costs are expensed in the same period in which they are incurred.

opportunity cost

should be considered in decision making and are benefits that are given up when selecting one alternative over another

what type of cost is never relevant and should be disregarded when making decisions?

sunk cost

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

they are incurred

in order to be ISO 9000 certified, suppliers must demonstrate that

they have a quality control system in use an expected level of quality has been clearly defined detailed documentation regarding the system is in place

In the equation Y=a+bX, Y is the:

total mixed cost

an income statement focusing on product and period costs has been prepared using a ____________format, while a ______ format income statement makes a distinction between fixed and variable costs.

traditional, contribution

True or False: A cost may be direct or indirect, depending on the cost object

true

true or false: presenting fixed costs on an average per unit basis makes them look like they are variable costs

true

Which of the following statements is true?

within the relevant range of activity fixed costs remain constant in total and the relevant range of activity is approximated by a straight line

units that are partially complete are found in:

work in process

variable costs vary _____ within the relevant range of activity

in total

small groups of employees that meet regularly to discuss ways to improve quality are referred to as

quality circles

products that meet or exceed expectations and are free from defects that mar or degrade their performance are said to have a high ______ of __________

quality of conformance

Committed fixed costs include

real estate taxes and top management salaries

which of the following are differences between the traditional and contribution format to income statements?

traditional income statements focus on cost classifications. Contribution format statements focus on cost behavior. Compared to traditional statements, contribution format statements provide management with a tool to make decision making easier.

common activity bases include

units sold, machine hours, direct labor hours

Mixed costs are also commonly known as semi-_________ costs.

variable

Within the relevant range, the _____costs remain constant on a per unit basis

variable

a cost that changes in direct proportion to changes in the activity level is a _______ cost

variable

In the equation Y=a+bX, b denotes the

variable cost per until of activity and the slope of the line

Which of the following statements is true?

when mixed costs are represented by a straight line the steeper the slope the higher the variable cost per unit. a mixed cost has a minimum cost of having a service available and ready for use.

quality control reports in graphic form

help clarify trends in data stack appraisal costs on top of prevention costs include pie charts and bar graphs

when it comes to quality of conformance, and economy car:

may have the same quality of conformance as a luxury car

companies that use just-in-time systems

often require supplies to use sophisticated quality control programs receive parts from suppliers at the time needed to fill orders may require suppliers to certify delivered items are free of defects