Week 1 Videos

Davidson Company has sales of $100,000, variable cost of goods sold of $40,000, variable selling expenses of $15,000, variable administrative expenses of $5,000, fixed selling expenses of $7,000, and fixed administrative expenses of $9,000. What is Davidson's contribution margin?

$40,000 B/c Contribution margin = Sales revenues - All variable expenses Contribution margin = $100,000 - ($40,000 + $15,000 + $5,000)) = $100,000 - $60,000 = $40,000

Adventure Holidays sells thousands of tour packages each month through its branches. A branch manager's salary would be a (n) _________ of selling a tour package

indirect cost

Which of the following is true of the contribution approach?

it seperares costs into fixed and variable categories

Items such as indirect materials, indirect labor, maintenance and repairs on production equipment, depreciation, and insurance on manufacturing facilities are included in ________.

manufacturing overhead costs

Match the term and the definition. 1. emphasizes decisions affecting the future 2. emphasizes relevance 3. emphasizes financial consequences of past activities 4. not required to follow GAAP 5. emphasizes objectivity

1. managerial 2. managerial 3. financial 4. managerial 5. financial

A ____ is a cost that is incurred to support a number of cost objects but cannot be traced to them individually

common cost

managerial perspective includes:

ethics perspective, strategic management perspective, enterprise risk management perspective, corporate social responsibility perspective, process management perspective, and leadership perspective

Which of the following is NOT a business management perspective that goes beyond the numbers to enable intelligent planning, controlling, and decision making?

lean production perspective

If a firm increases its activity level, ________.

some costs will change, others will remain the same.

Which of the following is always an irrelevant cost?

sunk cost

Which observation is true of period costs?

they are expensed in the period in which they are incurred

A fixed cost is a cost which ________.

remains constant in total with changes in the level of activity

planning involves _____

setting goals and objectives

Audio Corporation purchased $20,000 of DVDs during the current year. The company had DVD inventory of $15,000 at the beginning of the year. An end of the year audit revealed that the company had DVD inventory of $10,000. The amount that would be reported as cost of goods sold in the income statement for the current year is ________.

$25,000 B/c Cost of goods sold = Beginning merchandise inventory + Purchases - Ending merchandise inventory Cost of goods sold = $15,000 + $20,000 - $10,000 = $25,000

Manufacturing costs include all of the following categories except ________. a. administrative cost b. direct labor c. direct materials d. manufacturing overhead

A

All of the following are pillars of managerial accounting EXCEPT... a. controlling b. decision making c. planning d. maximizing profit

d. maximizing profit

Adventure Holidays sells thousands of tour packages each month through its branches. A branch manager's salary would be a(n) _________ of the branch

direct cost

Which of the following is common to both prime cost and conversion cost?

direct labor

________ is sometimes called "touch labor."

direct labor

Materials that become an integral part of the finished product and whose costs can be conveniently traced to the finished product are called ________.

direct materials

Differential costs are always ________.

relevant in making business decisions

Cyber Devices manufactures PCTV products that enable people to watch television content on their computers. It sells its product to retailers for $50. A tuner component that goes into each of these devices costs $5 to acquire. The total variable cost at an activity level of 1,000 units equals ________.

$5,000 B/c Total variable cost = $5 × 1,000 = $5,000.

In the equation, Y = a + bX, X represents ________.

the level of activity

In a small manufacturing facility, one welder is needed for every 200 hours of machine-hours or fewer in a month. The welder is paid a monthly salary of $2,500. If the total monthly requirement is 1,300 machine-hours, the total salaried employee expense is ________.

$17,500 B/c The company would need 7 welders (7 × $2,500 = $17,500) to complete the work. The relevant range here is 1,201 to 1,400 machine-hours.

Which of the following statements about opportunity costs is not correct? a.An opportunity cost is the potential benefit that is given up when one alternative is selected over another. b.An opportunity cost cannot be changed by any decision made now or in the future. c.Opportunity costs are not usually found in accounting records. d.Opportunity costs are costs that must be explicitly considered in every decision a manager makes.

B

The traditional income statement uses which of the following cost categories?

cost of goods sold and selling and administrative expenses

How should the wages of a sheet metal worker in a fabrication plant be classified?

product cost

The ________ requires that the costs incurred to generate a particular revenue should be recognized as expenses in the same period that the revenue is recognized.

matching principle

Property taxes associated with a company's administrative facility are considered ________.

nonmanufacturing costs