A306 Smart Book Questions

A company purchased a 12 month insurance policy on October 1 for $1,200. On the December 31 annual financial statements, ______.

$300 is reported as a expense and $900 is reported as an asset

Manufacturing costs include

Direct labor, Direct materials, manufacturing overhead

Which of the following statements is true? - There are no significant differences between financial and managerial accounting - Financial accounting data is based on business transactions of the business. Managerial accounting is based solely on estimated activity - Managerial accounting provides financial data for internal use and financial accounting provides data to external users - Managerial accounting data is provided to stockholders and lenders to support decisions about lending and investing in the business

Managerial accounting provides financial data for internal use and financial accounting provides data to external users

Factory materials, such as cleaning supplies, that are not components of finished products are classified as ______.

Manufacturing Overhead

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

Manufacturing overhead & Indirect Materials

Cost objects include:

Organizational subunits, customers, and anything for which cost data is desired

Three activities vital to the role of managerial accounting are ??

Planning, Controlling, Decision Making

Product costs:

are also called inventorial costs "attach" to units of product as they are purchased for resale or produced

Opportunity costs ______.

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

Period costs:

are expensed in the period incurred include all costs that are not product costs

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

behavior

Cost Behavior:

categorizes costs as fixed, mixed and variable refers to how a cost will change as activity level changes

Cost classifications for predicting cost behavior are used on _____

contribution format income statements only

Sales revenue minus variable expenses equals _____ _____

contribution margin

Gathering feedback needed to ensure that expectations are being met is part of _____?

controlling

Any item for which cost data is desired is called a(n) ____ ____

cost object

A manager selecting a course of action is performing a ____ activity

decision making

Fantastic Furniture makes custom-order couches. The material used to make a couch is a(n) ______ 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

selling and administrative costs are ____ costs

direct or indirect

Planning involves ____

establishing goals and specifying how to achieve them

controlling involves

gathering feedback to ensure plans are being properly executed or modified as needed

As the level of activity moves outside of the relevant range, fixed costs, ______

increase or decrease in discrete steps

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

incremental

Factory costs such as cleaning supplies, taxes, insurance, and janitor wages are classified as ____

manufacturing overhead

A cost that contains both variable and fixed costs elements is called a(n) ____ cost

mixed

Indirect materials include

nails, glue, and thread

When making a decision ______ should be considered.

only relevant costs and benefits

A potential benefit that is forfeited or lost when one decision is chosen over another is called a(n) _____ _____

opportunity cost

The management activity of ___ includes specifying how to achieve established goals

planning

On a traditional income statement, cost of goods sold reports the ____ costs attached to the merchandise sold and selling and administrative expenses report all ____ costs that have been incurred.

product & period

The assumption that cost behavior is strictly linear is reasonably valid within the ____ ____ of activity

relevant range

Contribution margin is ______.

sales revenue minus variable costs

Direct labor is also called ____ labor

touch

The finished product of one company can become raw materials for another company (true or false)

ture

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

variable

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

variable

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 ______.

$80,000 (Gross Margin of $140,000 - Total Selling & Admin. Exp. of $60,000 = $80,000.)

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

Direct

To be traced to a cost object such as a particular product, the cost must be incurred to make the product (true or false)

Fase

Managerial accounting helps managers perform three vital activities: _____, _____, and decision making

Planning & Controlling

Parties MORE interested in managerial accounting data than in financial accounting data include

Sales Managers & Production Managers

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)

direct material

Administrative costs include ____

executive compensation and public relations costs

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

income statement

The difference in revenues between the two alternatives is called ______.

incremental revenue

A factory manager's salary is an example of a(n) ______ cost.

indirect

Salaries of factory supervisors and factory maintenance personnel are examples of ______ labor costs.

indirect

Direct materials and direct labor are both _____ costs.

manufacturing

Direct materials, direct labor, and manufacturing overhead are all ______ costs.

product

Non manufacturing costs include:

sales commissions company president's salary

Nonmanufacturing costs include ___

sales commissions company president's salary

Period costs are always expensed on the income statement in the period in which ______.

they are incurred

The accrual concept that costs incurred to generate a revenue are expensed in the same period the revenue is recognized is known as the _____ principle.

matching

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

Contribution format statements make it easier to predict how decisions affect the future. Traditional income statements focus on cost classifications. Contribution format statements focus on cost behavior.

Selecting a course of action from competing alternatives is part of ____ ____.

Decision making

The materials that go into the final product are called ____ materials.

raw