Accounting Principles Ch 1-3
Selling costs include
Advertising Sales salaries Sales commissions
Cost ____ refers to how individual costs change as the level of activity level increases or decreases
Behavoir
A ______ cost is a type of indirect cost incurred to benefit more than one cost object.
Common cost
Costs that are shared by multiple costs objects in a company are ___ costs
Common costs
The relative proportion of each type of cost in an organization is known as the company's _____ ______
Cost structure
A change in revenues between two alternatives is known as _____ revenue or incremental revenue
Differential
_____ fixed costs usually arise from annual decisions made by management to spend on certain fixed costs
Discretionary
Which of the following are examples of indirect labor costs?
Factory security guard wages Assembly-line supervisor wages
True or False: Variable costs remain fixed in total within the relevant range of activity
False
___ cost remain constant within the relevant range of activity
Fixed cost
A dress manufacture would consider the cost of relatively inexpensive items like thread to be part of
Manufacturing overhead
The revenue from selling one additional unit is _____ revenue.
Marginal
______ costs is the cost of producing one or more unit
Marginal
A potential benefit that is forfeited or lost when one decision is chosen over another is called a
Opportunity cost
Direct materials, direct labor, and manufacturing overhead are all...
Product Cost
Cost incurred to obtain customers orders are known as ______ cost
Selling
Costs that have already been incurred and can not be changed by decisions made in the current period or in future periods are called ____ costs
Sunk costs
A regional sales manager salary would be a direct cost of the regional office in which the sales manager works.
True
Direct costs can be easily and conveniently traced back to a specific cost object.
True
The high low method....
Uses only two data points is based on periods where the activity tends to be unusual
____ costs vary in total, in direct proportion to changes in activity level
Variable
Mixed costs are commonly known as...
Variable cost
A contribution margin income statement....
can assist with management decision making separates costs into their fixed and variable costs
Prime costs are...
direct labor direct material
Examples of common activity bases
direct labor hours Machine hours Number of purchase orders
Materials that can be easily and conveniently traced back to the finished product are _____
direct materials
Period costs are expensed on the income statement
in the period in which they occur
A fixed costs remains fix ____ within the relevant range of activity
in total
Manufacturing overhead costs include...
indirect materials, factory supervisor's salaries, and factory taxes and insurance
Factory materials such as cleaning supplies that are not components of finished products are classified as
manufacturing overhead
Costs objects...
may be assigned costs to help control spending can be products customers or jobs *is anything for which cost data is desired
An activity base...
measures whatever causes costs to vary is sometimes called a costs driver
Fixed costs
remain constant in total regardless of changes in activity generally include rent and supervisor salary should not be expressed on a per unit basis when making decisions
Contribution margin is..
sales revenue minus variable costs
Marginal costs is...
the cost incurred to produce one more unit of product
Differential cost is
the difference in costs between two alternatives
in the equation "Y=a+b(x) Y is...
the total mixed cost
When using the high low method, the change in cost divided by the change in units is
the variable cost per unit
Costs assumptions are reasonably valid
within the RELEVANT RANGE
Differential costs is...
the difference in costs between two alternatives also known as incremental costs
