ACCT2102- Ch1 + 2

How a cost react to changes in activity level is referred to as cost ____.

Behavior

Fixed costs that cannot easily be changed and often lock a company into a multi-year decision are called ___ fixed costs.

Committed

A change in revenues between two alternatives is known as _____ revenue or incremental revenue.

Differential

Fixed costs that usually arise from annual spending decisions by management are called ____ or managed fixed costs.

Discretionary

Indirect Materials are ...

Nails, Glue, Thread -- Minor, rather insignificant materials that aren't worth to trace the cost.

As the level of activity moves outside of the relevant range, fixed costs, _______. Multiple choice question. do not increase or decrease increase or decrease in a linear fashion increase or decrease in discrete steps

Sales Revenue - Variable Costs

Committed fixed costs include ______. Multiple select question. top management salaries research real estate taxes public relations

Top Management Salaries Real Estate Taxes

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

Variable

Which type of cost varies, in total, in direct proportion to changes in the level of activity? Variable Fixed Differential Opportunity

Variable - think varies!

Within the relevant range of activity ______. Multiple select question. fixed costs remain constant in total and vary per unit variable costs do not change in total, only per unit the assumption that cost behavior is strictly linear is reasonably valid

fixed costs remain constant in total and vary per unit the assumption that cost behavior is strictly linear is reasonably valid

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 ______. Multiple choice question.

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

Which of the following are most likely fixed costs? Administrative salaries Factory insurance Electricity to operate factory machines Factory rent

Administrative salaries Factory insurance Factory rent -- Think: Things that wont change if activity changes!

Within the relevant range of activity, ______ costs remain constant in total.

Fixed -- Variable Costs remain constant per UNIT within the range of activity while Fixed remain constant always!

A fixed cost remains fixed ______ within the relevant range of activity.

In total

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

Income Statement

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

Income Statement

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

Indirect

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. (Enter only one word per blank.)

Matching

Which of the following statements are true? Multiple select question. Period costs do not flow through the inventory accounts. Period costs are expensed when incurred. Inventoriable costs are expensed in the period in which they are incurred. None of the costs incurred in a manufacturing company are period costs.

Period costs do not flow through the inventory accounts. Period costs are expensed when incurred.

Discretionary fixed costs include: advertising factory depreciation insurance expense management training programs

advertising management training programs

Cost behavior: Multiple select question. is the relative proportion of each type of cost in an organization is a detailed analysis technique used to determine whether costs are fixed or variable refers to how a cost will change as activity level changes categorizes costs as fixed, mixed and variable

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

The assumption that cost behavior is strictly linear is reasonably valid within the______ ______ of activity. (Enter only one word per blank.)

relevant range

Marginal cost is ______. Multiple choice question. the cost that can be traced to a specific product another name for the fixed cost per unit what is given up by selecting one alternative over another the cost incurred to produce one more unit of a product

the cost incurred to produce one more unit of a product

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. (Enter only one word per blank).

traditional; contribution

As the level of activity moves outside of the relevant range _____ costs increase or decrease in discrete steps rather than an linear fashion.

variable

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

Indirect

Which of the following is not a COST CLASSIFICATION associated with decision making? Multiple choice question. Indirect costs Differential costs Sunk costs Opportunity costs

Indirect Costs

Which of the following are differences between the traditional and contribution format to income statements? Multiple select question. The traditional income statement is for internal use, while the contribution format income statement is for external use. Traditional income statements focus on cost classifications. Contribution format statements focus on cost behavior. 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. Contribution format statements make it easier to predict how decisions affect the future.

Differential Cost is ________. also known as incremental cost the same as opportunity cost never relevant to a product decision the difference in cost between two alternatives

also known as incremental cost the difference in cost between two alternatives

Product costs _______. Multiple select question. are always expensed in the same period in which the related products are produced include all costs involved in making and selling a product are also called inventoriable costs "attach" to units of product as they are purchased for resale or produced

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

Period costs: Multiple select question. are expensed in the period incurred flow through the inventory accounts are included as part of the cost of goods include all costs that are not product costs

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

Indirect labor costs include- Which of the following: assembly-line supervisor salary factory security guard wages assembly-line worker wages administrative assistant salary

assembly-line supervisor salary factory security guard wages

Nonmanufacturing costs include ______.Multiple select questions. company president's salary insurance on plant equipment assembly-line worker wages sales commissions

company president's salary sales commissions

Differential costs, opportunity costs, and incremental costs are all cost classifications used in: decision making account analysis predicting cost behavior financial statements

decision making

Administrative costs include

executive compensation and public relations costs

Variable costs vary ______ within the relevant range of activity. in total or per unit

in total

As the level of activity moves outside of the relevant range, fixed costs, ________. do not increase or decrease increase or decrease in a linear fashion increase or decrease in discrete steps

increase or decrease in discrete steps

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

indirect - think: Only labor costs that can be physically and conveniently traced to individual units of product are considered direct labor costs.

Manufacturing overhead costs include: - indirect materials, factory supervisors' salaries, and factory depreciation - direct materials, administrative taxes and insurance, and sales commissions - direct materials, sales commissions, and factory assembly workers' wages - administrative taxes and insurance, sales commissions, and factory assembly workers' wages

indirect materials, factory supervisors' salaries, and factory depreciation

The revenue from selling one additional unit is called ______ revenue

marginal

A potential benefit that is forfeited or lost when one decision is chosen over another is called a(n) _______ _______. . (Enter only one word per blank.)

opportunity cost

On a traditional income statement, cost of goods sold reports the ________ costs attached to merchandise sold during the period, while selling and administrative expenses report all ________ costs that have been expensed as incurred. (Enter only one word per blank.)

product; period