Chapter 1: Managerial Accounting and Cost Concepts CONNECT

Selling costs include ______.

Advertising Sales salaries Sales commissions

Cost objects include ______.

Anything for which cost data is desired Organizational subunits / departments Customers

Product costs ______.

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

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

Behavior

A(n) _____ _____ is anything for which cost data are desired—including products, customers, plants, office locations, and departments.

Cost Object

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

Direct

Raw materials whose cost can be easily and conveniently traced to the finished product are ________ materials.

Direct

Touch labor is another name for ________ labor.

Direct

In an automobile manufacturing plant, the assembly-line workers are classified as _______ _______ cost.

Direct Labor

Manufacturing costs include ______ costs.

Direct and indirect

Which of the following statements are true?

Direct cost can be easily and conveniently traced to specific cost objects. A sales manager's salary is a direct cost of the sales office in which they work.

A laptop computer manufacturer would consider the computer's processor chip to be a(n) ______ cost.

Direct material

Selling and administrative costs are ______ costs.

Direct or indirect

Which of the following are most likely fixed costs?

Factory rent Factory insurance Administrative salaries

Indirect labor costs include:

Factory security guard wages Assembly-line supervisor salary

True or False: All of a company's depreciation, property taxes, and insurance premiums are considered manufacturing overhead.

False

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

Fixed

Period costs:

Include all costs that are not product costs Are expensed in the period incurred

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

Income statement

A factory produces a variety of tools. The factory manager's salary is a(n) ______ cost of a particular type of tool.

Indirect

A manufacturing cost that cannot be easily traced to a specific cost object is a(n) __________ cost.

Indirect

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

Indirect

Manufacturing overhead costs include ______.

Indirect materials, factory supervisors' salaries, and factory depreciation

Direct materials and direct labor are both ______ costs.

Manufacturing

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

Manufacturing overhead

Indirect materials and indirect labor are classified as:

Manufacturing overhead

A cost that contains both variable and fixed cost elements is a(n) ______ cost.

Mixed

Inventoriable costs is another term for _______ costs.

Product

The term ________ materials refers to any materials used in the final product.

Raw

Prior to being recorded on the income statement, manufacturers' product costs flow through ______.

Raw Materials Finished Goods Work in Process

Cost behavior:

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

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

They are incurred

True or False: The finished product of one company can become raw materials for another company.

True

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

Units that are partially complete are found in ______.

Work in Process