Chapter 1 Review
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, what would be the total salaried employee expense?
$17,500 (7*$2,500)
A ___ is a cost that is incurred to support a number of cost objects but cannot be traced to them individually.
Common cost
Adventure Holidays sells thousands of tour packages each month through its branches. A branch manager's salary would be a(n) __ of generating a particular lead.
Indirect cost
This is the sum of direct materials cost and direct labor cost.
Prime cost
This includes direct materials, direct labor, and manufacturing overhead.
Product costs
Which of the following observations is true of period cost?
They are expensed in the period in which they are incurred.
This is the sum of direct labor and manufacturing overhead.
conversion cost
___ is sometimes called "touch labor."
direct labor
___ are those materials that become an integral part of the finished product and whose costs can be conveniently traced to the finished product.
direct materials
The traditional format provides managers with an income statement that clearly distinguishes between fixed and variable costs and therefore aids planning, controlling, and decision making.
false
The labor costs of janitors, supervisors, materials handlers, and night security guards at a manufacturing facility are examples of ___ labor.
indirect
Which of the following is true of the contribution approach?
it separates costs into fixed and variable categories
___ consists of items such as indirect materials, indirect labor, maintenance and repairs on production equipment, depreciation, and insurance on manufacturing facilities.
manufacturing overhead
Which of the following 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 ___.
non manufacturing costs
The potential benefit that is given up when one alternative is selected over another
opportunity cost
This includes all selling and administrative expenses.
period costs
a cost that has already been incurred and that cannot be changed by any decision made now or in the future.
sunk cost
Which of the following best describes the wages of a sheet metal worker in a fabrication plant?
product cost
Identify the cost categories in a traditional format income statement
cost of goods sold and selling and administrative expenses
Which of the following is common to both prime cost and conversion cost?
direct labor
The salary of a sales personnel in a company is structured as a monthly base salary of $3,000, plus an additional $100 on each sale made. If the person makes 15 sales in a month, what is the total mixed cost associated with this salesperson?
$4,500
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. What is the total variable cost at an activity level of 1,000 units?
$5,000
Which of the following best describes contribution margin?
Sales revenues minus variable expenses
In the equation, Y=a+bX, what does X represent?
The level of activity
a difference in costs between any two alternatives.
differential cost
a difference in revenues between any two alternatives.
differential revenue
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