Cost Accounting smartbook ch 2

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Which of the following workers are classified as direct labor?

Assembly line workers Tax preparers

A company started the year with $185,000 of goods finished and ready for sale. During the year, a total of $700,000 of goods were started in production. Of the goods started, $550,000 were finished during the year. If total cost of goods sold for the year equals $625,000, the company's ending finished goods inventory equals $.

Blank 1: 110,000 or 110000

A company had the following inventories during the year: Inventories: Beginning Ending Direct materials $200 $150 Work in process $300 $250 Finished goods $400 $350 If total direct materials purchased was $2,850, the direct materials put into production for the year equals $ .

Blank 1: 2,900 or 2900

On a per unit basis, the equals the difference between sales price and the variable cost per unit.

Blank 1: contribution Blank 2: margin

The amount available to cover fixed expense and earn a profit is the _ _.

Blank 1: contribution Blank 2: margin

The way costs respond to changes in activity levels is called .

Blank 1: cost Blank 2: behavior or behaviour

The three major categories of product costs are materials, , and manufacturing .

Blank 1: direct Blank 2: direct Blank 3: labor or labour Blank 4: overhead

Costs that can be unambiguously related to cost objects are costs whereas costs that cannot be unambiguously related to cost objects are costs.

Blank 1: direct Blank 2: indirect

Product costs that can be identified with units at a relatively low cost are manufacturing costs and all other product costs are manufacturing costs.

Blank 1: direct Blank 2: indirect

The two types of product costs are manufacturing costs and manufacturing costs.

Blank 1: direct Blank 2: indirect

The cost of parts purchased by a manufacturer that can be identified with units or batches of products are classified as cost.

Blank 1: direct or raw Blank 2: material, materials, or manufacturing

When preparing financial statements, are deducted from revenues associated with an accounting period.

Blank 1: expenses

Costs that do not change as volume changes are costs and costs that change in direct proportion with a change in volume are costs.

Blank 1: fixed Blank 2: variable

Product costs debited to work in process and finished goods are called .

Blank 1: inventoriable Blank 2: costs

Any new costs incurred when adding a product are considered product costs under costing.

Blank 1: managerial

Costs required to obtain customer orders are costs and costs required to manage the organization are costs.

Blank 1: marketing, selling, or sales Blank 2: administrative or administration

Departments, units of products, and product lines are all examples of cost .

Blank 1: objects

Nonmanufacturing costs are also called costs and manufacturing costs are also called

Blank 1: period Blank 2: product

Nonmanufacturing costs are also called costs and manufacturing costs are also called costs.

Blank 1: period Blank 2: product

Department costs, rental costs, or travel costs incurred to visit multiple clients are examples of items accumulated in cost to be assigned to cost .

Blank 1: pools or pool Blank 2: objects or object

The sum of direct materials and direct labor equals costs and the sum of direct labor and manufacturing overhead equals costs.

Blank 1: prime Blank 2: conversion

Costs assigned to units of production and expensed when the units are sold are costs, whereas costs are expensed as incurred.

Blank 1: product or manufacturing Blank 2: period or nonmanufacturing

If a company is focused on trying to eliminate waste and reduce costs, financial statements can be developed that classify costs into - and - activities.

Blank 1: value Blank 2: added Blank 3: nonvalue Blank 4: added

Direct materials and sales commissions are most likely costs, whereas many manufacturing overhead costs such as rent and supervisor salaries are costs.

Blank 1: variable Blank 2: fixed

Which of the following is NOT one of the four basic cost behavior categories?

Direct

True or false: Cost of goods sold includes the actual cost of goods that were sold and the costs required to sell them.

False

True or false: The excess of operating revenues over the operating costs incurred to generate those revenues is net income.

False

True or false: The focus of cost accounting is on expenses.

False

Which of the following statements are true?

For managerial purposes, managers often assign nonmanufacturing costs to products. Nonmanufacturing costs are expensed as incurred for financial accounting purposes. Distinguishing between manufacturing and nonmanufacturing costs can be difficult.

Which of the following statements are true?

Gross margin reflects the ability of a wholesaler to price products. Retailers have an entire category of amounts that do not appear on service company income statements.

Which of the following statements are true?

Information technology represents the major cost for some service organizations. Labor is the most important single cost for many service organizations.

Which of the following statements are true?

Nonmanufacturing costs are expensed as incurred for financial accounting purposes. For managerial purposes, managers often assign nonmanufacturing costs to products. Distinguishing between manufacturing and nonmanufacturing costs can be difficult.

Which of the following statements are true?

The cost of goods manufactured and sold statement focuses on both current costs and inventories. Cost of goods manufactured and sold statements can be effective communication devices. Managerial reports are tailored to the individual company's needs.

Which of the following statements are true?

Transportation-in is included in the cost of direct materials. Direct materials are directly identified with products. Direct materials are often called raw materials.

True or false: For a manufacturer, finished goods inventory is optional.

True

To calculate cost of goods sold during the year, take total cost of goods manufactured and:

add beginning finished goods and subtract ending finished goods inventory

To calculate cost of goods manufactured during the year, take total manufacturing costs and ______.

add beginning work in process and subtract ending work in process inventory

Under variable costing, ______.

all costs except variable manufacturing costs are period costs

The process of assigning costs is called cost ______

allocation

The process of assigning indirect costs is called cost .

allocation

Product costs for unsold units are ______.

assigned to inventory under both absorption and variable costing

The difference between revenue and variable cost is _____.

contribution margin

A sacrifice of resources is a(n) .

cost

Cost to be assigned to cost objects are accumulated in a(n) .

cost pool

Workers must be identified with a product at a reasonable cost to be classified as .

direct labor

Major categories of product costs include ______.

direct labor direct materials manufacturing overhead

To calculate net income, operating profit is adjusted for ______.

extraordinary items interest expense other required regulatory adjustments

Manufacturing overhead costs include ______.

factory cleaning materials inventory warehouse workers factory depreciation

Indirect labor includes ______.

factory maintenance workers factory supervisors

Products ready for sale are called .

finished goods

The difference between full cost and full absorption cost is ______.

fixed and variable selling costs are included in full cost but not in full absorption cost

Common approaches for determining product costs discussed in the text do not include ______ costing.

full

Product costs added to inventory accounts are called .

inventoriable costs

A cost ______.

is a sacrifice of resources may be recorded as an asset

The full cost of a product equals all ______.

manufacturing and selling costs (both fixed and variable)

All product costs other than direct materials and direct labor are commonly referred to as indirect costs or .

manufacturing overhead

Any end to which a cost is assigned is a cost .

object

Assume total units produced equals total units sold. If the company prepares a gross margin income statement and a contribution margin income statement, ______.

operating profit will be the same on both statements marketing and administrative costs will be the same on both statements

Cost of goods manufactured and sold statements are ______.

prepared as part of a company's internal reporting system

Companies with low overhead costs focus on managing ______ costs, whereas companies with high overhead costs focus on managing ______ costs.

prime, conversion

Beginning work in process inventory plus total manufacturing costs equals ______.

resources put into production during the year

Customers are provided with an intangible product by companies.

service

If a company is focused on trying to eliminate waste, income statement costs can be divided into ______.

value-added vs. nonvalue-added activities

Goods that have been started in production but are not yet completed are called ______.

work in progress

Products that have been started but not yet completed are called .

work in progress

Given the following, calculate cost of goods sold: Inventories: Beginning Ending Direct materials $300 $250 Work in process $400 $200 Finished goods $500 $350 Direct material purchases $4,200 Direct labor $3,000 Manufacturing overhead $5,000

$12,600

Given the following, calculate cost of materials put into production. Inventories: Beginning Ending Direct materials $300 $250 Work in process $400 $200 Finished goods $500 $350 Direct material purchases $4,200 Direct labor $3.000 Manufacturing overhead $5,000

$4,250


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