Ch 1. Managerial Accounting and Cost Concepts LearnSmart

The following information is for S&P Enterprises for the month of September: Total period cost for the month of September was $__________.

$58,000 ($16,000 + $15,000) + ($9,000 + $18,000) = $58,000 Period Cost = Selling expense + Administrative expense

The following information is for S&P Enterprises for the month of July: Total conversion cost for the month of July was: A. $95,000 B. $116,000 C. $171,000 D. $65,000

A. $95,000 $40,000 + ($25,000 + $30,000) = $95,000 Conversion Cost = Direct labor + Total Manufacturing overhead

What type of cost is never relevant and should be disregarded when making decisions? A. Sunk B. Incremental C. Marginal D. Opportunity

A. Sunk

Administrative costs include: A. executive compensation and public relations costs B. shipping costs and sales commissions C. sales commissions and factory supervisors' salaries D. factory maintenance workers' wages and factory supervisors' salaries

A. executive compensation and public relations costs

Within the relevant range of activity, ________ costs remain constant in total. A. fixed B. neither fixed nor variable C. variable D. both fixed and variable

A. fixed

Direct materials and direct labor are both _______ costs. A. manufacturing B. period C. selling and administrative D. nonmanufacturing

A. manufacturing

Direct labor and manufacturing overhead costs are added to: A. Finished Goods B. Work in Process C. Cost of Goods Sold D. Raw Materials

B. Work in Process

The revenue from selling one additional unit is called ________ revenue. A. economic B. marginal C. opportunity

B. marginal

A cost that changes in direct proportion to changes in the activity level is a _______ cost. A. fixed B. variable C. mixed

B. variable

The following information is for S&P Enterprises for the month of July: Total fixed cost for the month of July was: A. $33,000 B. $146,000 C. $63,000 D. $88,000

C. $63,000 $30,000 + $15,000 + $18,000 = $63,000 Fixed manufacturing overhead + Fixed selling expense + Fixed administrative expense

The difference in costs between two alternatives is called a(n) __________ cost. A. common B. opportunity C. differential D. sunk

C. differential

Fantastic Furniture makes custom order couches. The material used to make a couch is a(n) ________ cost of the customer placing the order. A. overhead B. indirect C. direct D. common

C. direct

Variable costs _________. A. remain constant in total and vary per unit B. vary both in total and per unit C. remain constant per unit and vary in total D. remain constant both in total and per unit

C. remain constant per unit and vary in total

The following information is for S&P Enterprises for the month of July: Total product cost for the month of July was: A. $141,000 B. $198,000 C. $116,000 D. $171,000

D. $171,000 $76,000 + $40,000 + ($25,000 + $30,000) = $171,000 Product Cost = Direct materials + Direct labor + Manufacturing overhead

Labor costs that can be easily and conveniently traced to specific products are ________ costs. A. selling B. indirect labor C. manufacturing overhead D. direct labor

D. direct labor

The contribution approach to construction income statements distinguishes between _______ costs. A. relevant and irrelevant B. product and period C. prime and conversion D. fixed and variable

D. fixed and variable

Fantastic Furniture makes custom order furniture. The factory manager's salary is a(n) _______ cost of producing a couch. A. period B. variable C. direct D. indirect

D. indirect

Factory costs such as cleaning supplies, taxes, insurance, and janitor wages are classified as _________. A. indirect labor B. period costs C. direct materials D. manufacturing overhead

D. manufacturing overhead

Contribution margin is: A. sales revenue minus cost of goods sold B. all revenues minus all costs C. sales revenue minus fixed costs D. sales revenue minus variable costs

D. sales revenue minus variable costs

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

False

Which of the following statements are true? a. A mixed cost has a minimum cost of having a service available and ready for use b. The equation for a straight-line makes it easy to calculate the total mixed cost for any activity level outside the relevant range. c. When mixed costs are represented by a straight-line, the steeper the slope, the higher the variable cost per unit. d. The fixed portion of a mixed cost represents the cost incurred for the actual consumption of a service.

a. A mixed cost has a minimum cost of having a service available and ready for use c. When mixed costs are represented by a straight-line, the steeper the slope, the higher the variable cost per unit.

Which of the following statements are true? Check all the apply a. A regional sales manager's salary would be a direct cost of the regional office in which the sales manager works. b. A direct cost can be easily and conveniently traced to a specific cost object. c. A direct cost is sometimes referred to as a common cost. d. An individual cost is either direct or indirect, regardless of the cost object.

a. A regional sales manager's salary would be a direct cost of the regional office in which the sales manager works. b. A direct cost can be easily and conveniently traced to a specific cost object.

Which of the following statements are true? a. Within the relevant range of activity, fixed costs remain constant in total b. The relevant range of activity is approximated by a straight line c. Within the relevant range of activity total variable costs do not change

a. Within the relevant range of activity, fixed costs remain constant in total b. The relevant range of activity is approximated by a straight line

Prior to being recorded on the income statement, manufacturers' product costs flow through: a. Work in Process b. Raw Materials c. Cost of Goods Sold d. Finished Goods

a. Work in Process b. Raw Materials d. Finished Goods

Selling costs include: a. advertising b. sales salaries c. administrative salaries d. sales commissions

a. advertising b. sales salaries d. sales commissions

Nonmanufacturing costs include: a. company president's salary b. insurance on plant equipment c. assembly-line worker wages d. sales commissions

a. company president's salary d. sales commissions

Indirect labor costs include: a. factory security guard wages b. assembly-line worker wages c. administrative assistant salary d. assembly-line supervisor salary

a. factory security guard wages d. assembly-line supervisor salary

Step-variable costs: a. may include total salaried employee expense b. can be adjusted quickly as conditions change c. are generally treated as fixed costs

a. may include total salaried employee expense b. can be adjusted quickly as conditions change

Committed fixed costs include: a. real estate taxes b. research c. top management salaries d public relations

a. real estate taxes c. top management salaries

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

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

Common activity bases include: a. units sold b. scrapped units c. direct labor hours d. machine hours

a. units sold c. direct labor hours d. machine hours

Within the relevant range, fixed costs: a. per unit become progressively larger as the level of activity increases b. remain constant in total regardless of changes in activity c. generally include rent and supervisor salaries d. should not be expressed on a per unit basis when making decisions

b. remain constant in total regardless of changes in activity c. generally include rent and supervisor salaries d. should not be expressed on a per unit basis when making decisions

Which of the following statements are true? a. Period costs are included as part of the cost of goods. b. The wages of assembly-line workers are period costs. c. Period costs are expensed in the same period in which they are incurred. d. Sales commissions are period costs.

c. Period costs are expensed in the same period in which they are incurred. d. Sales commissions are period costs.

A dress manufacturer would consider the cost of relatively inexpensive items like thread to be part of: a. direct materials b. administrative costs c. manufacturing overhead d. indirect materials

c. manufacturing overhead d. indirect materials

Sales revenue minus variable expenses equals _________ ___________.

contribution margin

Any item for which cost data is desired is called a(n) ______ _______.

cost object

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

differential

Materials that become an important component of the finished product whose cost can be easily and convenlently traced to the finished product as ____________ materials.

direct

Fixed costs that usually arise from annual spending decisions by management are _______ fixed costs.

discretionary

A potential benefit that is forfeited or lost when one decision is chosen over another is called a(n) ___________ ___________.

opportunity cost

Inventoriable costs is another term for ________ costs.

product

Mixed costs are also commonly known as semi-________ costs.

variable