chap1
Which of the following are differences between the traditional and contribution format to income statements?
Compared to traditional statements, contribution format statements provide management with a tool to make decision-making easier. Traditional income statements focus on cost classifications. Contribution format statements focus on cost behavior.
A laptop computer manufacturer would consider the computer's processor chip to be a(n) ______ cost.
DM
Product costs are also called ---- costs.
Inventorial costs
Factory costs such as cleaning supplies, taxes, insurance, and janitor wages are classified as
MOH
Factory costs such as cleaning supplies, taxes, insurance, and janitor wages are classified as ______.
MOH
Factory materials, such as cleaning supplies, that are not components of finished products are classified as ______.
MOH
Direct materials and direct labor are both ______ costs.
Manufacturing
cost materials include
anything for which cost data is desired customers organizational subunits
Indirect labor costs include ______.
assembly-line supervisor salary factory security guard wages
How individual costs react to changes in activity level is referred to as cost----
behavior
Any item for which cost data is desired is called a(n)
cost object
cost objects include
customers organizational subunits anything for which cost data is desired
A change in revenues between two alternatives is known as ---- revenue or incremental revenue
differential
Fantastic Furniture makes custom order couches. The material used to make a couch is a(n) ______ cost of the customer placing the order.
direct
Costs that can be easily and conveniently traced to a specific product are called ______ costs.
direct costs
Administrative costs include ______
executive compensation and public relations costs
True or false: Labor costs that can be specifically traced to a product are indirect labor costs.
false
Within the relevant range of activity, ______ costs remain constant in total.
fixed
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
Manufacturing overhead costs include ______.
indirect materials, factory supervisors' salaries, and factory depreciation
A dress manufacturer would consider the cost of relatively inexpensive items like thread to be part of _____
manufacturing overhead indirect materials
Manufacturing costs can be divided into three categories: direct -----, ---- labor and manufacturing -----
material direct overhead
A cost that contains both variable and fixed costs elements is called a(n) _____ cost
mixed
Any materials that go into the final product.
raw materials
Selling costs include ______
sales salaries, sales commissions, and advertising
Period costs are always expensed on the income statement in the period in which _____
they are incurred
A cost that can be easily and conveniently traced to a specific cost object is a(n)----- cost of that cost object, whereas costs that cannot be easily and conveniently traced to that specific cost object are -----costs.
direct indirect
In an automobile manufacturing plant, the assembly-line workers are classified as-------- cost.
direct labor
All of a company's depreciation, property taxes and insurance premiums are considered manufacturing overhead. t/f
false Only indirect costs associated with operating the factory are included in manufacturing overhead.
Minor items such as nails and glue are usually considered to be ______.
indirect costs. these are materials that could be traced and treated as direct, it isn't worth the cost and effort to do it.
Factory rent Administrative salaries Factory insurance these are most likely
mixed costs
the sum of direct material and direct labor is called
prime cost
Cost behavior ______.
refers to how a cost will change as activity level changes categorizes costs as fixed, mixed and variable
Differential cost is _____
the difference in cost between two alternatives also known as incremental cost
Sales commissions are period costs. Period costs are expensed when they are incurred.
these statements are true
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.
traditional contribution
t/f :The finished product of one company can become raw materials for another company.
true. Raw materials are anything that go into a finished product. For example, a computer chip is a finished product for the chip manufacturer and a raw material for the computer manufacturer.
Cost of goods sold for a merchandising company, direct materials and commissions are all examples of ----- costs.
variable
Within the relevant range, a cost that changes in direct proportion to changes in the activity level is a ______ cost.
variable