Chapter 1 Accounting Review
$300 is reported as a expense and $900 is reported as an asset
A company purchased a 12 month insurance policy on October 1 for $1,200. On the December 31 annual financial statements...
Mixed Cost
A cost that contains both variable and fixed cost elements is a(n)...
Indirect materials & manufacturing overhead
A dress manufacturer would consider the cost of relatively inexpensive items like thread to be part of ______.
In total
A fixed cost remains fixed ______ within the relevant range of activity.
Direct material cost
A laptop computer manufacturer would consider the computer's processor chip to be a(n)...
Indirect Cost
A manufacturing cost that cannot be easily traced to a specific cost object is a(n)...
Common Cost
A type of indirect cost incurred to benefit more than one cost object is a(n)...
Executive compensation and public relations costs
Administrative costs include...
False
All of a company's depreciation, property taxes, and insurance premiums are considered manufacturing overhead.
Cost Object
Any item for which cost data is desired is called a...
Increase or decrease in discrete steps
As the level of activity moves outside of the relevant range, fixed costs...
Sales revenue minus variable costs
Contribution margin is...
Categorizes costs as fixed, mixed and variable & refers to how a cost will change as activity level changes
Cost behavior...
Direct Costs
Costs that can be easily and conveniently traced to a specific product are called...
Touch Labor
Direct labor is also called...
Manufacturing costs
Direct materials and direct labor are both...
Management training programs & advertising
Discretionary fixed costs include...
Manufacturing Overhead
Factory burden is a synonym for...
Manufacturing Overhead
Factory costs such as cleaning supplies, taxes, insurance, and janitor wages are classified as...
Discretionary & committed
Fixed costs that can be cut-back or eliminated without significant damage to a company's long-term goals are _________ fixed cost and _________ fixed costs can not be easily changed or eliminated
Committed
Fixed costs that cannot easily be changed and often lock a company into a multi-year decision are called ___________ fixed costs.
Discretionary
Fixed costs that usually arise from annual spending decisions by management are called ________ or managed fixed costs.
80,000 (Reason: Gross Margin of $140,000 - Total Selling & Admin. Exp. of $60,000 = $80,000.)
Given: Sales of $360,000, Gross Margin of $140,000, Contribution Margin of $110,000, and Total Selling & Administrative Exp. of $60,000, net income using the traditional income statement format equals _______.
Cost Behavior
How individual costs react to changes in activity level is referred to as...
Assembly-line supervisor salary & factory security guard wages
Indirect labor costs include...
Nails, glue, and thread
Indirect materials include...
Company president's salary & sales commissions
Nonmanufacturing costs include...
Indirect manufacturing costs, factory overhead, & factory burden
Other names for manufacturing overhead include...
They are incurred
Period costs are always expensed on the income statement in the period in which...
Direct materials & direct labor
Prime costs include...
Manufacturing or Inventoriable Costs
Product costs are also called...
Contribution Margin
Sales revenue minus all variable expenses equals...
Direct & indirect
Selling and administrative costs are ___________ costs.
Advertising, sales salaries, & sales commissions
Selling costs include...
Marginal Cost
The cost of producing one more unit is the...
Incremental Cost
The difference in costs between two alternatives is called a(n)...
True
The finished product of one company can become raw materials for another company.
Prime Cost
The sum of direct materials and direct labor is called...
Remain constant per unit & vary in total
Variable costs...
Administrative salaries, factory rent, & factory insurance
Which of the following are most likely fixed costs?
Indirect Costs
Which of the following is not a COST CLASSIFICATION associated with decision making?
Fixed
Within the relevant range of activity, _________ costs remain constant in total.
The assumption that cost behavior is strictly linear is reasonably valid & fixed costs remain constant in total and vary per unit
Within the relevant range of activity...
Variable Cost
Within the relevant range, a cost that changes in direct proportion to changes in the activity level is a...
