Chapter 1
A company purchased a 12 month insurance policy on October 1 for $1,200. On the December 31 annual financial statements,
$300 is reported as a expense and $900 is reported as an asset
_______is a cost that is incurred to support a number of cost objects but cannot be traced to them individually. (Type of Indirect Cost)
Common Cost
_____ is anything for which cost data are desired—including products, customers, plants, office locations, and departments.
Cost Objects
Differential costs, opportunity costs and incremental costs are all cost classifications used in ______.
Decision Making
________ is a cost that can be easily and conveniently traced to a specified cost object.
Direct Cost
_______ consists of labor that can be easily traced to individual units of product.
Direct Labor
__________is a cost that cannot be easily and conveniently traced to a specified cost object.
Indirect Cost
Factory costs such as cleaning supplies, taxes, insurance, and janitor wages are classified as
Manufacturing Overhead
________ refers to all manufacturing costs other than direct labor and direct materials.
Manufacturing Overhead
A cost that contains both variable and fixed cost elements is a(n) ______ cost.
Mixed
Sum of direct materials and direct labor
Prime Cost
The assumption that cost behavior is strictly linear is reasonably valid within the ________ ________ of activity
Relevant Range
Direct labor is also called
Touch Labor
When are period costs recorded?
When they are incurred
format income statement that makes a distinction between fixed and variable costs.
contribution format
Sales revenue minus variable expenses equals
contribution margin
another way to so incremental is
differential
Within the relevant range of activity, Blank______ costs remain constant in total.
fixed
Minor items such as nails and glue are usually considered to be
indirect materials
The accrual concept that costs incurred to generate a revenue are expensed in the same period the revenue is recognized is known as the
matching principle
Manufacturing costs can be divided into three categories: direct ____ , _______labor and manufacturing ______
materials, direct, and overhead
Inventoriable costs is another term for
product cost
Contribution margin is ______.
sales revenue minus variable costs
An income statement focusing on product and period costs has been prepared using a(n)
traditional format