chapter 1: managerial accounting and cost concepts
executive compensation and public relations costs
administrative costs include
-factory security guard wages -assembly-line supervisor salary
indirect labor costs include
contribution margin
sales revenue minus variable expenses equals
fixed
within the relevant range of activity, _______ costs remain constant in total
variable
within the relevant range, ______ cost remain constant on a per unit basis
differential
a change in revenues between two alternatives is known as ______ revenue or incremental revenue
mixed cost
a cost that contains both variable and fixed cost elements is
-manufacturing overhead -indirect materials
a dress manufacturer would consider the cost of relatively inexpensive items like thread to be part of
direct material
a laptop computer manufacturer would consider the computer's processor chip to be an _______ cost
indirect cost
a manufacturing cost that cannot be easily traced to a specific cost object is
opportunity cost
a potential benefit that is forfeited or lost when one decision is chosen over another is called
common cost
a type of indirect cost incurred to benefit more than one cost object is
-measures whatever causes costs to vary -is sometimes called a cost driver
an activity base:
-real estate taxes -top management salaries
committed fixed costs include:
variable
cost of goods sold for a merchandising company, direct materials and commissions are all example of _____- costs
direct costs
costs that can be easily and conveniently traced to a specific product are called
manufacturing overhead
factory materials, such as cleaning supplies, that are not components of finished products are classified as
discretionary
fixed costs that usually arise from annual spending decisions by management are _______ fixed costs
direct labor
in an automobile manufacturing plant, the assembly-line workers are classified as
total mixed cost
in the equations Y-a+bX, Y is the
nails, glue, and thread
indirect materials include:
product
inventorial costs is another terms for ______ costs
-direct labor -direct materials -manufacturing overhead
manufacturing costs include:
indirect materials, factory supervisors' salaries, and factory depreciation
manufacturing overhead costs include:
-sales commissions -company presidents salary
non manufacturing costs include:
they are incurred
period costs are always expensed on the income statement in the period in which:
-give managers an idea of where to focus quality control efforts -show managers if quality control costs are poorly distributed -help identify the financial cost of defects
quality cost information reports:
direct or indirect
selling and administrative costs are _____ costs
-advertisting -sales commissions -sales salaries
selling costs include
matching
the accrual concept that costs incurred to generate a revenue are expensed in the same period the revenue is know as the _______ principle
differential cost
the difference in cost between two alternatives is called
relevant range
the level of activity within which variable and fixed cost assumptions are valid is known as the
marginal revenue
the revenue obtained from selling one additional unit of product is called
true
true or falsE: a cost may be direct or indirect, depending on the cost object
false
true or false: all of a company's depreciation, property taxes and insurance premiums are considered manufacturing overhead
-factory rent -factory insurance -administrative salaries
what are most likely fixed costs
sunk
what type of cost is never relevant and should be disregarded when making decisions
-measuring and reporting quality costs does not solve quality problems -the impact of customer ill will is generally not found on quality control reports
what is true?
