Chapter 1 Smartbook

Manufacturing costs can be divided into three categories:

Direct Materials, Direct Labor, Manufacturing Overhead

A cost may be direct or indirect, depending on the cost object.

True

Which type of cost changes in total, in direct proportion to changes in activity level?

Variable

How individual costs react to changes in activity level is referred to as cost ___

behavior

A ____ format income statement makes a distinction between fixed and variable costs

contribution

A(n) __ __ is anything for which cost data are desired—including products, customers, plants, office locations, and departments.

cost object

Costs that can be easily and conveniently traced to a specific product are called ______ costs.

direct

Materials that become an important component of the finished product whose cost can be easily and conveniently traced to the finished product are ___ materials

direct

Labor costs that can be easily and conveniently traced to specific products are ___ ___ costs

direct labor

A laptop computer manufacturer would consider the computer's processor chip to be a(n) ____ ____ cost

direct material

Within the relevant range of activity, ______ costs remain constant in total.

fixed

The rise-over-run formula for the slope of a straight line is the basis of the ____ method

high-low

Product costs flow through the inventory accounts until the goods are sold, at which time they are matched against sales on the ___ ___

income statement

Inventoriable costs is another term for ___ costs

product/manufacturing

Direct labor is also called ___ labor

touch

An income statement focusing on product and period costs has been prepared using a _____ format

traditional

Cost of goods sold for a merchandising company, direct materials and commissions are all examples of ___ costs

variable