ECON CH1 QUIZ
what is a mixed cost
A cost that contains both variable and fixed cost elements
An exam that focuses on planning, controlling and decision-making skills is required to become a(n)
CMA
discretionary fixed costs
Can be cut for short periods of time with minimal damage to the long run goals of the organization
administrative costs
all costs associated with the general management of an organization rather than with manufacturing or selling( either direct or indirect)
selling costs
all costs that are incurred to secure customer orders and get the finished product or service into the hands of the customer(either direct or indirect)
period costs
all costs that are not product costs
cost object
anything for which cost data are desired—including products, customers, plants, office locations, and departments.
variable cost acts
constant per unit vary in total
opportunity cost
A potential benefit that is forfeited or lost when one decision is chosen over another
product costs
All costs that are involved in acquiring or making a product. In the case of manufactured goods, these costs consist of direct materials, direct labor, and manufacturing overhead.
Decision making
Selecting a course of action from competing alternatives
incremental revenue(differential revenue)
The difference in revenues between two alternatives
cost structure
The relative proportion of each type of cost in an organization
Direct cost
a cost that can be easily and conveniently traced to a specified cost object
an activity base is sometimes called a
cost driver
The matching principle
cost incurred to generate a particular revenue should be recognized as expenses in the same period the revenue is recognized
fixed cost
cost that remains constant
What is the cost being indirect or direct dependent on
dependent on the cost object
manufacturing costs include
direct materials, direct labor, manufacturing overhead
Selling and admisitration costs can be either
direct or indirect
relevant range
ex: the assumption that the rent for the diagnotics machine is 20,000 per month is only valid within the relevant range of 0 to 3,000 test per month. if the mayo clinic needed to test 5,000 test per month then they would need to rent an additional machine for another 20,000
financial accounting is
external
Within the relevant range of activity, Blank______ costs remain constant in total.
fixed costs
committed costs are
fixed costs can not be easily changed or eliminated
What is the primary role of managerial accounting
partner with co-workers within the organization to improve performance
Three activities vital to the role of managerial accounting are
planning, controlling and decision making
Prior to being recorded on the income statement, manufacturers' product costs flow through Blank______.
raw material work in process finished good
variable costs
remain constant per unit and vary in total
Within the relevant range of activity, fixed costs
remain fixed in total and vary per unit.
committed fixed cost
represent organizational investments with a multiyear planning horizon that cant be significantly reduced without making fundemental changes
managerial accountants need
strong financial accounting skills
within the relevant range of activuty
the assumption that cost behavior is strictly linear is reasonably valid
Y=a+bX A represents
total fixed costs
Y=a+bX Y is
total mixed costs
Managerial accounting skills are needed in for profit, not-for-profit and governmental entities
true
work in process
units of product that are only partially complete and will require further work before they are ready for sale to the customer
an activity base measures
whatever causes costs to vary
the cost of relatively inexpensive items are considered
Manufacturing overhead indirect materials
Controlling involves
gathering feedback to ensure plans are being properly executed or modified as needed
cost behavior
how a cost reacts to changes in the level of activity fixed variable mixed
When are period costs expensed?
in the period they are incurred
Planning
includes specifying how to achieve established goal
Managerial accounting is
internal
Product costs are also known as
inventoriable costs
Period costs do or do not flow through the inventory accounts
DO NOT
discretionary costs
Fixed costs that can be cut-back or eliminated without significant damage to a company's long-term goals
Committed fixed costs
Fixed costs that cannot easily be changed and often lock a company into a multi-year decision
cost behavior
How individual costs react to changes in activity level
What are indirect labor costs
Indirect labor costs cannot be conveniently and easily traced to a specific product.
What are synonyms for Manufacturing Overhead
Indirect manufacturing cost factory overhead factory burden
common cost
a cost that can be incurred to support a # of cost objects but cannot be traced to them individually (type of indirect)
indirect cost
a cost that cannot be easily and conveniently traced to a specified cost object
sunk cost
a cost that has already been committed and cannot be recovered
differential cost
a future cost that differs between any 2 alternatives (relevant costs)
activity base
a measure of whatever causes the incurrence of a variable cost
A type of indirect cost incurred to benefit more than one cost object is a(n
common cost
differential revenue
future revenue that differs between any two alternatives( relevant benefit)
When fixed costs are expressed on an average per unit basis,
it can give the false impression that total fixed costs change with changes in activity. aka variable cost
Raw materials
materials that go into the final product
to be traced to a cost object
the cost must be caused by the cost object
cost structure
the relative proportion of each type of cost in an organization
conversion cost
the sum of DL and MOH
Within the relevant range of activity, variable costs
vary in total and remain fixed per unit.
Units that are partially complete are found in
work in process
