Module 2 accounting

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Facility-sustaining cost

A cost incurred to maintain the company's capacity to operate

Batch-related costs

A cost that varies with the number of batches regardless of how many units are in each batch

Cells

A group of machines arranged to reduce travel time of product between machines

life-cycle pricing

A pricing strategy where the company attempts to set a selling price that will cover the costs of the product over its life

Target pricing

A pricing strategy where the company first determines the selling price of the product and then decides whether to enter the market

Machine set up

Adjustments made to machines in preparation for new production run

FOB shipping point indicated that goods in transit being to the: Seller Buyer Common carrier either the buyer or seller depending upon the terms of the bill of lading

Buyer

Direct labor

Cost of salaries for workers who actually manufacture the product

Purchase discounts

Discount given buyer for paying amount due early

Sales allowances

Discounts given to unhappy customers by seller (seller books)

Purchase returns

Goods return by buyer on buyers books

FOB destination

Legal title transfers to customer when goods are received

Manufacturing overhead

Manufacturing cost not directly associated with the production of a product

The document listing the quantities of materials and parts needed by the production department is referred to as a: Operations lists Bill of lading Production order Materials requisition

Materials requisition

Goods shipped from seller's warehouse on Nov. 10, 2010, arrived at the buyer's warehouse on Nov 16, 2010. The invoice for the goods arrived at the buyer's accounting department on Nov 13, 2010 and was paid on Nov 20, 2010. IF the goods were sold FOB shipping point, the buyer took legal title on: Nov 20, 2010 Nov 13, 2010 Nov 10, 2010 Nov 16, 2010

Nov 10, 2010

Sri-State corporation ordered materials from down-state manufacturing on October 1, 2006. Down-state shipped the materials by rail on October 5 and the railroad notified Tri-state on October 12, that the goods had arrived. Tri-state picked up the materials on October 13. The terms of the sale are FOB shipping point. On what date should Try-state consider this a purchase? October 1 October 5 October 12 October 13

October 5

Purchase allowances

Reduction in price of goods purchased as a result of dissatisfaction by customer (buyers books)

Selling margin

Selling price less cost

Bill of Lading

Shipping document that describes agreement between business and common carrier

Goods shipped from a seller's warehouse on April 10 using the terms FOB shipping point. On the way to the buyer's warehouse the truck hauling the good wrecked and the goods were destroyed. Who will get the insurance check covering the loss? The seller The Buyer The seller and buyer split the loss The delivery company

The buyer

Direct labor

The cost of employees who manufacture products

Indirect material

The cost of production materials that either cannot be traces to the product or whose cast is not enough to warrant tracing

Predatory pricing

The practice of selling products below cost in an attempt to drive out competition, control the market, and then raise prices

Price gouging

The practice of setting excessively high prices

Cost-volume-profit analysis

The study of how cost and profits change in response to changes in the volume of goods and services provided to customers

Price Fixing

When a group of companies agree to limit supply and charge identical prices

A document sent by the purchasing department to order a specific quantity of goods or services called a: Vendor invoice Purchasing report purchasing order purchase requisition

purchase order

The purchase order originates with the: Vendor Receiving department purchasing department manufacturing department needing the goods or services

purchasing department

A sales invoice originates with the: Vendor Purchasing department Sales department Accounting department

sales department

dumping

selling products below cost in a foreign market

Which of the following is part of the revenue process? 1. Provide customer support 2. Pay supplier for inventory 3. Convert raw material into inventory for sale 4. Order inventory for resale

1. Provide customer support

Determining the company's needs for goods and services is associated with which of the following processes? 1. Revenue process 2. Expenditure process 3. Conversion process 4. Evaluation process

1. Revenue Process

Delivery of goods is associated with which of the following process? 1. Revenue process 2. Expenditure process 3. Conversion process 4. Evaluation process

1. Revenue process

Determining the credit and payment policies for customers is part of the: 1. revenue process 2. Collection process 3. Expenditure process 4. Conversion process

1. Revenue process

Which of the following is part of the conversion process 1. Storing finished manufacturing goods until they are sold 2. Accepting orders for manufactured good s 3. Paying salaries for the sales personnel who sell the product 4. Pay the freight to deliver the product to the customer

1. Storing finished manufacturing goods until they are sold

Which of the following is not part of the conversion process? 1. Machine set up 2. Paying for the raw materials used in productions 3. Storing the raw material used in productions 4. Storing finished manufactured goods until sold

2. Paying for the raw materials used in productions

Which of the following is not a part of the revenue process? 1. Receive and accept order for goods and services 2. Receive goods and services 3. Receive payments for goods and services rendered 4. Provide customer support

2. Receive goods and services

Manufacturing products is associated with which of the following processes? 1. Revenue process 2. Expenditure process 3. Conversion process 4. Evaluation process

3. conversion process

Which of the following is not part of the expenditure process? 1. Receiving goods and services 2. Paying suppliers 3. Ordering goods ans services 4. Using equipment to manufacture products

4. Using equipment to manufacture products

Product-sustaining cost

A cost that varies with the number of product lines

Unit related cost

A cost that varies with the number of products produced

Skimming pricing

A pricing strategy in which the company sets its initial selling price is high in an attempt to appeal to those individuals who want to be the first to have the product and who are not concerned about the price

Penetrating pricing

A pricing strategy where a company sets its initial selling price low in an attempt to fain a share of the markets from competitors

Manufacturing overhead

All cost other than direct materials and direct labor that are incurred to manufacture products

Markup

An additional amount over cost that is added to determine selling price

Direct materials

Crude oil purchased to produce gasoline

Goods shipped from a seller's warehouse on June 10, 2010, arrived at the buyers warehouse on June 16, 2010. The invoice for the goods arrived at the buyer's accounting department on June 13, 2010 and was paid on June 20, 2010. If the goods were sold FOB destination, the buyer took legal title on: June 20, 2008 June 13, 2008 June 10, 2008 June 16, 2008

June 16, 2008

FOB shipping point

Legal title transfer when goods leave the seller's place of business

Incremental cost

The additional cost associated with an alternative


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