Studying for cost accounting

indirect costs

A cost which can't be directly identified with making a product or providing a service.

Job Cost Record

A document that shows the direct materials, direct labor, and manufacturing overhead costs for an individual job.

allocation base

A measure of activity such as direct labor-hours or machine-hours that is used to assign costs to cost objects.

Job Costing also called job order costing

A unique custom order or small batches of the same thing. Also this me an that it's going to be much more difficult to capture the cost alone the way. Ex: if you are manufacturing homes, every home would be unique and have a whole set of different costs.

Which of the following would not be a good allocation base for manufacturing overhead

Accounting hours

Manufacturing overhead(MOH)

All others ( than DL and DM) manufacturing costs cannot be really traced to finished products. Like indirect labor and indirect material. This is a indirect cost.

opportunity cost

Are benefits lost when choosing one option over another Should be considered in decision making

Which of the following statements is true? A: Period costs and fixed costs are synonyms. B: Period costs are excluded from the calculation of gross margin. C: Period costs may be included in inventory as reported on the balance sheet. D: Period costs include indirect materials and indirect labor.

B

Finished goods goes in what financial statements

Balance sheet

Raw material goes in what financial statements

Balance sheet

Work in progress goes in what financial statements

Balance sheet

Direct Costs

Can be directly traced to a particular cost object.

Coat behavior

Categorized costs as fixed, mixed and variable Refers to how a cost will change as activity levels changes

Fixed costs that cannot easily be change and offer lock a company into a multi-year decision are called

Committed fixed costs

cost behavior

Cost behavior refers to how cost will react to changes in the level of activity.

The relative proportion of each type of cost in an organization is known as the company's?

Cost structure

Direct Materials(DM)

Direct material are raw materials that become an integral part of the product and that can be conveniently traced directly to it. Direct materials is known as also direct cost.

products costs

Direct materials Direct labor Manufacturing overhead

Fixed costs that usually arise from annual spending decisions by management are called (blank) or managed fixed costs

Discretionary

Costs assigned to unit of product under absorption costing include

Fixed manufacturing Variable manufacturing

A fixed cost vary (blank) within the relevant range of activity

In total

Variable costs vary (blank) within the relevant range of activity

In total

Raw material goes in what category in the balance sheet

Inventory

Direct Labor(DL)

Is also known as touch labor, touch means a labor that's going to touch the product. Also it should be easily traced to individual units of products. It's also a direct cost.

Administrative costs

Is basically everything that goes on in the office building and not the factory. Administrative costs can be either direct or indirect cots.

Process Costing

Large amounts of the same thing something that you're producing over and over. Ex: Coca Cola, M&Ms, potato chips Ex: so let's say you are a manager of a hot sauce manufacturing plant. Every bottle of your hot sauce is going to be similar to every other bottle. All you need to do is take your total cost/the number of bottles that you produce. This will give you the cost for each bottle.

The accrual concept that costs incurred to generate a revenue are expensed in the same period that revenue is recognized is known as the?

Matching principle

What financial statement does period cost goes on?

Period costs would go into the income statement because their expenses.

The formula for applying overhead to a specific job is (blank) amount of allocation base incurred by job

Predetermined overhead rate X

What financial statements does product costs goes on?

Product costs would go into the balance sheet as inventory and go in the income statement because that inventory has generated revenue.

Contribution Margin formula

Sales - Variable Costs

Period Costs

Selling expenses Administrative expense

Contribution Margin

The amount remaining from sales revenues after all variable expenses have been deducted.

selling costs

Think of selling costs as what's going to cost to sell my product to the customer. Selling costs can be either direct or indirect costs

discretionary fixed costs (often referred to as managed fixed costs)

Those fixed costs that arise from annual decisions by management to spend on certain fixed cost items. Example: advertising, research, public relations, management, development programs, and internships for students

Which of the following are differences between the traditional and contribution format to income statements

Traditional income statements focus on cost classifications. Contribution format statements focus on cost behavior. Compared to traditional statements, contribution format statements provide management with a tool to make decision making easier.

The most common classification are?

Variable costs Fixed costs (relevant range) Mixed costs

Per unit

We also use the word unit while referring to the unit price of an item. It means the cost per unit.

A cost driver is

a factor that causes overhead costs to occur

The process used to assign overhead costs to products is called overhead

allocation

raw materials

any materials that go into the final product

The type and quantity of each type of direct material needed to complete a unit of product is listed on the

bill of materials

Finished goods costs

consists of completed units of product that have not yet been sold to customers

work in process

consists of units of production that are only partially complete and will require further work before they are ready for sale to customers

Sales revenue minus variable expenses equals

contribution margin

Any item for which cost data is desired is called a(n)

cost object

Differential costs, opportunity costs and sunk costs are all cost classifications used in

decision making

Categories of manufacturing costs include:

direct materials, direct labor, manufacturing overhead

three basic manufacturing cost categories

direct materials, direct labor, manufacturing overhead

Administrative costs include

executive compensation and public relations costs

Non-manufacturing costs

include those costs that are not incurred in the production process but are incurred for others business activities of the entity. These costs do not specifically contribute to the actual production of goods but are essential to ensure overall functioning of the business.

Differential costs are also known as

incremental costs

The document that records the materials, labor, and manufacturing overhead costs charged to a job is the

job cost sheet

common activity bases include:

machine hours, direct labor hours, units sold

Manufacturing overhead consists of

many different kinds of indirect costs

The revenue from selling one additional unit is called

marginal revenue

A potential benefit that is forfeited or lost when one decision is chosen over another is called

opportunity cost

committed fixed costs include

real estate taxes, top management salaries

Matching Principle

requires that expenses be recorded when incurred in earning revenue

Contribution margin is

sales revenue minus variable costs

Period costs are always expenses on the income statement in the period in which?

they are incurred

An hour-by-hour summary of an employee's activities throughout the day is found on the

time ticket

The document used to record the hours workers spend on each job and task is called a

time ticket

In the equation Y = a + bX, Y is the

total mixed cost