A202 Exam 1

Which of the following is an essential quality of an overhead allocation base? It must vary with all overhead costs. It must be a cost associated with producing the firm's goods. It must be common to all the company's products and services. It must be calculated using a predetermined overhead rate.

It must be common to all the company's products and services

Which of the following statements are true? Inventoriable costs are expensed in the period in which they are incurred. Period costs do not flow through the inventory accounts. Period costs are expensed hen incurred. All costs in a merchandising company are period costs.

Period costs do not flow through the inventory accounts. Period costs are expensed hen incurred.

Which of the following statements are true? Period costs do not flow through the inventory accounts. inventoriable costs are expensed in the period in which they are incurred. All costs in merchandising company are period costs. Period costs are expensed when incurred.

Period costs do not flow through the inventory accounts. Period costs are expensed when incurred.

The formula for applying overhead to a specific job is: Predetermined overhead rat x Amount of allocation base incurred by job Estimated manufacturing overhead/Amount of allocation base incurred by job Estimated manufacturing overhead x Amount of allocation base incurred by job Estimated manufacturing overhead/Estimated allocation base

Predetermined overhead rate x Amount of allocation base incurred by job

Which of the following statements are true? Sales commissions are period costs. Period costs are included as part of the cost of goods. The wages of assembly-line workers are period costs. Period costs are expensed in the same period in which they are incurred.

Sales commissions are period costs. Period costs are expensed in the same period in which they are incurred.

Which of the following statements are true? The relevant range of activity is approximated by a straight line. Within the relevant range of activity total variable costs do not change. Within the relevant range of activity, fixed costs remain constant in total.

The relevant range of activity is approximated by a straight line. Within the relevant range of activity, fixed costs remain constant in total.

A cost that changes in direct proportion to changes in the activity level is a __________ cost. Fixed mixed variable

Variable

Which of the following statements are true? Within the relevant range of activity total variable costs do not change. Within the relevant range of activity, fixed costs remain constant in total. The relevant range of activity is approximated by a straight line.

Within the relevant range of activity, fixed costs remain constant in total. The relevant range of activity is approximated by a straight line.

A cost driver is: a factor that causes overhead costs to occur the amount of overhead assigned to a job something you want to know the cost of a measure that is used to assign overhead costs to products and services

a factor that causes overhead costs to occur

Which of the following are most likely fixed costs? administrative salaries electricity to operate factory machines factory insurance factory rent

administrative salaries factory insurance factory rent

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

allocation

A measure such as direct labor-hours or machine hours used to assign overhead costs to products and services is called a cost driver or a(n) _____________ ___________.

allocation base

Differential cost is: also known as incremental cost never relevant to a product decision the same as opportunity cost the difference in cost between two alternatives

also known as incremental cost the difference in cost between two alternatives

The total cost of a job is calculated by adding the total of direct labor cost, direct materials cost and applied manufacturing overhead cost applied manufacturing overhead cost and applied non-manufacturing cost actual manufacturing overhead cost actual manufacturing cost, and applied non-manufacturing cost

applied manufacturing overhead cost

Product Costs: are also called inventoriable costs are always expensed in the same period in which the related products are produced include all costs involved in making and selling a product "attach" to units of product as they are purchased for resale or produced

are also called inventoriable costs "attach" to units of product as they are purchased for resale or produced

Indirect labor costs include: administrative assistant salary assembly-line supervisor salary assembly-line worker wages factory security guard wages

assembly-line supervisor salary factory security guard wages

The unit product cost is the same as the: average product cost per unit cost that would be incurred if another unit were produced incremental unit cost total job cost divided by number of units

average product cost per unit total job cost divided by number of units

The type and quantity of each type of direct material needed to complete a unit of product is listed on the bill of materials time ticket materials requisition form production order

bill of materials

Costs assigned to units of product in absorption costing include ____________ manufacturing costs. only fixed neither variable nor fixed only variable both variable and fixed

both variable and fixed

Sales revenue minus variable expenses equals ____________ __________.

contribution margin

A factor that causes overhead costs is called a: cost object predetermined overhead rate cost driver manufacturing cost

cost driver

Cost objects include: customers organizational subunits anything for which cost data is desired anything for which revenue data is desired

customers organizational subunits anything for which cost data is desired

A change in revenues between two alternatives is known as _________ revenue or incremental revenue.

differential

The difference in revenues between two alternatives is called: differential revenue differential cost net profit marginal revenue

differential revenue

Fantastic Furniture makes custom order couches. The material used to make a couch is a(n) _____________ cost of the customer placing the order. overhead common direct indirect

direct

Labor costs that are easily traced to a job are called ______________ labor 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. Manufacturing overhead selling direct labor indirect labor

direct labor

The total cost of a job includes: direct labor cost non-manufacturing cost applied manufacturing overhead direct materials cost actual manufacturing overhead

direct labor cost applied manufacturing overhead direct materials cost

Widely used allocation bases in manufacturing are: direct labor hours direct labor costs product revenue non-manufacturing costs units of product machine hours

direct labor hours direct labor costs units of product machine hours

Manufacturing costs include: administrative costs direct materials selling costs direct labor manufacturing overhead

direct materials direct labor manufacturing overhead

Categories of manufacturing costs include: direct materials selling expenses manufacturing overhead administrative expenses direct labor

direct materials manufacturing overhead direct labor

Fixed costs that can be cut-back or eliminated without significant damage to a company's long-term goals are _____________ fixed cost and ____________ fixed costs can not be easily changed or eliminated.

discretionary committed

Companies assign costs to products and services to: establish selling prices determine the best supplier of raw materials understand product profitability value ending inventory

establish selling price understand product profitability value ending inventory

To calculate a predetermined overhead rate, divide estimated manufacturing overhead by: estimated allocation base estimated direct labor hours estimated units of production actual manufacturing overhead

estimated allocation base

Within the relevant range of activity, _______ costs remain constant in total. fixed variable both fixed and variable neither fixed nor variable

fixed

Variable costs vary _____ within the relevant range of activity. per unit in total

in total

A manufacturing cost that cannot be easily traced to a specific cost object is a(n) _________ cost.

indirect

Minor items such as nails and glue are usually considered to be: indirect materials direct materials administrative costs selling costs

indirect materials

The document that records the materials, labor, and manufacturing overhead costs charged to a job is the: time ticket production order job cost sheet materials requisition form

job cost sheet

Companies that make many different products each period use _____________- ____________ costing.

job-order

Typical cost drivers include: machine depreciation machine-hours computer time utilities cost flight-hours

machine hours computer time flight-hours

Materials requisition forms are used for making journal entries in accounting records controlling the flow of materials into production summarizing the cost of a job specifying the cost of materials to be ordered

making journal entries in accounting records controlling the flow of materials into production

Factory costs such as cleaning supplies, taxes, insurance, and janitor wages are classified as: direct materials period costs manufacturing overhead indirect labor

manufacturing overhead

Indirect materials and indirect labor are classified as: period costs nonspecific materials manufacturing overhead nonspecific labor

manufacturing overhead

Companies that use job-order costing make: many different products a very few products in large numbers

many different products

The manufacturing overhead account contains: a single kind of direct cost many different kinds of indirect costs many different kinds of direct costs a single kind of indirect cost

many kinds of indirect costs

The revenue obtained from selling one additional unit of product is called _____________ revenue.

marginal

A job cost sheet contains: the selling price of the job materials costs charged to the job manufacturing overhead costs charged to the job labor costs charged to the job selling costs charged to the job

materials costs charged to the job manufacturing overhead costs charged to the job labor costs charged to the job

The type and quantity of materials to be drawn from the storeroom and the job that will be charged for the materials is specified on the production order form time ticket materials requisition form bill of materials

materials requisition form

An allocation base is a(n): measure of activity used to assign overhead costs to products and services activity that causes overhead costs to change measure used to assign all manufacturing costs to products and services

measure of activity used to assign overhead costs to products and services

Compared to a plant-wide overhead rate system, a multiple predetermined overhead rate system is: simpler, but less accurate more complex, but more accurate simpler and more accurate more complex and less accurate

more complex, but more accurate

A potential benefit that is forfeited or lost when one decision is chosen over another is called an _____________ ________.

opportunity cost

A single predetermined overhead rate is called a(n) ___________ overhead rate.

pantwide

The materials that go into the final product are called ___________ materials.

raw

Cost behavior: refers to how a cost will change as activity level changes categorizes costs as fixed, mixed and variable is a detailed analysis technique used to determine whether costs are fixed or variable is the relative proportion of each type of cost in an organization

refers to how a cost will change as activity level changes categorizes costs as fixed, mixed and variable

A multiple predetermined overhead rate system is more accurate than a plant-wide overhead rate system because it: is easier to apply than a plant-wide system reflects how different departments use direct materials reflects how different departments use direct labor reflects how different departments use direct labor reflects differences in how overhead costs are incurred within departments

reflects differences in how overhead costs are incurred within departments

Cost assumptions are reasonably valid within the __________ _________ of activity.

relevant range

Cost assumptions are reasonably valid within the _____________ ___________.

relevant range

Non-manufacturing costs include: sales commissions assembly- line worker wages insurance on plant equipment company president's salary

sales commissions company president's salary

A contribution approach income statement: separates costs into their fixed and variable components reports both gross margin and net income can assist with management decision making is prepared primarily for external reporting purposes

separates costs into their fixed and variable components can assist with management decision making

In the equation Y=a+bX, b denotes the: level of activity slope of the line fixed cost per unit of activity variable cost per unit of activity

slope of the line variable cost per unit of activity

What type of cost is never relevant and should be disregarded when making decisions? marginal opportunity sunk incremental

sunk

Period costs are always expensed on the income statement in the period which: they are incurred the cash for the expense changes hands the related goods are sold

they are incurred

Period costs are always expensed on the income statement in the period which: they are incurred the related goods are sold the cash for the expense changes hands

they are incurred

Committed fixed costs include: top management salaries public relations research real estate taxes

top management salaries real estate taxes

In the equation Y= a + bX, Y is the: variable cost per unit of activity level of activity total mixed cost total fixed cost

total mixed cost

A bill of materials contains the: type of each direct material needed to complete a unit of product quantity of each direct material needed to complete a unit of product type of materials to be drawn from the storeroom quantity of materials to be drawn from the storeroom

type of each direct material needed to complete a unit of product quantity of each direct material needed to complete a unit of product

Mixed costs are also commonly known as semi-______________ costs.

variable

Within the relevant range, _____________ costs remain constant on a per unit basis.

variable