Accounting Principles Ch 1-3

Selling costs include

Advertising Sales salaries Sales commissions

Cost ____ refers to how individual costs change as the level of activity level increases or decreases

Behavoir

A ______ cost is a type of indirect cost incurred to benefit more than one cost object.

Common cost

Costs that are shared by multiple costs objects in a company are ___ costs

Common costs

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

Cost structure

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

Differential

_____ fixed costs usually arise from annual decisions made by management to spend on certain fixed costs

Discretionary

Which of the following are examples of indirect labor costs?

Factory security guard wages Assembly-line supervisor wages

True or False: Variable costs remain fixed in total within the relevant range of activity

False

___ cost remain constant within the relevant range of activity

Fixed cost

A dress manufacture would consider the cost of relatively inexpensive items like thread to be part of

Manufacturing overhead

The revenue from selling one additional unit is _____ revenue.

Marginal

______ costs is the cost of producing one or more unit

Marginal

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

Opportunity cost

Direct materials, direct labor, and manufacturing overhead are all...

Product Cost

Cost incurred to obtain customers orders are known as ______ cost

Selling

Costs that have already been incurred and can not be changed by decisions made in the current period or in future periods are called ____ costs

Sunk costs

A regional sales manager salary would be a direct cost of the regional office in which the sales manager works.

True

Direct costs can be easily and conveniently traced back to a specific cost object.

True

The high low method....

Uses only two data points is based on periods where the activity tends to be unusual

____ costs vary in total, in direct proportion to changes in activity level

Variable

Mixed costs are commonly known as...

Variable cost

A contribution margin income statement....

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

Prime costs are...

direct labor direct material

Examples of common activity bases

direct labor hours Machine hours Number of purchase orders

Materials that can be easily and conveniently traced back to the finished product are _____

direct materials

Period costs are expensed on the income statement

in the period in which they occur

A fixed costs remains fix ____ within the relevant range of activity

in total

Manufacturing overhead costs include...

indirect materials, factory supervisor's salaries, and factory taxes and insurance

Factory materials such as cleaning supplies that are not components of finished products are classified as

manufacturing overhead

Costs objects...

may be assigned costs to help control spending can be products customers or jobs *is anything for which cost data is desired

An activity base...

measures whatever causes costs to vary is sometimes called a costs driver

Fixed costs

remain constant in total regardless of changes in activity generally include rent and supervisor salary should not be expressed on a per unit basis when making decisions

Contribution margin is..

sales revenue minus variable costs

Marginal costs is...

the cost incurred to produce one more unit of product

Differential cost is

the difference in costs between two alternatives

in the equation "Y=a+b(x) Y is...

the total mixed cost

When using the high low method, the change in cost divided by the change in units is

the variable cost per unit

Costs assumptions are reasonably valid

within the RELEVANT RANGE

Differential costs is...

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