ACCT 2310 Smartbook CH1

Product costs ______.

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

A company purchased a 12 month insurance policy on October 1 for $1,200. On the December 31 annual financial statements, ______.

$300 is reported as a expense and $900 is reported as an asset

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.

Blank 1: discretionary or managed Blank 2: committed

A potential benefit that is forfeited or lost when one decision is chosen over another is called a(n)______ ______ .

Blank 1: opportunity Blank 2: cost

Which of the following are most likely fixed costs?

Factory rent Factory insurance Administrative salaries

Inventoriable costs is another term for costs.Product

Product

Discretionary fixed costs include ______.

advertising management training programs

Differential cost is ______.

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

Indirect labor costs include ______.

assembly-line supervisor salary, factory security guard wages

How individual costs react to changes in activity level is referred to as cost behavior

behavior or behaviour

Fixed costs that cannot easily be changed and often lock a company into a multi-year decision are called ______ fixed costs.

commited

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

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

differential

Fantastic Furniture makes custom order couches. The material used to make a couch is a(n) ______ cost of the customer placing the order.

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.

direct labor

Fixed costs that usually arise from annual spending decisions by management are called ______fixed costs

discretionary or managed

Within the relevant range of activity, ______ costs remain constant in total.

fixed

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

indirect

Salaries of factory supervisors and factory maintenance personnel are examples of ______ labor costs.

indirect

Discretionary fixed costs include ______.

management training programs advertising

Direct materials and direct labor are both ______ costs.

manufacturing

Indirect materials and indirect labor are classified as ______.

manufacturing overhead

The revenue from selling one additional unit is called ______ revenue.

marginal

A cost than contains both variable and fixed costs elements is called a(n) ______ cost

mixed or semivariable

Indirect materials include ______.

nails, glue, and thread

Cost behavior ______.

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

Opportunity costs ______.

should be considered in decision making are benefits that are given up when selecting one alternative over another

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

Marginal cost is ______.

the cost incurred to produce one more unit of a product

Period costs are always expensed on the income statement in the period in which ______.

they are incurred

Within the relevant range, a cost that changes in direct proportion to changes in the activity level is a ______ cost.

variable

Which of the following statements are true?

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

A cost that contains both variable and fixed cost elements is a(n) ______ cost.

mixed

Cost of goods sold for a merchandising company, direct materials and commissions are all examples of ______ costs.

variable

Which of the following are most likely fixed costs?

Administrative salaries Factory rent Factory insurance

Fixed costs that cannot easily be changed and often lock a company into a multi-year decision are called ______ fixed costs.

Committed

Fixed costs that cannot easily be changed and often lock a company into a multi-year decision are called fixed costs.

Committed

True or false: All of a company's depreciation, property taxes and insurance premiums are considered manufacturing overhead.

False

Which of the following is not a COST CLASSIFICATION associated with decision making?

Indirect costs

Which of the following statements are true?

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

What type of cost is never relevant and should be disregarded when making decisions?

Sunk

True or false: A cost may be direct or indirect, depending on the cost object.

True

Factory costs such as cleaning supplies, taxes, insurance, and janitor wages are classified as ______.

manufacturing overhead

Committed fixed costs include ______.

top management salaries real estate taxes

A dress manufacturer would consider the cost of relatively inexpensive items like thread to be part of ______.

manufacturing overhead indirect materials

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

matching

Manufacturing costs can be divided into three categories: direct ______ , ______ labor and manufacturing ______ .

materials, direct, overhead

True or false: The finished product of one company can become raw materials for another company.

True

Within the relevant range, which type of cost changes in total, in direct proportion to changes in activity level?

Variable

A laptop computer manufacturer would consider the computer's processor chip to be a(n) ______ cost.

direct material

Selling and administrative costs are ______ costs.

direct or indirect

Manufacturing overhead costs include ______.

indirect materials, factory supervisors' salaries, and factory depreciation

Direct labor is also called ______ labor.

touch

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

common

Selling costs include ______.

sales salaries sales commissions advertising