ACCT 455G Exam 1

Units that are partially complete are found in ______. Multiple choice question. Raw Materials Work in Process Cost of Goods Sold finished goods

work in process

Product costs are also called

inventoriable/manufacturing costs

Cost objects include ______. Multiple select question. -anything for which cost data is desired -customers -organizational subunits -anything for which revenue data is desired

-anything for which cost data is desired -customers -organizational subunits

Step-variable costs ______. Multiple select question. can be adjusted quickly as conditions change are generally treated as fixed costs may include total salaried employee expense

can be adjusted quickly as conditions change may include total salaried employee expense

differential costs ___ include all costs related to a decision can be fixed or variable are always variable costs

can be fixed or variable

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

common

manufacturing costs can be divided into three categories: direct ____, _____ labor, and manufacturing ______

materials; direct; overhead

Indirect materials include ______. Multiple choice question. factory manager's salary factory rent and insurance nails, glue, and thread laptop computer keyboards

nails, glue, and thread

the sum of direct materials and direct labor is called _____ cost

prime

On a traditional income statement, cost of goods sold reports the ______ costs attached to merchandise sold during the period, while selling and administrative expenses report all _____ costs that have been expensed as incurred.

product; period

differential costs are also known as ____ costs

relevant

The assumption that cost behavior is strictly linear is reasonably valid within the _____ ______ of activity.

relevant range

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

behavior

Selling and administrative costs are ______ costs. Multiple choice question. direct or indirect always indirect always direct

direct or indirect

A cost that can be easily and conveniently traced to a specific cost object is a(n) _____ cost of that cost object, whereas costs that cannot be easily and conveniently traced to that specific cost object are ______ costs.

direct; indirect

Fixed costs that usually arise from annual spending decisions by management are called fixed _______ or managed fixed costs.

discretionary

Administrative costs include ______. Multiple choice question. shipping costs and sales commissions executive compensation and public relations costs factory maintenance workers' wages and factory supervisors' salaries sales commissions and factory supervisors' salaries

executive compensation and public relations costs

Indirect labor costs include ______. Multiple select question. factory security guard wages administrative assistant salary assembly-line worker wages assembly-line supervisor salary

factory security guard wages assembly-line supervisor salary

discretionary fixed costs include management training programs factory depreciation insurance expense advertising

management training programs advertising

Direct materials and direct labor are both ______ costs. Multiple choice question. manufacturing nonmanufacturing period selling and administrative

manufacturing

Indirect materials and indirect labor are classified as ______. Multiple choice question. period costs nonspecific materials nonspecific labor manufacturing overhead

manufacturing overhead

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

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

true

A company purchased a 12 month insurance policy on October 1 for $1,200. On the December 31 annual financial statements, ______. Multiple choice question. $1,200 is reported as an expense $900 is reported as a expense and $300 is reported as an asset $1,200 is reported as an asset $300 is reported as a expense and $900 is reported as an asset

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

Which of the following statements are true? Multiple select question. -A regional sales manager's salary is a direct cost of the regional office in which the sales manager works. -An individual cost is either direct or indirect, regardless of the cost object. -A direct cost is sometimes referred to as a common cost. -A direct cost can be easily and conveniently traced to a specific cost object.

-A regional sales manager's salary is a direct cost of the regional office in which the sales manager works. -A direct cost can be easily and conveniently traced to a specific cost object.

Which of the following are most likely fixed costs? Multiple select question. Electricity to operate factory machines Factory rent Factory insurance Administrative salaries

Factory rent Factory insurance Administrative salaries

Which of the following statements are true? Multiple select question. Period costs are expensed when they are incurred. 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 when they are incurred. Sales commissions are period costs.

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

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

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

committed

A type of indirect cost incurred to benefit more than one cost object is a(n) ______ cost. Multiple choice question. prime sunk opportunity common

common

Costs that are shared by multiple cost objects in a company are known as ______ costs. Multiple choice question. direct opportunity common marginal

common

Direct labor and overhead costs incurred to change raw materials into finished products are known as ______ costs.

conversion

Direct labor and overhead costs incurred to change raw materials into finished products are known as ______ costs. Multiple choice question. period prime opportunity conversion

conversion

Costs that can be easily and conveniently traced to a specific product are called ______ costs.

direct

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

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

Prime costs include ______. Multiple select question. manufacturing overhead selling and administrative expenses direct materials direct labor

direct materials direct labor

Other names for manufacturing overhead include ______. Multiple select question. factory overhead factory burden prime manufacturing costs indirect manufacturing costs

factory overhead factory burden indirect manufacturing costs

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

false

True or false: Labor costs that can be specifically traced to a product are indirect labor costs. True false question. True False

false

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

false

Prior to being recorded on the income statement, manufacturers' product costs flow through ______. Multiple select question. Finished Goods Cost of Goods Sold Raw Materials Work in Process

finished goods raw materials work in process

Within the relevant range of activity, ______ costs remain constant in total. Multiple choice question. neither fixed nor variable variable fixed both fixed and variable

fixed

As the level of activity moves outside of the relevant range, fixed costs, ______. do not increase or decrease increase or decrease in a linear fashion increase or decrease in discrete steps

increase or decrease in discrete steps

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 ______. Multiple choice question. indirect materials direct materials administrative costs selling costs

indirect materials

Manufacturing overhead costs include ______. Multiple choice question. administrative taxes and insurance, sales commissions, and factory assembly workers' wages indirect materials, factory supervisors' salaries, and factory depreciation direct materials, administrative taxes and insurance, and sales commissions direct materials, sales commissions, and factory assembly workers' wages

indirect materials, factory supervisors' salaries, and factory depreciation

Common activity bases include ______. Multiple select question. machine hours units sold scrapped units direct labor hours

machine hours units dols direct labor hours

Manufacturing costs include ______. Multiple select question. selling costs manufacturing overhead direct labor administrative costs direct materials

manufacturing overhead direct labor direct materials

the revenue from selling one additional unit is called ____ revenue economic opportunity marginal

marginal

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

Direct materials, direct labor, and manufacturing overhead are all ______ costs. Multiple choice question. period conversion direct variable product

product

ost behavior ______. Multiple select question. refers to how a cost will change as activity level changes is a detailed analysis technique used to determine whether costs are fixed or variable categorizes costs as fixed, mixed and 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

Selling costs include ______. Multiple select question. sales commissions advertising administrative salaries sales salaries

sales commissions advertising sales salaries

Nonmanufacturing costs include ______. Multiple select question. sales commissions assembly-line worker wages company president's salary insurance on plant equipment

sales commissions company president's salary

Within the relevant range, fixed costs ______. per unit become progressively larger as the level of activity increases should not be expressed on a per unit basis when making decisions remain constant in total regardless of changes in activity generally include rent and supervisor salaries

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

Differential cost is ______. Multiple select question. the difference in cost between two alternatives never relevant to a product decision also known as incremental cost the same as opportunity cost

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

Period costs are always expensed on the income statement in the period in which ______. Multiple choice question. they are incurred the related goods are sold the cash for the expense changes hands

they are incurred

Committed fixed costs include ______. Multiple select question. public relations research top management salaries real estate taxes

top management salaries real estate taxes

An income statement focusing on product and period costs has been prepared using a(n) ______ format, while a(n) ________ format income statement makes a distinction between fixed and variable costs.

traditional; contribution

Presenting fixed costs on an average per unit basis makes them look like they are variable costs. True false question.TrueFalse

true

Which type of cost changes in total, in direct proportion to changes in activity level? Multiple choice question. Differential Opportunity Variable Fixed

variable

Salaries of factory supervisors and factory maintenance personnel are examples of ______ labor costs. Multiple choice question. administrative direct indirect

indirect

Step-variable costs ______. Multiple select question. can be adjusted quickly as conditions change are generally treated as fixed costs may include total salaried employee expense opportunity costs indirect costs differential costs sunk costs

indirect costs

factory burden is a synonym for ____ _____

manufacturing overhead

Factory materials, such as cleaning supplies, that are not components of finished products are classified as ______. Multiple choice question. administrative costs direct materials manufacturing overhead period costs

manufacturing overhead

Beginning merchandise inventory + Purchases - Ending merchandise inventory = Multiple choice question. contribution margin cost of goods sold total traditional income statement expense cost of goods available for sale

cost of goods sold

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

cost structure

Within the relevant range, a cost that changes in direct proportion to changes in the activity level is a ______ cost. Multiple choice question. fixed variable mixed

variable

opportunity costs ____ are part of traditional accounting records are uncommon in decision making are benefits that are given up when selecting one alternative over another should be considered in decision making

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

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

cost object

the materials that go into the final product are called ____ materials

direct

In an automobile manufacturing plant, the assembly-line workers are classified as _____ _______ cost.

direct labor

Labor costs that can be easily and conveniently traced to specific products are ______ costs. Multiple choice question. manufacturing overhead direct labor indirect labor selling

direct labor

A laptop computer manufacturer would consider the computer's processor chip to be a(n) ______ cost. Multiple choice question. direct material direct labor manufacturing overhead indirect material

direct material

within the relevant range of activity ____ variable costs do not change in total, only per unit fixed costs remain constant in total costs and activity can be approximated by a straight line

fixed costs remain constant in total costs and activity can be approximated by a straight line

An activity base ______. Multiple select question. is a measure of whatever causes fixed costs to occur is sometimes called a cost driver is part of the organization where major operations are planned and carried out measures whatever causes costs to vary

is sometimes called a cost driver measures whatever caused costs to vary

Cost structure ______. Multiple choice question. is a detailed analysis technique used to determine whether costs are fixed or variable refers to how a cost will change as activity level changes is the relative proportion of each type of cost in an organization

is the relative proportion of each type of cost in an organization

Cost behavior patterns such as salaried employees are often called _____ _____ costs.

step variable