ACG SB Ch.1

Anything other than a product cost or selling expense. (Rent on headquarters, compensation of top executives)

Administrative expenses

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

Indirect Materials and Manufacturing overhead

Advertising, promotion, compensation of sales force, freight-out, warehousing

Selling Expense

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

behavior

Sales revenue minus all variable expenses equals

contribution margin

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

conversion

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

cost object

Beginning merchandise inventory less purchases made during the fiscal period plus ending inventory equals ___________________________

cost of goods sold

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

cost structure

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

false

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

false

Because the variable cost per unit equals the slope of the straight line, the steeper the slope, the ______ the variable cost per unit.

higher

Product costs flow through the inventory accounts until the goods are sold, at which time they are matched against sales on the ______.

income statement

Differential costs are also known as

incremental costs

Minor items such as nails and glue are usually considered to be ______.

indirect materials

Product costs are also called

inventoriable costs

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

opportunity cost

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

sunk cost

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

sunk costs

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

they are incurred.

Which type of cost changes in total, in direct proportion to changes in activity level?

variable

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

variable