Ch 1 - Managerial Accounting and Cost Concepts
Product costs ___
"attach" to units of products 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
opportunity costs ___
are benefits that are given up when selecting one alternative over another; should be considered in decision making
Indirect labor costs include ___
assembly-line supervisor salary, factor security guard wages
How individual costs react to changes in activity level is referred to as cost ___
behavior
Cost behavior ___
categories costs as fixed
Nonmanufacturing costs includes
companiy president's salary, sales commission
which of the following are differences between the traditional and contribution format to income statements?
compared to traditional statements, contribution format statements provide management with a tool to make decision making easier; traditional income statements focus on cost classifications. contribution format statements focus on cost behavior
sales revenue minus variable expenses equals ___ ___.
contribution margin
Salaries of factory supervisors and factory maintenance personnel are examples of ___ labor costs
indirect
which of the following is not a cost classification associated with decision making
indirect costs
A dress manufacturer would consider the cost of the relatively inexpensive items like thread to be part of ___.
indirect materials, manufacturing overhead
Direct materials and direct labor are both _______ costs.
manufacturing
Factory costs such as cleaning supplies, taxes, insurance, and janitor wages are classified as ___.
manufacturing overhead
indirect materials include ___
nails, glue, and thread
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/GAAP, contribution
COGS for a merchandising company, direct materials and commissions are all examples of ___ costs
variable
which type of cost changes in total, in direct proportion to changes in activity level?
variable
based on the following information, calculate net income for Dana's Dress Shop using the traditional format. Sales $360,000 Gross Margin $140,000 Contribution Margin $110,000 Total Selling and Administrative Exp. $60,000
$80,000
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.
The finished product of one company can become raw materials for another company
True
Which of the following are most likely fixed cost
administrative salaries, factory insurance, factory rent
selling costs include
advertising, sales commissions, sales salaries
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 2 alternatives is known as ___ revenue or incremental revenue
differential
Costs that can be easily and conveniently traced to a specific product are called ___________ costs.
direct
Fantastic Furniture makes custom order couches. The materials used to make a couch is a(n) cost of the customer placing the order.
direct
In an automobile manufacturing plant, the assembly-line workers are classified as ___ ___.
direct labor
The accural concept that costs incurred to generate a revenue are expensed in the same period the revenue is known as the ___ principle
matching
a cost that contains both variable and fixed cost elements is a(n) ___ cost
mixed
a costs that contains both variable and fixed costs elements is called a(n) ___ costs
mixed
a potential benefit that is forfeited or lost when one decision is chosen over another is called a(n) ___ ___
opportunity cost
which of the following statements are true?
period costs are expensed when incurred; period costs do not flow through the inventory accounts
The materials that go into the final product are called ___ materials.
raw
the assumption that cost behavior is strictly linear is reasonably valid within the ___ ___ of activity
relevant range
contribution margin is ___
sales revenue minus variable cost
differential cost is ___
the difference in cost between 2 alternatives; also known as incremental cost
Which of the following statements are true
Period costs do not flow through the inventory accounts, Period costs are expensed when incurred
Cost objects include
anything for which cost data is desired, organizational subunits, customers
Materials that become an important component of the finished product whose cost can be easily and conveniently traced to the finished product are ___
direct
Labor costs that can be easily and conveniently traced to specific products are ___ costs
direct labor
Manufacturing costs include ___
direct labor, direct materials, manufacturing overhead
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
administrative costs include ___
executive compensation and public relations costs
which of the following are most likely fixed costs?
factory rent, administrative salaries, factory insurance
within the relevant range of activity, ___ costs remain constant in total
fixed
within the relevant range of activity ___
fixed costs remain constant in total, costs and activity can be approximated by a straight line
A manufacturing cost that cannot be easily traced to a specific cost object is a(n) ___ cost.
indirect
Indirect materials and indirect labor are classified as
manufacturing overhead
on a traditional statement, costs 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
period/manufacturing; period
Inventoriable costs is another term for ___ costs
product
