chap1

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.

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

DM

Product costs are also called ---- costs.

Inventorial costs

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

MOH

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

MOH

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

MOH

Direct materials and direct labor are both ______ costs.

Manufacturing

cost materials include

anything for which cost data is desired customers organizational subunits

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

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

cost object

cost objects include

customers organizational subunits anything for which cost data is desired

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

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

direct costs

Administrative costs include ______

executive compensation and public relations costs

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

false

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

fixed

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

income statement

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

indirect

Manufacturing overhead costs include ______.

indirect materials, factory supervisors' salaries, and factory depreciation

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

manufacturing overhead indirect materials

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

material direct overhead

A cost that contains both variable and fixed costs elements is called a(n) _____ cost

mixed

Any materials that go into the final product.

raw materials

Selling costs include ______

sales salaries, sales commissions, and advertising

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

they are incurred

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

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

direct labor

All of a company's depreciation, property taxes and insurance premiums are considered manufacturing overhead. t/f

false Only indirect costs associated with operating the factory are included in manufacturing overhead.

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

indirect costs. these are materials that could be traced and treated as direct, it isn't worth the cost and effort to do it.

Factory rent Administrative salaries Factory insurance these are most likely

mixed costs

the sum of direct material and direct labor is called

prime cost

Cost behavior ______.

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

Differential cost is _____

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

Sales commissions are period costs. Period costs are expensed when they are incurred.

these statements are true

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

t/f :The finished product of one company can become raw materials for another company.

true. Raw materials are anything that go into a finished product. For example, a computer chip is a finished product for the chip manufacturer and a raw material for the computer manufacturer.

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

variable

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

variable