Chapter 2. Basic Cost Management
Cost Driver
A characteristics of an activity that causes costs to be incurred is a(n) ....
Controllable Cost
A cost that a manager can significantly influence is a(n) ....
Sunk
A cost that has been incurred in the past and does not affect future costs and cannot be changed by any current or future action is a(n) .... cost
Fixed
A cost that remains unchanged in total as the level of activity changes in a(n) ..... cost
Cost Object
A particular product which a cost is assigned is called a(n) ....
A cost that changes, in total, in direct proportion to a change of activity
A variable cost is ....
A benefit that is sacrificed with the choice of once course of action over another
An opportunity cost is ....
Manufacturing overhead costs
Costs of departments that support manufacturing are classified as.....
1. Fringe benefits for assembly line personnel 2. Cost of salaries and wages for personnel who work directly on the manufactured products
Direct Labor includes
Materials that are physically incorporated into the finished product and are easily traceable to the product.
Direct Materials are ....
Sales - Cost of Sales
Gross profit is ....
1. Service firms can have direct materials 2. A cost that a manager can significantly influence is a controllable cost in both a service and a manufacturing firm
Identify which statements regarding costs in the service industry are correct.
Work-in-progress
Inventory that includes all materials before they are placed into production is called ..... inventory
Indirect
Materials required for the production process that are insignificant in cost are called ..... materials
Manufactured
The cost of goods completed and transferred from work-in-process to finished goods inventory is cost of goods .....
Marginal
The incremental cost of producing one additional item is a(n) .... cost
Are period costs
The main difference between service production costs and a manufactured
1. Shipping costs paid by the acquiring retailer or wholesaler for inventory 2. Purchase cost of inventory
The product cost for a merchandising retailer or wholesaler includes ....
Average
The total manufacturing cost divided by the number of units manufactured is called ..... cost
1. Classified cost data may be appropriate for one use but inappropriate for another 2. A cost is a sacrifice to achieve a particular purpose 3. Depending upon its purpose, a cost classification can change
Which of the following are true?
Cost of goods sold is an inventoriable cost
Which of the following statements is incorrect?
$64,900
COGM = 1,200 + 64,800 - 950 = $65,050 COGS = 500 + 65,050 - 650 = $64,900
Direct labor and manufacturing overhead
Conversion costs are ....
Operating profit
Another term for operating income is ...
Inventoriable
Another term for product cost is ... cost.
Inventoriable
Another term for product cost is ..... cost.
The cost of goods are transferred from finished goods to cost of goods sold
At the time of the sale
Direct
Cost of salaries and wages for personnel who work directly on the manufactured products are .... labor
Direct
Materials that can be easily traced to a product are called .... materials
Income Statement
Operating expenses are shown on the ....
Work-in-progress
Partially completed inventory is called ..... inventory
Expenses
Period costs are recognized as ..... during the time period in which they are incurred.
False
Prime Costs + Conversion Costs = Total manufacturing costs ...
Direct materials, and direct labor
Prime costs are.....
Tracing costs to the department in which the cost is incurred
Responsibility accounting is the process of ....
1. Job Shop 2. Batch 3. Assembly 4. Continuous Flow
Standard categories of manufacturing processes include ...
Differential Cost
The amount by which a cost differs under alternative courses of action is a(n)
Expense
The cost incurred when an asset is used to generate revenue is called a(n)....
Cost of goods manufactured
The cost of goods completed and transferred from work-in-process to finished goods inventory is ....
A few major products, higher volume, lower diversity, minimal customization
Which of the following describes the Assembly production process?
Direct materials + direct labor + manufacturing overhead + beginning work-in-progress - ending work-in-process
Which of the following is the calculation of cost of goods manufactured?
The benefit of the information should be weighed against the cost of obtaining and using the information.
Which of the following is true regarding managerial accounting information
