Chapter one smart book managerial accounting

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 & Administrative Exp. $60,000 Multiple choice question. $190,000 $50,000 $80,000 $160,000

80,000

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

Opportunity costs ______.

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

How individual costs react to changes in activity level is referred to as cost . (Enter only one word per blank.)

behavior

How individual costs react to changes in activity level is referred to as cost ___ . (Enter only one word per blank.)

behavior

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

company presidents salary sales commissions

Sales revenue minus variable expenses equals ____. (Enter only one word per blank.)

contribution margin

Any item for which cost data is desired is called a(n)______ . (Enter only one word per blank.)

cost object

A change in revenues between two alternatives is known as ____revenue or incremental revenue. (Enter only one word per blank.)

differential

Costs that can be easily and conveniently traced to a specific product are called ______ costs. Multiple choice question. direct period common indirect

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. direct common indirect overhead

direct

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

direct labor direct materials manufacturing overhead

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

factory insurance factory rent administrative salaries

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

fixed

The difference in costs between two alternatives is called a(n) ______ cost. Multiple choice question. incremental sunk opportunity common

incremental

A manufacturing cost that cannot be easily traced to a specific cost object is a(n) ______ cost. (Enter only one word per blank).

indirect

Which of the following is not a COST CLASSIFICATION associated with decision making? Multiple choice question. Indirect costs Differential costs Sunk costs Opportunity costs

indirect costs

Product costs are also called ______ costs. (Enter only one word per blank.)

inventoriable

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

manufacturing

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. (Enter only one word per blank.)

matching

A cost that contains both variable and fixed cost elements is a(n) ______ cost. Multiple choice question. mixed semifixed sunk opportunity

mixed

A cost that contains both variable and fixed costs elements is called a(n) ___ cost. (Enter only one word per blank.)

mixed

A potential benefit that is forfeited or lost when one decision is chosen over another is called a(n) . (Enter only one word per blank.)

opportunity cost

A potential benefit that is forfeited or lost when one decision is chosen over another is called a(n) _____. (Enter only one word per blank.)

opportunity cost

Cost behavior ______. Multiple select question. 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 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 categorizes costs as fixed, mixed and variable

The assumption that cost behavior is strictly linear is reasonably valid within the of activity. (Enter only one word per blank.)

relevant range

Opportunity costs ______. Multiple select question. should be considered in decision making are uncommon in decision making are benefits that are given up when selecting one alternative over another are part of traditional accounting records

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

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

they are incurred

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 asset $900 is reported as a expense and $300 is reported as an asset $300 is reported as a expense and $900 is reported as an asset $1,200 is reported as an expense

$300 is reported as a expense and $900 is reported as an asset $1,200 is reported as an expense

Which of the following are differences between the traditional and contribution format to income statements? Multiple select question. The traditional income statement is for internal use, while the contribution format income statement is for external use. 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.

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.

Differential costs, opportunity costs and sunk costs are all cost classifications used in ______. Multiple choice question. account analysis financial statements decision making predicting cost behavior

decision making

Within the relevant range of activity ______. Multiple select question. fixed costs remain constant in total costs and activity can be approximated by a straight line 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

Product costs flow through the inventory accounts until the goods are sold, at which time they are matched against sales on the ______. Multiple choice question. balance sheet statement of cash flows income statement

income statement

Which of the following statements are true? Multiple select question. The wages of assembly-line workers are period costs. Sales commissions are period costs. Period costs are expensed when they are incurred. Period costs are included as part of the cost of goods.

period costs are expensed when they are incurred sales commissions are period costs

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. (Enter only one word per blank.)

product, period

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

sales commissions sales salaries advertising

Contribution margin is ______. Multiple choice question.

sales revenue minus variable costs

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. (Enter only one word per blank).

traditional , contribution

Cost of goods sold for a merchandising company, direct materials and commissions are all examples of ______ costs. (Enter only one word per blank.)

variable

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

variable