COB 242 SB Study Set

When a company creates overhead rates based on the actions it performs, it is employing an approach called _______ ______ costing

Activity based

The salary paid to the president of a company would be classified on the income statement as a(n):

Administrative expense

Which of the following statements is true? A) Overhead can be applied slowly as a job is worked on. B) Overhead can be applied when the job is completed. C) Overhead should be applied to any job not completed at year-end in order to properly value the work in process inventory.

All are true

Contribution Margin

Amount remaining from sales revenue after all expenses have been deducted

The process used to assign overhead costs to products is called overhead

Application

Which of the following is an example of a period cost in a company that makes clothing? A)Fabric used to produce men's pants. B) Advertising cost for a new line of clothing. C)Factory supervisor's salary. D)Monthly depreciation on production equipment.

B) Advertising cost for a new line of clothing

Which of the following costs is classified as both a prime cost and a conversion cost? A)Direct materials. B)Direct labor. C)Variable overhead. D)Fixed overhead.

B) Direct labor

COGS Available for Sale formula

Beginning Finished Goods + COGS manufactured

The type and quantity of each type of direct material needed to complete a unit of product is listed on the

Bill of materials

Unadjusted COGS Formula

COGS available for sale - ending finished goods

A type of indirect cost incurred to benefit more than one cost object is a(n) ______ cost.

Common

Sales revenue minus variable expenses equals

Contribution margin

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

Cost behavior

The adjustment for overapplied overhead ______ net income.

Decreases COGS and increases

A future cost that differed between na ny two alternatives is known as

Differential cost

Calculation of conversion cost

Direct labor + Manufacturing overhead

Conversion costs refer to the sum of

Direct labor and manufacturing overhead

Prime costs are the sum of

Direct labor costs and direct materials cost

Selling and administrative costs are Blank______ costs.

Direct or indirect

Traditional Format Income Statement

Divides cost into COGS and Sales & Administrative Expenses

Cost of direct materials are a conversion cost (T/F)

False

Period costs flow through the inventory accounts. (T/F)

False

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

Fixed

Differential costs are also known as

Incremental costs

The document that records the materials, labor, and manufacturing overhead costs charged to a job is the Blank______.

Job cost sheet

Widely used allocation bases in manufacturing include ____

Machine hours, direct labor hours, direct labor cost, units of production

The accrual concept that costs incurred to generate a revenue are expensed in the same period the revenue is recognized is known as the

Matching Principle

A cost that contains both variable and fixed cost elements is a(n) cost.

Mixed

The predetermined overhead rate is multiplied by the actual allocation base incurred by a job to find ____

Overhead applied to the job

Is depreciation a product or period cost?

Period

On a traditional income statement, selling and administrative expenses report all _____ costs that have been expensed as incurred.

Period

Period Costs are not expensed in the

Period incurred

Inventoriable costs is another term for ____ costs

Product

Property taxes on a company's factory building would be classified as a(n):

Product cost

On a traditional income statement, cost of goods sold reports the _____ costs attached to merchandise sold during the period

Product/Manufacturing

The assumption that cost behavior is strictly linear is reasonably valid within the ________ _______ of activity

Relevant range

Contribution Format Income Statement

Separates costs into fixed and variable categories

When all of a company's job cost sheets are viewed collectively, they form what is known as a(n)

Subsidiary ledger

Period costs are expensed when incurred. (T/F)

True

Period costs include all costs that are not product costs (T/F)

True

Costs assigned to units of product under absorption costing include:

Variable manufacturing and fixed manufacturing

A type of indirect cost incurred to benefit more than one cost object is a(n) ______ cost.

prime