Managerial accounting chapter 1 SmartBook
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
Labor costs that can be easily and conveniently traced to specific products are Blank______ costs.
Direct labor
All of a company's depreciation, property taxes, and insurance premiums are considered manufacturing overhead.
False
The finished product of one company can become raw materials for another company.
True
Product costs ______.
are also called inventoriable costs "attach" to units of product as they are produced or purchased for resale
A(n) ______ _______ is anything for which cost data are desired - including products, customers, plants, office locations, and departments
cost object
Cost objects include ______.
customers organizational subunits anything for which cost data is desired
Manufacturing costs include ______.
direct materials, direct labor, manufacturing overhead
Selling and administrative costs are ______ costs.
direct or indirect
Minor items such as nails and glue are usually considered to be ______.
indirect materials
Manufacturing overhead costs include ______.
indirect materials, factory supervisors' salaries, and factory depreciation
A manufacturing cost that cannot be easily traced to a specific cost object is a(n) ______ cost.
indirect, common, overhead, or shared (all work)
Product costs are also called _____ costs
inventoriable or manufacturing
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
Factory materials, such as cleaning supplies, that are not components of finished products are classified as ______.
manufacturing overhead
A dress manufacturer would consider the cost of relatively inexpensive items like thread to be part of ______.
manufacturing overhead, indirect materials
Materials that become an important component of the finished product whose cost can be easily and conveniently traced to the finished product are _____ materials
raw or direct
Which of the following are most likely fixed costs?
Administrative salaries Factory insurance Factory rent
Labor costs that can be specifically traced to a product are indirect labor costs.
False
Which of the following is not a COST CLASSIFICATION associated with decision making?
Indirect costs
Cost behavior ______.
categorizes costs as fixed, mixed and variable refers to how a cost will change as activity level changes
Fixed costs that cannot easily be changed and often lock a company into a multi-year decision are called ______ fixed costs.
committed
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
Indirect labor costs include ______.
factory security guard wages, assembly-line supervisor salary
Within the relevant range of activity, ______ costs remain constant in total.
fixed
Within the relevant range of activity ______.
fixed costs remain constant in total and vary per unit the assumption that cost behavior is strictly linear is reasonably valid
A fixed cost remains fixed ______ within the relevant range of activity.
in total
Variable costs vary ______ within the relevant range of activity.
in total
Product costs flow through the inventory accounts until the goods are sold, at which time they are matched against sales on the ______.
income statement
The difference in revenues between two alternatives is called ______.
incremental revenue
The difference in costs between two alternatives is called a(n) ______ cost.
incremental/differential
The materials that go into the final product are called _____ materials
raw or direct
Committed fixed costs include ______.
real estate taxes, top management salaries
The assumption that cost behavior is strictly linear is reasonably valid within the _________ of activity.
relevant range
Selling costs include ______.
sales commissions advertising sales salaries
Opportunity costs ______.
should be considered in decision making are benefits lost when choosing one option over another
Within the relevant range, a cost that changes in direct proportion to changes in the activity level is a ______ cost.
variable
Costs that can be easily and conveniently traced to a specific product are called ______ costs.
direct
Fantastic Furniture makes custom order couches. The material 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 ______ ______ cost.
direct labor
A laptop computer manufacturer would consider the computer's processor chip to be a(n) ______ cost.
direct material
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.
matching
Manufacturing costs can be divided into three categories: direct ______, _______ labor and manufacturing _______.
materials, direct, overhead
A cost that contains both variable and fixed cost elements is a(n) ______ cost.
mixed
A cost that contains both variable and fixed costs elements is called a(n) ______ cost.
mixed
Which type of cost changes in total, in direct proportion to changes in activity level?
variable
Differential costs, opportunity costs and incremental costs are all cost classifications used in ______.
decision making
Direct materials, direct labor, and manufacturing overhead are all ______ costs.
product
Period costs ______.
are expensed in the period incurred include all costs that are not product costs
How individual costs react to changes in activity level is referred to as cost _____ .
behavior
Period costs are always expensed on the income statement in the period in which ______.
they are incurred
Direct labor is also called _____ labor
touch
