Managerial Accounting Exam #1

Bill of materials

a document that lists the type and quantity of each type of direct material needed to complete a unit of product

cost-plus pricing occurs when.......

a markup percentage is added to the cost of a job

Absorption Costing

all manufacturing costs, both fixed and variable, are assigned to units of product-units are said to fully absorb manufacturing costs

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

fixed

A company purchased a 12 month insurance policy on October 1 for $1,200. On the December 31 annual financial statements, ______. Multiple choice question.

$300 is reported as a expense and $900 is reported as an asset

Manufacturing Costs include...

DM,DL and indirect: MOH

Bill materials

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

Activity-based costing

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

Cost object

any item for which cost data is desired- products, customers, plants, office locations, and departments

A manufacturing cost that cannot be easily traced to a specific cost object is a ____________ cost

common, indirect, overhead, shared`

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

cost behavior

Within the relevant range of activity ______

costs and activity can be approximated by a straight line fixed costs remain constant in total

Cost objects include ______

customers, anything for which cost data is desired, organizational subunits

Differential costs, opportunity costs and sunk costs are all cost classifications used in ______.

decision making

differential cost is also known as......

incremental cost

Selling and administrative costs are ______ costs.

indirect or direct

Product costs are also called_____________ costs

inventoriable costs or manufacturing

Analysis of mixed cost

is a detailed analysis technique used to determine whether costs are fixed or variable

Period costs are expensed when incurred. Period costs do not flow through the inventory accounts.

know this

Allocation base

must be common to all the company's products and services

Matching Principle

recognize expenses in the same period as the revenues they help to generate

The assumption that cost behavior is strictly linear is reasonably valid within the _______________ , _____________________ of activity

relevant range

Contribution Margin

sales revenue minus variable costs

Nonmanufacturing costs

selling costs and administrative costs

Opportunity cost

the potential benefit that is given up when one alternative is selected over another

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

A cost that changes in direct proportion to changes in the activity level is a ______ cost.

variable cost

Selling Cost

0 Fixed selling expense$3.90 Fixed administrative expense$2.00 Sales commissions$1.00 Variable administrative expense$0.50 Foundational 1-3 (Algo) 3. If 8,000 units are produced and sold, what is the variable cost per unit produced and sold?

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

variable costs