Managerial Accounting Questions Chapter 1
Manufacturing Costs can be divided into three categories
-Direct Materials -Direct Labor -Manufacturing Overhead
What are the two things cost behaviors do?
-Refers to how a cost will change as activity changes -Categorizes costs as fixed, mixed, and variable
Within the relevant range of activity
-costs and activity can approximated by a straight line -Fixed costs remain constant in total
cost objects include
-customers organizational subunits anything for which cost data is desired
cost behavior
-refers how a cost will change as activity level changes -Categorizes as fixed, mixed, and variable
committed fixed costs include
Real estate taxes Top management salaries
The contribution margin equation
Sales - Variable Costs
Marginal cost
The cost incurred to produce one more unit of a product
In the equation Y= a + bX, Y is the
Total Mixed Cost
True or false: The finished product of one company can become raw materials for another company
True
Common costs pertain to costs that:
are not directly traceable to a cost object
How individual costs react to changes in activity level is referred to as cost
behavior
Differential costs
can be fixed or variable
Sales Revenue -Variable expenses
contribution margin
Differential costs, opportunity costs and sunk costs are all cost classifications used in ______.
decision making
A change in revenue between two alternatives is known as
differential revenue
Fixed costs that usually arise from annual decisions by management are called [blank ]fixed costs
discretionary or managed
As the level of activity moves outside of the relevant range, blank costs increase or decrease in discrete steps rather than an linear fashion
fixed
An income statement focusing on product and period costs has been prepared using a GAAP format, while a contribution format income statement makes a distinction between blank cost
fixed and variable costs
Because the variable cost per unit equals the slope of the straight line, the steeper the slope, the ______ the variable cost per unit.
higher
A fixed cost remains fixed ______ within the relevant range of activity.
in total
As the level of activity moves outside of the relevant range, fixed costs, ______.
increase or decrease in discrete steps
The revenue obtained from selling one additional unit of product is called ___________ revenue.
marginal
The accrual concept that costs incurred to generate a revenue are expensed in the same period as the revenue is known as the
matching principle
A cost than contains both variable and fixed costs elements is called a(n) Blank 1 cost
mixed cost
Nonmanufacturing costs include
sales commission and company president's salary
Costs that have already been incurred and can not be changed by decisions made in the current period or in future periods are called Blank costs.
sunk
What type of cost is never relevant and should be disregarded when making decisions?
sunk
Period costs are always expensed on the income statement in the period in which ______.
they are incurred
Direct Labor is also called
touch labor
Within the relevant range, (Blank) costs remain constant on a per unit basis
variable
The contribution approach to constructing income statements distinguishes between ______ costs.
variable and fixed costs
what are inventoriable costs
Are product costs that attach to the product and are expense when the product is sold
Fixed costs that cannot easily be changed and often lock a company into a multi-yeaar decision are called
Committed
Beginning merchandise inventory+purchases-Ending Merchandise inventory
Cost of goods sold
Fantastic Furniture makes custom order couches. The material used to make a couch is a(n) ______ cost of the customer placing the order.
Direct
True or false: Labor costs that can be specifically traced to a product are indirect labor costs
False
Costs that can be easily and conveniently traced to a specific product are called
Direct Cost
Fixed costs that can be cut-back or eliminated without significant damage to a company's long-term goals are Blank 1 fixed cost and Blank 2 fixed costs can not be easily changed or eliminated
Discretionary Committed
True or false: Removing expenses that do not differ between alternatives could alter a decision.
False
A manufacturing cost that cannot be easily traced to a specific cost object is a
Indirect Cost
Prime Costs Equation
Prime Cost= Direct Materials + Direct Labor
Direct materials, direct labor, and manufacturing overhead are all ______ costs.
Product