Managerial Accounting Test One

direct labor

"touch labor"

Given: Sales of $360,000, Gross Margin of $140,000, Contribution Margin of $110,000, and Total Selling & Administrative Exp. of $60,000, net income using the traditional income statement format equals ______. $50,000 $80,000 $190,000 $160,000

80,000 Gross Margin of $140,000 - Total Selling & Admin. Exp. of $60,000 = $80,000.

y=a+b(x)

Y= total mixed cost a= total fixed cost b= variable cost per unit X= level of activity

cost driver/activity base

a measure of what causes the inccurence of a variable cost (labor hours, miles driven, machine hours, i.e.)

which of the following costs would be considered a period rather than a product cost in a manufacturing company? a. manufacturing equipment depreciation b. property taxes on corporate headquarters c. direct material costs d. electrical costs to light the production facility e. sales commission

a/e

product cotst

all costs used to produce a product. costs "attach to a product" and stay while awaiting sale.

manufacturing overhead

all manufacturing costs besides direct material and direct labor

sunk cost

already been incurred, cannot change - irrelevant/to be ignored

contribution margin

amt remaining from sales revenue after all variable expenses have been deducted

cost object

anything for which cost data are desired - including products, customers, plants, office locations, and departments

Select all that apply. Period costs: are expensed in the period incurred are included as part of the cost of goods include all costs that are not product costs flow through the inventory accounts

are expensed in the period incurred include all costs that are not product costs

Select all that apply. Period costs:. are expensed in the period incurred are included as part of the cost of goods flow through the inventory accounts include all costs that are not product costs

are expensed in the period incurred include all costs that are not product costs

discresionary fixed costs

arise from annual decisions by management to spend on certain fixed costs

inventory goes on (income statement/balance sheet)

balance sheet

relevant costs/benefits

benefit to be considered with making decisions

which of the following costs would be variable with respect to the number of ice cream cones sold at baskin and robins? chose all that apply. a. the cost of lighting at the store. b. the wage of the store manager c. the cost of ice cream. d. the cost of napkins for customers.

c/d

variable cost

changes in level of activity. must vary in respect to something

the ______ format is most used in management.

contribution

Sales revenue minus variable expenses equals ______

contribution margin

direct labor + manufacturing overhead =

conversion cost

indirect labor

cost cannot be directly traced (employees who play an essential role in running a manufacturing facility)

an activity base is also known as a(n) _________________

cost driver

sunk costs

cost incurred in the past that can not be changed

product cost

cost incurred inside factory

period cost

cost incurred outside factory

A(n) ______ is anything for which cost data are desired—including products, customers, plants, office locations, and departments.

cost object

Select all that apply. On a traditional format income statement ______. cost of goods sold includes both fixed and variable costs selling and administrative expenses are reported in product costs contribution margin is reported gross margin is reported

cost of goods sold includes both fixed and variable costs gross margin is reported

Select all that apply. On a traditional format income statement _________. selling and administrative expenses are reported in product costs cost of goods sold includes both fixed and variable costs contribution margin is reported gross margin is reported

cost of goods sold includes both fixed and variable costs gross margin is reported

Select all that apply. On a traditional format income statement______ cost of goods sold includes both fixed and variable costs gross margin is reported contribution margin is reported selling and administrative expenses are reported in product costs

cost of goods sold includes both fixed and variable costs gross margin is reported

administrative costs

costs of general amangement (PR, legal coucil, executive compensation)

Select all that apply. Cost objects include ______. customers organizational subunits / departments anything for which revenue data is desired anything for which cost data is desired

customers organizational subunits / departments anything for which cost data is desired

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

decision making

A change in revenues between two alternatives is known as _______ revenue or incremental

differential

manufacturing costs

direct material, direct labor, indirect manufacturing overhead

common cost

expense associated with operating a facility, product, or segment that is shared between two ro more departments or users. must be allocated equitably to all of the users that share the expense.

product costs attach to a product and stay while awaiting sale. once sold, it becomes an ______________

expense to cost of goods sold

______ cost per unit changes. ______ cost does not change. ______ cost per unit does not change. ______ does not change.

fixed cost per unit changes. fixed cost does not change. variable cost per unit does not change. variable cost does change.

differential costs

future costs that differentiates from any two alternatives (can be fixed or variable)

differental revenue

future revenue that differs between any two revenues

finished product

have not be sold to a customer

cost behavior

how a cost will react to a change in the level of activity

Period costs: flow through the inventory accounts include all costs that are not product costs are included as part of the cost of goods are expensed in the period incurred

include all costs that are not product costs are expensed in the period incurred

cost of goods sold goes on (income statement/balance sheet)

income statement

period costs are not expensed on the balance sheet. they go direct to _________

income statement

incremental costs

increase in costs between two alternatives.

The difference in revenues between two alternatives is called _______. incremental revenue incremental cost net profit marginal revenue

incremental revenue

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

indirect costs

Inventoriable costs is another term for _______ costs.

manufacturing

____________ are relative to a product.

manufacturing costs

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

direct materials

materials whose costsc can be easily traced to finished products

tracable fixed costs

may be altered in the short-term by current managerial decisions

activity base

measures whatever causes the incurrence of a variable cost

indirect cost

not easily traced to a specific cost object

A potential benefit that is forfeited or lost when one decision is chosen over another is called a(n) __________

opportunity cost

selling costs

ordergetting/filling. advertising, shipping, sales travel, sales commission, sales saleries, cost of finished goods

committed fixed costs

organizational investments with a multiyear planning horizon that can't be significantly reduced even for short periods of time without making fundamental changes

Cost objects include _____. anything for which revenue data is desired organizational subunits / departments customers anything for which cost data is desired

organizational subunits / departments customers anything for which cost data is desired

opportunity cost

potential benefit given up when an alternative is selected

direct material + direct labor =

prime costs

relative range

range of activity within which the assumption that cost behavior is strictly linear is reasonable valid

relevant range

range of activity within which the assumption that cost behavior is strictly linear is reasonable valid (step method)

cost structure

realtive proportuions of each type cost in an organization

matching principle

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

Nonmanufacturing costs include _____. sales commissions company president's salary insurance on plant equipment assembly-line worker wages

sales commissions company president's salary

Selling costs includes:

sales commissions, advertising, sales salaries

contribution approach

separates cost into fixed and variable categories first deducting all variable expenses from sales to obtain the contribution margin

conversion cost

sum of direct labor and manufacturing overhead

prime costs

sum of direct materials cost and direct labor costs

oportunity costs

the potential benefit given up when one alternative is selected over the other

direct cost

traced to specific cost objects

the ______ format is primarily used for external reporting.

traditional

indirect material

untraceable material (such as soldering electrical connections)

if your fixed monthly utilitiy charge is $40, your variable cost is $0.03 per kilowatt hour, and your monthly activity level. is 2,000 kilowatt hours, what is the amount of your utility bill?

y=a +b(x) y = 40+(.03x2000) y=100