A306 Smart Book Questions
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
Manufacturing costs include
Direct labor, Direct materials, manufacturing overhead
Which of the following statements is true? - There are no significant differences between financial and managerial accounting - Financial accounting data is based on business transactions of the business. Managerial accounting is based solely on estimated activity - Managerial accounting provides financial data for internal use and financial accounting provides data to external users - Managerial accounting data is provided to stockholders and lenders to support decisions about lending and investing in the business
Managerial accounting provides financial data for internal use and financial accounting provides data to external users
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
Cost objects include:
Organizational subunits, customers, and anything for which cost data is desired
Three activities vital to the role of managerial accounting are ??
Planning, Controlling, Decision Making
Product costs:
are also called inventorial costs "attach" to units of product as they are purchased for resale or produced
Opportunity costs ______.
are benefits that are given up when selecting one alternative over another should be considered in decision making
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
Cost Behavior:
categorizes costs as fixed, mixed and variable refers to how a cost will change as activity level changes
Cost classifications for predicting cost behavior are used on _____
contribution format income statements only
Sales revenue minus variable expenses equals _____ _____
contribution margin
Gathering feedback needed to ensure that expectations are being met is part of _____?
controlling
Any item for which cost data is desired is called a(n) ____ ____
cost object
A manager selecting a course of action is performing a ____ activity
decision making
Fantastic Furniture makes custom-order couches. The material used to make a couch is a(n) ______ cost of the customer placing the order.
direct
Materials that become an important component of the finished product whose cost can be easily and conveniently traced to the finished product are ____ materials.
direct
selling and administrative costs are ____ costs
direct or indirect
Planning involves ____
establishing goals and specifying how to achieve them
controlling involves
gathering feedback to ensure plans are being properly executed or modified as needed
As the level of activity moves outside of the relevant range, fixed costs, ______
increase or decrease in discrete steps
The difference in costs between two alternatives is called a(n) ______ cost.
incremental
Factory costs such as cleaning supplies, taxes, insurance, and janitor wages are classified as ____
manufacturing overhead
A cost that contains both variable and fixed costs elements is called a(n) ____ cost
mixed
Indirect materials include
nails, glue, and thread
When making a decision ______ should be considered.
only relevant costs and benefits
A potential benefit that is forfeited or lost when one decision is chosen over another is called a(n) _____ _____
opportunity cost
The management activity of ___ includes specifying how to achieve established goals
planning
On a traditional income statement, cost of goods sold reports the ____ costs attached to the merchandise sold and selling and administrative expenses report all ____ costs that have been incurred.
product & period
The assumption that cost behavior is strictly linear is reasonably valid within the ____ ____ of activity
relevant range
Contribution margin is ______.
sales revenue minus variable costs
Direct labor is also called ____ labor
touch
The finished product of one company can become raw materials for another company (true or false)
ture
Cost of goods sold for a merchandising company, direct materials and commissions are all examples of ______ costs.
variable
Which type of cost changes in total, in direct proportion to changes in activity level?
variable
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 ______.
$80,000 (Gross Margin of $140,000 - Total Selling & Admin. Exp. of $60,000 = $80,000.)
Costs that can be easily and conveniently traced to a specific product are called ____ costs
Direct
To be traced to a cost object such as a particular product, the cost must be incurred to make the product (true or false)
Fase
Managerial accounting helps managers perform three vital activities: _____, _____, and decision making
Planning & Controlling
Parties MORE interested in managerial accounting data than in financial accounting data include
Sales Managers & Production Managers
Labor costs that can be easily and conveniently traced to specific products are ______ costs.
direct labor
A laptop computer manufacturer would consider the computer's processor chip to be a(n)
direct material
Administrative costs include ____
executive compensation and public relations costs
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 the two alternatives is called ______.
incremental revenue
A factory manager's salary is an example of a(n) ______ cost.
indirect
Salaries of factory supervisors and factory maintenance personnel are examples of ______ labor costs.
indirect
Direct materials and direct labor are both _____ costs.
manufacturing
Direct materials, direct labor, and manufacturing overhead are all ______ costs.
product
Non manufacturing costs include:
sales commissions company president's salary
Nonmanufacturing costs include ___
sales commissions company president's salary
Period costs are always expensed on the income statement in the period in which ______.
they are incurred
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
Which of the following are the differences between the traditional and contribution format to income statements?
Contribution format statements make it easier to predict how decisions affect the future. Traditional income statements focus on cost classifications. Contribution format statements focus on cost behavior.
Selecting a course of action from competing alternatives is part of ____ ____.
Decision making
The materials that go into the final product are called ____ materials.
raw