ACC 2280 CHAPTER 1

Which of the following are most likely fixed costs?

Administrative salaries Factory insurance Factory rent

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

BEHAVIOR

The relative proportion of each type of cost in an organization is known as the company's

COST STRUCTURE

All of a company's depreciation, property taxes, and insurance premiums are considered manufacturing overhead.

FALSE

Which of the following statements are true?

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

Period costs are always expensed on the income statement in the period in which _____

THEY ARE INCURRED

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

VARIABLE

Within the relevant range, ______ costs remain constant on a per unit basis

VARIABLE

Units that are partially complete are found in ___

WORK IN PROVECC

Period costs Blank______.

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

Administrative costs include Blank______.

executive compensation and public relations costs

Within the relevant range, fixed costs ______.

generally include rent and supervisor salaries remain constant in total regardless of changes in activity should not be expressed on a per unit basis when making decisions

Product costs flow through the inventory accounts until the goods are sold, at which time they are matched against sales on the _____.

income statement

Product costs are also called _____ costs.

inventoriable

Cost structure Blank______.

is the relative proportion of each type of cost in an organization

Direct materials, direct labor, and manufacturing overhead are all ______ costs.

product

Cost behavior Blank______.

refers to how a cost will change as activity level changes. categorizes costs as fixed, mixed and variable.

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

An activity base ______.

measures whatever causes costs to vary. is sometimes called a cost driver.

Committed fixed costs include Blank______.

top management salaries real estate taxes

Common activity bases include Blank______.

units sold machine hours direct labor hours

Within the relevant range, a cost that changes in direct proportion to changes in the activity level is a ______ cost.

variable