ACCT 252 Chapter 1

Product costs:

attach to units of product as they are purchased for resale or produced and also called inventorial costs

Fixed costs that cannot be easily changed and often lock a company into a multi-year decision are ... fixed costs.

committed

Non-manufacturing costs include:

company president's salary and sales commissions

Sales Revenue - Variable Expenses equals what?

contribution margin

The difference in costs between two alternatives is called a ... cost.

differential

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

Labor costs that can be easily and conveniently traced to specific products are ... costs.

direct labor

Selling and administrative costs are ... costs.

direct or indirect

Fantastic Furniture makes custom order furniture. The factory manager's salary is an ... cost of producing a couch.

indirect

Salaries of factory supervisors and factory maintenance personnel are examples of _____ labor costs

indirect

Minor items such as nails and glue are usually considered to be:

indirect materials

Product costs are also called

inventoriable costs

Factory costs such as cleaning supplies, taxes, insurance, and janitor wages are classified as:

manufacturing overhead

A potential benefit that is forfeited or lost when one decision is chosen over another is called an ...

opportunity cost

What are benefits that are given up when selecting one alternative over another and should be considered in decision making?

opportunity costs

The materials that go into the final product are called ... materials.

raw

Cost assumptions are reasonably valid within ___________ ______________ of activity.

relevant range

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

variable

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

variable

A dress manufacturer would consider the cost of relatively inexpensive items like thread to be part of:

manufacturing overhead and indirect materials

The revenue from selling one additional unit is called ... revenue.

marginal

The revenue obtained from selling one additional unit of product is called ___________ revenue.

marginal

a cost that contains both variable and fixed cost elements

mixed

Selling Costs include:

sales salaries, sales commissions, and advertising

A contribution approach income statement:

separates costs into their fixed and variable components

Costs that have already been incurred and can not be changed by decisions made in the current period or in future periods are called ... costs.

sunk

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

they are incurred

Common activity bases include:

units sold, direct labor hours, and machine hours