ACCT202 Chapter 1 Smartbook
How individual costs react to changes in activity level is referred to as cost ______
behavior
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
The components of prime costs are direct costs and direct ______ ______ costs.
Blank 1: materials or material Blank 2: labor or labour
Which of the following are most likely fixed costs?
Factory rent Administrative salaries Factory insurance
True or false: 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 in the same period in which they are incurred. Sales commissions are period costs.
Which of the following statements are true?
Period costs do not flow through the inventory accounts. Period costs are expensed when incurred.
True or false: The finished product of one company can become raw materials for another company.
True
Cost objects include ______.
anything for which cost data is desired organizational subunits customers
Product costs ______.
are also called inventoriable costs "attach" to units of product as they are purchased for resale or produced
Cost behavior ______.
categorizes costs as fixed, mixed and variable refers to how a cost will change as activity level changes
Fixed costs that cannot easily be changed and often lock a company into a multi-year decision are called ______ fixed costs.
committed
Labor costs that can be easily and conveniently traced to specific products are ______ costs.
direct
Prime costs include ______.
direct labor direct materials
Manufacturing costs include ______.
direct labor direct materials manufacturing overhead
In an automobile manufacturing plant, the assembly-line workers are classified as ______ ______ cost.
direct labor OR touch labour
A laptop computer manufacturer would consider the computer's processor chip to be a(n) ______ cost.
direct material
Selling and administrative costs are ______ costs.
direct or indirect
True or false: Labor costs that can be specifically traced to a product are indirect labor costs.
false
Within the relevant range of activity, ______ costs remain constant in total.
fixed
Product costs flow through the inventory accounts until the goods are sold, at which time they are matched against sales on the ______.
income statement
A manufacturing cost that cannot be easily traced to a specific cost object is a(n) ______ cost.
indirect
Salaries of factory supervisors and factory maintenance personnel are examples of ______ labor costs.
indirect
A dress manufacturer would consider the cost of relatively inexpensive items like thread to be part of ______.
indirect materials manufacturing overhead
Manufacturing overhead costs include ______.
indirect materials, factory supervisors' salaries, and factory depreciation
Indirect materials and indirect labor are classified as ______.
manufacturing overhead
The accrual concept that costs incurred to generate a revenue are expensed in the same period the revenue is known as the ______ principle.
matching
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
A cost that changes in direct proportion to changes in the activity level is a ______ cost.
variable
Product costs are also called ______ costs.
inventoriable OR manufactoring
Minor items such as nails and glue are usually considered to be ______.
indirect materials
Factory costs such as cleaning supplies, taxes, insurance, and janitor wages are classified as ______.
manufacturing overhead
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