Econ 110: Managerial Cost Accounting and Control Chapter 2
Identify which statements regarding costs in the service industry are correct.
-Service firms can have direct materials -A cost that a manager can significantly influence is a controllable cost in both a service and a manufacturing firm
Service firms such as lawyers and CPAs can have______.
-direct material costs -direct labor costs
Manufacturing overhead includes______.
-factory depreciation -indirect materials -indirect labor
The product cost for a manufacturer includes______
-labor costs of production employees -overhead incurred to manufacture the product
Which of the following are true?
Classified cost data may be appropriate for one use but inappropriate for another. The word cost can have different meanings depending on the context used. A cost is a sacrifice made to achieve a particular purpose.
Which of the following is true regarding managerial accounting information?
The benefit of the information should be weighed against the cost of obtaining and using the information.
Which of the following statements is true?
The cost of sales is an expense.
True or false: A cost that is a direct cost in one department can be an indirect cost in another department.
True
True or false: The benefit of information should always be weighed against the cost of obtaining the information.
True
An opportunity cost is_______.
a benefit that is sacrificed with the choice of one course of action over another
A sunk cost is______.
a cost that has been incurred in the past.
A cost driver is_____.
an activity or event that causes costs to be incurred.
The main difference between service production costs and a manufactured product costs is that service department costs_____.
are period costs.
A cost that a manager can significantly influence is a(n)_______ cost.
controllable
A resource expended or given up to achieve a particular purpose is a(n)____
cost
A characteristic of an activity that causes costs to be incurred is a(n)_______ _________.
cost driver
An entity, such as a product, service, or department, to which a cost is assigned is called a(n)
cost object
An entity, such as a product, service, or department, to which a cost is assigned is called a(n) _____ _______.
cost object
The total cost of goods completed and transferred from work-in-process to finished-goods inventory is called______.
cost of goods manufactured
Once inventory is sold, product costs become______.
cost of goods sold
The amount by which a cost changed under alternative courses of action is a(n)_______ ________.
differential cost
Cost of salaries and wages for personnel who work directly on the manufactured products is classified as______ labor costs.
direct
Materials that can be easily traced to a product are called _____ materials.
direct
Materials that can be easily traced to a product are called____ materials
direct
A cost that can be traced to a particular cost object is called a(n)______ _______ of that cost object
direct cost
The costs of fringe benefits for assembly line workers are_____ costs.
direct labor
Conversion costs are_____
direct labor and manufacturing overhead
What are the three categories of manufacturing costs?
direct labor, manufacturing overhead, and direct materials
What are three categories of manufacturing costs?
direct labor, manufacturing overhead, and direct materials
Prime costs are______.
direct materials and direct labor.
The three categories of manufacturing costs are ______ material, direct _______, and manufacturing______.
direct, labor, overhead
Operating expenses are shown on the_____ ______.
income statement
Costs of materials that are required for the production process but do not become an integral part of the finished product are called______ materials
indirect
Materials that become an integral part of the finished product but are insignificant in cost are often classified as________ material
indirect
Production department supervisors, quality control inspectors, and assembly plant security guards are classified as_______ labor.
indirect
A cost that is not easily traceable to a particular service or product is a(n)______
indirect cost
Another term for product cost is_____cost
inventoriable
The cost of goods completed and transferred from work-in-process to finished-good inventory is cost of goods______.
manufactured
All costs of production other than direct labor and direct materials are classified as______ _________
manufacturing overhead
Costs of operating service departments that support manufacturing are classified as______.
manufacturing overhead
The cost of idle time and overtime premiums paid to factory works is classified as______.
manufacturing overhead
indirect labor is classified as part of_____.
manufacturing overhead
Select all that apply Objectives of a cost management system include______.
measuring the unused capacity of resources -determining the efficiency and effectiveness of all major activities -evaluating new activities that can improve organizational performance
Cost of activities that can be eliminated with no deterioration of product quality, performance, or perceived worth are called______-_______-_______costs.
non-value-added
A benefit that is sacrificed when the choice of one action precludes taking an alternative course of action is called a(n)_______ _________.
opportunity cost
Inventory that includes all materials before they are placed into production is called______ inventory
raw-material
Costs incurred in the past that will not change based on future action are_____ costs.
sunk
A differential cost is_______.
the amount by which a cost differs under alternative courses of action.
A cost that a manager cannot influence significantly is a(n)_____ cost.
uncontrollable
A cost that changed, in total, in direct proportion to a change of activity is a(n)_____cost
variable
A cost that changes, in total, in direct proportion to a change of activity is a(n)______cost.
variable
Inventory that is only partially completed at the balance sheet date is called_________ inventory
work-in-process
