Managerial Accounting Exam 1
Selling costs include: A.) Advertising B.) Sales Salaries C.) Sales commissions D.) Administrative Salaries
A.) Advertising B.) Sales Salaries C.) Sales commissions
Nonmanufacturing costs include: A.) Company president's salary B.) Sales commissions C.) Assembly-line worker wages D.) Insurance on plant equipment
A.) Company president's salary B.) Sales commissions
Which of the following are you true? A.) Period Costs do not flow through the inventory accounts B.) All costs in merchandising company are period costs C.) Inventoriable Costs are expensed in the period in which they are incurred D.) Period costs are expensed when incurred.
A.) Period Costs do not flow through the inventory accounts C.) Inventoriable Costs are expensed in the period in which they are incurred D.) Period costs are expensed when incurred.
Selling Costs include: A.) Sales Commissions B.) Advertising C.) Sales Salaries D.) Administrative Salaries
A.) Sales Commissions B.) Advertising C.) Sales Salaries
Which of the following statements are true?
A.) When mixed costs are represented by a straight-line, the steeper the slope, the higher the variable cost per unit B.) A mixed cost has a minimum cost of having a service available and ready for use
common activity bases include: A.) machine hours B.) scrapped units C.) direct labor hours D.) units sold
A.) machine hours C.) direct labor hours
Within the relevant range of activity, variable costs: A.) vary in total B.) remain constant per unit C.) remain constant in total D.) vary per unit
A.) vary in total B.) remain constant per unit
Non-manufacturing costs include: A.) assembly-worker wages B.) company president's salary C.) insurance on plant equipment D.) sales commissions
B.) company president's salary D.) sales commissions
An activity base A.) is a measure of whatever causes fixed costs to occur B.) is sometimes called a cost driver C.) is part of the organization where major operations and planned and carried out D.) measures whatever causes costs to vary
B.) is sometimes called a cost driver D.) measures whatever causes costs to vary
Discretionary fixed costs include A.) insurance expense B.) management training programs C.) factory depreciation D.) advertising
B.) management training programs D.) advertising
In the equation y = a + bX, b denotes the A.) fixed cost per unit of activity B.) slope of the line C.) variable cost per unit of activity D.) level of activity
B.) slope of the line C.) variable cost per unit of activity
Differential cost is: A.) the same as opportunity cost B.) the difference in cost between two alternatives C.) never relevant to a product decision D.) also known as incremental cost
B.) the difference in cost between two alternatives D.) also known as incremental cost
Manufacturing costs include A.) administrative costs B.) selling costs C.) manufacturing overhead D.) direct labor E.) direct materials
C.) manufacturing overhead D.) direct labor E.) direct materials
Indirect materials include: A.) factory manager's salary B.) laptop computer keyboards C.) nails, glue, and thread D.) factory rent and insurance
C.) nails, glue, and thread
Materials that can become an important component of the finished product whose costs can easily and conveniently be traced to the finished product
Direct materials
Prime costs are
Direct materials Direct Labor Manufacturing Overhead
Administrative costs include: A.) Factory maintenance workers' wages and factory supervisors' salaries B.) Executive compensation and public relations costs C.) Shipping Costs and Sales commissions D.) Sales commissions and factory supervisors' salaries
Executive compensation and public relations costs
True or false: Labor costs that can be specifically traced to a product are indirect labor costs
False
Prior to being recorded on the income statement, manufacturers' product costs flow through
Finished Goods Work in Process Raw Materials
Sales of factory supervisors and factory maintenance personnel are examples of _____ labor costs
Indirect
A manufacturing cost than cannot be easily traced to a specific cost object
Indirect Cost
Minor items such as nails and glue are usually considered to be
Indirect Materials
Product costs are also called
Inventoriable Costs
Factory materials, such as cleaning supplies, that are not components of finished products are classified as
Manufacturing Overhead
What type of cost is never relevant and should be disregarded when making decisions?
Sunk Cost
In the equation Y = a + bX, Y is the
Total Mixed Cost
Direct Labor is also called
Touch Labor
True or False: A cost may be direct or indirect, depending on the cost object
True
the relative proportion of each type of cost in an organization is known as the company's
base structure
step-variable costs
can be adjusted as conditions change may include total salaried employee expense
a type of indirect cost incurred to benefit more than one cost object is a(n)
common cost
Which of the following are differences between the traditional and contribution format to income statements?
compared to traditional statements, contribution format statements provide management with a tool to make decision making easier. Traditional income statements focus on cost classifications. Contribution format statements focus on cost behavior.
Sales revenue minus variable expenses equals
contribution margin
How individual costs react to changes in activity levels is referred to as
cost behavior
Any item for which cost data is desired is called
cost object
the difference in costs between two alternatives is called a(n) _____ cost
differential
A change in revenues between two alternatives is known as _________ or incremental revenue.
differential revenue
fantastic furniture makes custom order couches. the material used to make a couch is a(n) ______ cost of the customer placing the order
direct
Selling and administrative costs are ______ costs
direct or indirect
Fixed costs that usually arise from annual spending decisions by management are
discretionary fixed costs
Within the relevant range of activity, ______ costs remain constant in total
fixed
The contribution approach to constructing income statements distinguishes between
fixes and variable 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
A fixed cost remains fixed ______ within the relevant range of activity
in total
variable costs vary _____ within the relevant range of activity
in total
differential costs are also known as
incremental costs
Other names for manufacturing overhead include
indirect manufacturing costs factory overhead factory burden
Manufacturing overhead costs include
indirect materials, factory supervisors' salaries, and factory depreciation
The components of prime costs are direct ______ costs and direct ______ costs
labor, materials
Costs that are shared by multiple cost objects in a company are known as
marginal costs
The revenue obtained from selling one additional unit of product is called
marginal revenue
The accrual concept that costs incurred to generate a revenue are expensed in the same period the revenue is known as the
matching principle
manufacturing costs can be divided into three categories: direct _____, ______ labor and manufacturing ______.
materials, direct, overhead
a cost that contains both variable and fixed cost elements is a(n) ________ cost
mixed
a potential benefit that is forfeited or lost when one decision is chosen over another is called a(n)
opportunity cost
Cost object include
organizational subunits, anything for which cost data is desired
The materials that go into the final product are called
raw materials
cost assumptions are reasonably valid within the _________ of activity
relevant range
Costs that have already been incurred and can not be changed by decisions made in the current period or in future periods are called
sunk costs
Period costs are always expensed on the income statement in the period in which
they are incurred
committed fixed costs include
top management salaries real estate taxes
an income statement focusing on product and period costs has been prepared using a ______ format, while a(n) _________ format income statement makes a distinction between fixed and variable costs
traditional, contribution
Cost of goods sold for a merchandising company, direct materials, and commissions are all examples of
variable costs