Module 1

based on the following information, compute the cost of goods sold for Spengler Merchandising Corporation Sales 400,000 Purchases 300,000 Beginning Inventory 50,000 Ending inventory 90,000 Selling exp 70,000 Admin Exp. 30,000 Accts. Rec. 110,000

$260,000 (beginning inv + purch. - ending inv. =cogs)

a company purchased a 12 month insurance policy on October 1 at a cost of $1,200. On the December 31 annual financial statements:

$300 is reported as a expense and $900 is reported as an asset

based on the following information, calculate net income for Dana's Dress Shop using the traditional format. Sales 360,000 Gross margin 140,000 Contrib. margin 110,000 Total selling & admin exp 60,000

80,000 (Gross margin - total selling & admin exp.)

Costs that can be easily and conveniently traced to a specific product are called ____ costs

Direct

A cost that can be easily and conveniently traced to a specific cost object is a(n) ____ cost of that cost objective; whereas costs that cannot be easily and conveniently traced to that specific cost object are ____ costs

Direct ; Indirect

A laptop computer manufacturer would consider the computer's processor chip to be a(n) ____ cost

Direct Material

true or false: labor costs that can be specifically traced to a product are indirect labor costs

False

Which of the following statements are true?

a direct cost can be easily and conveniently traced to a specific cost object. a regional sales manager's salary would be a direct cost of the regional office in which the sales manager works.

the contribution approach to constructing income statements

aids in decision making distinguishes between fixed and variable costs

Cost objects include

anything for which cost data is desired organizational subunits customers

indirect labor costs include

assembly-line supervisor salary factory security guard wages

A type of indirect cost incurred to benefit more than one cost object is a(n) ____ cost

common

a type of indirect cost incurred to benefit more than one cost object is a(n) ____ cost

common

nonmanufacturing costs include

company president's salary sales commissions

sales revenue minus variable expenses equals ____ ___.

contribution margain

direct labor and overhead costs incurred to change raw materials into finished products are known as ___ cost

conversion

any item for which cost data is desired is called a(n) ____.

cost objective

In an automobile manufacturing plant, the assembly-line workers are classified as ____ ____ cost

direct labor

prime costs are:

direct materials direct labor

other names for manufacturing overhead include

factory overhead factory burden indirect manufacturing costs

manufacturing overhead costs include

indirect materials, factory supervisors' salaries, and factory depreciation

direct materials and direct labor are both ____ costs

manufacturing

indirect materials and indirect labor as classified as

manufacturing overhead

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

manufacturing overhead indirect matierals

the accrual concept that cost incurred to generate a revenue are expensed in the same period that revenue is known as the ____ principle

matching

There are two broad classifications of costs: Manufacturing and ____ costs

nonmanufacturing

which of the following are true?

period costs are expensed in the same period in which they are incurred sales commissions are period costs

inventoriable costs is another term for ____ costs.

product

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 and contribution

True or false: The finished product of one company can become raw materials for another company

true

units that are participial complete are found in

work in progress