Acc 204 Chapter 1 smartbook questions

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.

Which of the following are most likely fixed costs?

Factory insurance Administrative salaries Factory rent

Which of the following statements are true?

Period costs do not flow through the inventory accounts. Period costs are expensed when incurred.

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

committed

Within the relevant range of activity ______.

costs and activity can be approximated by a straight line fixed costs remain constant in total

Differential costs, opportunity costs and sunk costs are all cost classifications used in:

decision making

Fixed costs that usually arise from annual spending decisions by management are called ______ or managed fixed costs.

discretionary

As the level of activity moves outside of the relevant range, costs increase or decrease in discrete steps rather than an linear fashion.

fixed

Within the relevant range of activity, ______ costs remain constant in total.

fixed

The difference in revenues between two alternatives is called ______.

incremental revenues

Which of the following is not a COST CLASSIFICATION associated with decision making?

indirect costs

Discretionary fixed costs include ______.

management training programs advertising

A cost that contains both variable and fixed cost elements is a(n) ______ cost.

mixed

The assumption that cost behavior is strictly linear is reasonably valid within the _____ ______ of activity

relevant range

Variable costs ______.

remain constant per unit and vary in total

An income statement focusing on product and period costs has been prepared using a(n) ______ format, while a(n) _______ format income statement makes a distinction between fixed and variable costs.

traditional contribution

Which type of cost changes in total, in direct proportion to changes in activity level?

variable

As the level of activity moves outside of the relevant range, fixed costs, ______.

increase or decrease in discrete steps

On a traditional income statement, cost of goods sold reports the costs attached to merchandise sold during the period, while selling and administrative expenses report all costs that have been expensed as incurred.

product period

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