Cost Accounting smartbook ch 2
Which of the following workers are classified as direct labor?
Assembly line workers Tax preparers
A company started the year with $185,000 of goods finished and ready for sale. During the year, a total of $700,000 of goods were started in production. Of the goods started, $550,000 were finished during the year. If total cost of goods sold for the year equals $625,000, the company's ending finished goods inventory equals $.
Blank 1: 110,000 or 110000
A company had the following inventories during the year: Inventories: Beginning Ending Direct materials $200 $150 Work in process $300 $250 Finished goods $400 $350 If total direct materials purchased was $2,850, the direct materials put into production for the year equals $ .
Blank 1: 2,900 or 2900
On a per unit basis, the equals the difference between sales price and the variable cost per unit.
Blank 1: contribution Blank 2: margin
The amount available to cover fixed expense and earn a profit is the _ _.
Blank 1: contribution Blank 2: margin
The way costs respond to changes in activity levels is called .
Blank 1: cost Blank 2: behavior or behaviour
The three major categories of product costs are materials, , and manufacturing .
Blank 1: direct Blank 2: direct Blank 3: labor or labour Blank 4: overhead
Costs that can be unambiguously related to cost objects are costs whereas costs that cannot be unambiguously related to cost objects are costs.
Blank 1: direct Blank 2: indirect
Product costs that can be identified with units at a relatively low cost are manufacturing costs and all other product costs are manufacturing costs.
Blank 1: direct Blank 2: indirect
The two types of product costs are manufacturing costs and manufacturing costs.
Blank 1: direct Blank 2: indirect
The cost of parts purchased by a manufacturer that can be identified with units or batches of products are classified as cost.
Blank 1: direct or raw Blank 2: material, materials, or manufacturing
When preparing financial statements, are deducted from revenues associated with an accounting period.
Blank 1: expenses
Costs that do not change as volume changes are costs and costs that change in direct proportion with a change in volume are costs.
Blank 1: fixed Blank 2: variable
Product costs debited to work in process and finished goods are called .
Blank 1: inventoriable Blank 2: costs
Any new costs incurred when adding a product are considered product costs under costing.
Blank 1: managerial
Costs required to obtain customer orders are costs and costs required to manage the organization are costs.
Blank 1: marketing, selling, or sales Blank 2: administrative or administration
Departments, units of products, and product lines are all examples of cost .
Blank 1: objects
Nonmanufacturing costs are also called costs and manufacturing costs are also called
Blank 1: period Blank 2: product
Nonmanufacturing costs are also called costs and manufacturing costs are also called costs.
Blank 1: period Blank 2: product
Department costs, rental costs, or travel costs incurred to visit multiple clients are examples of items accumulated in cost to be assigned to cost .
Blank 1: pools or pool Blank 2: objects or object
The sum of direct materials and direct labor equals costs and the sum of direct labor and manufacturing overhead equals costs.
Blank 1: prime Blank 2: conversion
Costs assigned to units of production and expensed when the units are sold are costs, whereas costs are expensed as incurred.
Blank 1: product or manufacturing Blank 2: period or nonmanufacturing
If a company is focused on trying to eliminate waste and reduce costs, financial statements can be developed that classify costs into - and - activities.
Blank 1: value Blank 2: added Blank 3: nonvalue Blank 4: added
Direct materials and sales commissions are most likely costs, whereas many manufacturing overhead costs such as rent and supervisor salaries are costs.
Blank 1: variable Blank 2: fixed
Which of the following is NOT one of the four basic cost behavior categories?
Direct
True or false: Cost of goods sold includes the actual cost of goods that were sold and the costs required to sell them.
False
True or false: The excess of operating revenues over the operating costs incurred to generate those revenues is net income.
False
True or false: The focus of cost accounting is on expenses.
False
Which of the following statements are true?
For managerial purposes, managers often assign nonmanufacturing costs to products. Nonmanufacturing costs are expensed as incurred for financial accounting purposes. Distinguishing between manufacturing and nonmanufacturing costs can be difficult.
Which of the following statements are true?
Gross margin reflects the ability of a wholesaler to price products. Retailers have an entire category of amounts that do not appear on service company income statements.
Which of the following statements are true?
Information technology represents the major cost for some service organizations. Labor is the most important single cost for many service organizations.
Which of the following statements are true?
Nonmanufacturing costs are expensed as incurred for financial accounting purposes. For managerial purposes, managers often assign nonmanufacturing costs to products. Distinguishing between manufacturing and nonmanufacturing costs can be difficult.
Which of the following statements are true?
The cost of goods manufactured and sold statement focuses on both current costs and inventories. Cost of goods manufactured and sold statements can be effective communication devices. Managerial reports are tailored to the individual company's needs.
Which of the following statements are true?
Transportation-in is included in the cost of direct materials. Direct materials are directly identified with products. Direct materials are often called raw materials.
True or false: For a manufacturer, finished goods inventory is optional.
True
To calculate cost of goods sold during the year, take total cost of goods manufactured and:
add beginning finished goods and subtract ending finished goods inventory
To calculate cost of goods manufactured during the year, take total manufacturing costs and ______.
add beginning work in process and subtract ending work in process inventory
Under variable costing, ______.
all costs except variable manufacturing costs are period costs
The process of assigning costs is called cost ______
allocation
The process of assigning indirect costs is called cost .
allocation
Product costs for unsold units are ______.
assigned to inventory under both absorption and variable costing
The difference between revenue and variable cost is _____.
contribution margin
A sacrifice of resources is a(n) .
cost
Cost to be assigned to cost objects are accumulated in a(n) .
cost pool
Workers must be identified with a product at a reasonable cost to be classified as .
direct labor
Major categories of product costs include ______.
direct labor direct materials manufacturing overhead
To calculate net income, operating profit is adjusted for ______.
extraordinary items interest expense other required regulatory adjustments
Manufacturing overhead costs include ______.
factory cleaning materials inventory warehouse workers factory depreciation
Indirect labor includes ______.
factory maintenance workers factory supervisors
Products ready for sale are called .
finished goods
The difference between full cost and full absorption cost is ______.
fixed and variable selling costs are included in full cost but not in full absorption cost
Common approaches for determining product costs discussed in the text do not include ______ costing.
full
Product costs added to inventory accounts are called .
inventoriable costs
A cost ______.
is a sacrifice of resources may be recorded as an asset
The full cost of a product equals all ______.
manufacturing and selling costs (both fixed and variable)
All product costs other than direct materials and direct labor are commonly referred to as indirect costs or .
manufacturing overhead
Any end to which a cost is assigned is a cost .
object
Assume total units produced equals total units sold. If the company prepares a gross margin income statement and a contribution margin income statement, ______.
operating profit will be the same on both statements marketing and administrative costs will be the same on both statements
Cost of goods manufactured and sold statements are ______.
prepared as part of a company's internal reporting system
Companies with low overhead costs focus on managing ______ costs, whereas companies with high overhead costs focus on managing ______ costs.
prime, conversion
Beginning work in process inventory plus total manufacturing costs equals ______.
resources put into production during the year
Customers are provided with an intangible product by companies.
service
If a company is focused on trying to eliminate waste, income statement costs can be divided into ______.
value-added vs. nonvalue-added activities
Goods that have been started in production but are not yet completed are called ______.
work in progress
Products that have been started but not yet completed are called .
work in progress
Given the following, calculate cost of goods sold: Inventories: Beginning Ending Direct materials $300 $250 Work in process $400 $200 Finished goods $500 $350 Direct material purchases $4,200 Direct labor $3,000 Manufacturing overhead $5,000
$12,600
Given the following, calculate cost of materials put into production. Inventories: Beginning Ending Direct materials $300 $250 Work in process $400 $200 Finished goods $500 $350 Direct material purchases $4,200 Direct labor $3.000 Manufacturing overhead $5,000
$4,250
