ECON CH1 QUIZ

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what is a mixed cost

A cost that contains both variable and fixed cost elements

An exam that focuses on planning, controlling and decision-making skills is required to become a(n)

CMA

discretionary fixed costs

Can be cut for short periods of time with minimal damage to the long run goals of the organization

administrative costs

all costs associated with the general management of an organization rather than with manufacturing or selling( either direct or indirect)

selling costs

all costs that are incurred to secure customer orders and get the finished product or service into the hands of the customer(either direct or indirect)

period costs

all costs that are not product costs

cost object

anything for which cost data are desired—including products, customers, plants, office locations, and departments.

variable cost acts

constant per unit vary in total

opportunity cost

A potential benefit that is forfeited or lost when one decision is chosen over another

product costs

All costs that are involved in acquiring or making a product. In the case of manufactured goods, these costs consist of direct materials, direct labor, and manufacturing overhead.

Decision making

Selecting a course of action from competing alternatives

incremental revenue(differential revenue)

The difference in revenues between two alternatives

cost structure

The relative proportion of each type of cost in an organization

Direct cost

a cost that can be easily and conveniently traced to a specified cost object

an activity base is sometimes called a

cost driver

The matching principle

cost incurred to generate a particular revenue should be recognized as expenses in the same period the revenue is recognized

fixed cost

cost that remains constant

What is the cost being indirect or direct dependent on

dependent on the cost object

manufacturing costs include

direct materials, direct labor, manufacturing overhead

Selling and admisitration costs can be either

direct or indirect

relevant range

ex: the assumption that the rent for the diagnotics machine is 20,000 per month is only valid within the relevant range of 0 to 3,000 test per month. if the mayo clinic needed to test 5,000 test per month then they would need to rent an additional machine for another 20,000

financial accounting is

external

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

fixed costs

committed costs are

fixed costs can not be easily changed or eliminated

What is the primary role of managerial accounting

partner with co-workers within the organization to improve performance

Three activities vital to the role of managerial accounting are

planning, controlling and decision making

Prior to being recorded on the income statement, manufacturers' product costs flow through Blank______.

raw material work in process finished good

variable costs

remain constant per unit and vary in total

Within the relevant range of activity, fixed costs

remain fixed in total and vary per unit.

committed fixed cost

represent organizational investments with a multiyear planning horizon that cant be significantly reduced without making fundemental changes

managerial accountants need

strong financial accounting skills

within the relevant range of activuty

the assumption that cost behavior is strictly linear is reasonably valid

Y=a+bX A represents

total fixed costs

Y=a+bX Y is

total mixed costs

Managerial accounting skills are needed in for profit, not-for-profit and governmental entities

true

work in process

units of product that are only partially complete and will require further work before they are ready for sale to the customer

an activity base measures

whatever causes costs to vary

the cost of relatively inexpensive items are considered

Manufacturing overhead indirect materials

Controlling involves

gathering feedback to ensure plans are being properly executed or modified as needed

cost behavior

how a cost reacts to changes in the level of activity fixed variable mixed

When are period costs expensed?

in the period they are incurred

Planning

includes specifying how to achieve established goal

Managerial accounting is

internal

Product costs are also known as

inventoriable costs

Period costs do or do not flow through the inventory accounts

DO NOT

discretionary costs

Fixed costs that can be cut-back or eliminated without significant damage to a company's long-term goals

Committed fixed costs

Fixed costs that cannot easily be changed and often lock a company into a multi-year decision

cost behavior

How individual costs react to changes in activity level

What are indirect labor costs

Indirect labor costs cannot be conveniently and easily traced to a specific product.

What are synonyms for Manufacturing Overhead

Indirect manufacturing cost factory overhead factory burden

common cost

a cost that can be incurred to support a # of cost objects but cannot be traced to them individually (type of indirect)

indirect cost

a cost that cannot be easily and conveniently traced to a specified cost object

sunk cost

a cost that has already been committed and cannot be recovered

differential cost

a future cost that differs between any 2 alternatives (relevant costs)

activity base

a measure of whatever causes the incurrence of a variable cost

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

common cost

differential revenue

future revenue that differs between any two alternatives( relevant benefit)

When fixed costs are expressed on an average per unit basis,

it can give the false impression that total fixed costs change with changes in activity. aka variable cost

Raw materials

materials that go into the final product

to be traced to a cost object

the cost must be caused by the cost object

cost structure

the relative proportion of each type of cost in an organization

conversion cost

the sum of DL and MOH

Within the relevant range of activity, variable costs

vary in total and remain fixed per unit.

Units that are partially complete are found in

work in process


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