Managerial Accounting Chapter 1 Learnsmart: Managerial Accounting and Cost Concepts
True or False: Labor costs that can be specifically traced to a product are indirect labor costs.
False
True or False: A cost may be direct or indirect, depending on the cost object.
True
True or False: The finished product to one company can become raw materials for another company.
True
Selling costs include:
advertising sales salaries sales commissions
Product costs:
are also called inventorial costs and "attach" to units of product as they are purchased for resale or produced
Opportunity cost:
are benefits that are given up when selecting one alternative over another and should be considered in decision making
Costs that are shared by multiple cost objects in a company are known as ____ costs.
common
Which of the following are different 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 and traditional income statements focus on cost classifications. Contribution format statements focus on cost behavior
Sales revenue minus variable expenses equals ____ _____ .
contribution margin
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 object
A change in revenues between two alternatives is known as ____ revenue or incremental revenue.
differential
Cost 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 object, whereas costs that cannot be easily and conveniently traced to that specific cost object are _____ costs.
direct and indirect
Labor costs that can be easily and conveniently traced to specific products are _____ costs.
direct labor
Prime Costs:
direct labor and direct materials
Common activity bases include:
direct labor hours machine hours units sold
A laptop computer manufacturer would consider the computers processor chip to be a(n) ____ cost.
direct material
Selling and administrative costs are ____ costs.
direct or indirect
Administrative costs include:
executive compensation and public relations costs
Within the relevant range of activity, ____ costs remain constant in total.
fixed
A manufacturing cost that cannot be easily traced to a specific cost object is a(n)_____ cost.
indirect
Other names for manufacturing overhead include:
indirect manufacturing costs factory burden factory overhead
Minor items such as nails and glue are usually considered to be:
indirect materials
Manufacturing overhead costs include _____.
indirect materials, factory supervisors' salaries, and factory depreciation
Product costs are also called ____ costs.
inventoriable
Discretionary fixed costs include:
management training programs and advertising
Discretionary fixed costs include:
management training programs and advertising
Direct materials and direct labor are both ____ costs.
manufacturing
Factory costs such as cleaning supplies, taxes, insurance, and janitor wages are classified as ____.
manufacturing overhead
The revenue from selling one additional unit is called ___ revenue.
marginal
The components of prime costs are direct ______ costs and direct ______ costs.
materials and labor
A potential benefit the tis forfeited or lost when one decision is chosen over another is called a(n) ______ .
opportunity cost
The materials that go into the final product are called ____ materials.
raw
The level of activity within which variable and fixed cost assumptions are valid is known as the ____ _____.
relavent range
Differential cost is:
the difference in cost between two alternatives and also known as incremental cost
Period costs are always expensed on the income statement in the period in which:
they are incurred
Committed fixed costs include:
top management salaries and real estate taxes
Within the relevant range, ____ costs remain constant on a per unit basis.
variable
Units that are partially complete are found in:
work in process
Variable costs vary ____ within the relevant range of activity.
in total
Non-manufacturing costs include:
sales commissions and company president's salary
A contribution approach income statement:
separates costs into their fixed and variable components and can assist with management decision making
In the equation Y= a + bX, b denotes the:
slope of the line and variable cost per unit of activity
What type of cost is never relevant and should be disregarded when making decisions?
sunk
A cost that changes in direct proportion to changes in the activity level is a _____ cost.
variable
Mixed costs are also commonly known as semi-_________ costs.
variable
Cost objects include:
organizational subunits customers anything for which cost data is desired