Chapter 1

Question 1

Which type of accounting is concerned with reporting financial information to external parties, such as stockholders, creditors, and regulators

Answer 1

Financial Accounting

Question 2

Which type of accounting is concerned with providing information to managers within an organization so that they can plan, control operations, and make decisions

Answer 2

Managerial Accounting

Question 3

What are the two different types of costs?

Answer 3

Direct Costs
Indirect Costs

Question 4

What are the three classifications of manufacturing costs?

Answer 4

Direct Materials
Direct Labor
Manufacturing Overhead

Question 5

T/F- the three classifications of manufacturing costs are also known as product costs

Answer 5

True

Question 6

What type of manufacturing cost consists of raw materials that become an obvious part of the product and can be easily traced directly to it.

Answer 6

Direct Materials

Question 7

T/F- A radio installed in a truck is known as direct materials

Answer 7

True

Question 8

What type of manufacturing cost consists of labor costs
that can be easily traced to individual units of product

Answer 8

Direct Labor

Question 9

T/F- An example of direct labor is: Wages paid to technician who installed the radio in the truck

Answer 9

True

Question 10

What type of manufacturing cost includes all of the costs that are incurred to operate the manufacturing facility?

Answer 10

Manufacturing Overhead

Question 11

T/F- Manufacturing Overhead are considered direct costs that cannot be traced to single products

Answer 11

FALSE, because the costs cannot be traced to a single product it is known as an INDIRECT cost

Question 12

What are some examples of manufacturing overhead in a company?

Answer 12

Plant utilities
Depreciation and maintenance on equipment
insurance on factory

Question 13

Materials consumed the factory but not put into the product is known as

Answer 13

Indirect Materials

Question 14

Material put into the product that is too difficult to count or measure is also known as

Answer 14

Indirect Materials

Question 15

What are some examples of indirect materials?

Answer 15

cleaning solvents, light bulbs, first aid, thread in a sofa or glue on a tennis shoe

Question 16

Employees who work in the plant but are not directly
involved in the assembly or manufacture of the product is known

Answer 16

Indirect Labor

Question 17

What are some examples of manufacturing overhead?

Answer 17

Depreciation of equipment
Plant utility costs
property taxes
insurance premiums in order to operate

Question 18

T/F- All indirect costs associated with operating the factory are include in manufacturing OH. These costs will eventually be assigned to products

Answer 18

True

Question 19

Manufacturing costs are often classified between what two costs?

Answer 19

Prime Cost
Conversion Cost

Question 20

What terms make up prime cost?

Answer 20

Direct Material
Direct Labor

Question 21

What terms make up conversion cost

Answer 21

Direct Labor
Manufacturing O/H

Question 22

Costs incurred to secure orders and deliver the product. These costs can be
either direct (commission)
or indirect (advertising) are known as

Answer 22

Selling Costs

Question 23

All executive, organizational, and clerical costs. These costs can be either direct
(warranty registration)
or indirect (executive
salaries).

Answer 23

Administrative Cost

Question 24

All of the costs that are involved in buying or making a product is known as

Answer 24

Product Costs

Question 25

T/F- Product costs “attach to” or are added to a product when it is purchased or as it is manufactured. They stay attached to the product as long as the product is in inventory waiting to be sold.

Answer 25

True

Question 25

The inventory accounts used by manufacturing companies include what 3 things?

Answer 25

Raw Materials Work in Process Finished Goods

Question 26

T/F- Inventory is on an Income statement

Answer 26

False, Balance sheet

Question 27

T/F- Cost of Goods Sold is on the income statement

Answer 27

True

Question 28

Which of the following costs would be considered a period rather than a product cost in a manufacturing company? A. Manufacturing equipment depreciation. B. Property taxes on corporate headquarters. C. Direct materials costs. D. Electrical costs to light the production facility. E. Sales commissions.

Answer 28

B) Property taxes on corporate headquarters E) Sales Commisions

Question 29

Cost behavior refers to how a cost will react to changes in the level of activity. What are the three most common classifications

Answer 29

Variable Fixed Mixed Costs

Question 30

A measure of volume- the cause of a variable cost is known as

Answer 30

Cost Driver

Question 31

A cost that varies, in total, in direct proportion to changes in volume is known as

Answer 31

Variable Cost

Question 32

T/F- a variable cost per unit is constant

Answer 32

True

Question 33

What is an example of a variable cost per unit from the powerpoint?

Answer 33

the bun cost in a Chick-fil-A sandwich

Question 34

A cost that remains constant, in TOTAL, regardless of changes in volume is known as

Answer 34

Fixed Cost

Question 35

T/F-A fixed cost per unit varies inversely with changes in volume

Answer 35

True

Question 36

T/F- When volume increases, Fixed cost per unit decreases

Answer 36

True

Question 37

T/F- When volume decreases, fixed cost per unit increases

Answer 37

True

Question 38

What is an example of a fixed cost from the powerpoint?

Answer 38

The rent at Chick-fil-a

Question 39

What are the two types of fixed costs?

Answer 39

Committed and Discretionary

Question 40

A long-term fixed cost, cannot be significantly reduced in the short-term and an example of this is rent or a lease. Which fixed cost am i describing

Answer 40

Committed

Question 41

This type of fixed cost may be altered in the short-term by current managerial decisions an example of this is an office Christmas party. Which fixed cost am I describing?

Answer 41

Discretionary

Question 42

What term refers to a normal range of activity which is not abnormally high or low. Cost behavior is predictable in this range.

Answer 42

Relevant Range

Question 43

Which of the following costs would be variable with respect to the number of ice cream cones sold at a Baskin & Robbins? (There may be more than one correct answer.) A. The cost of lighting the store. B. The wages of the store manager. C. The cost of ice cream. D. The cost of napkins for customers

Answer 43

C. The cost of ice cream. D. The cost of napkins for customers

Question 44

What type of cost is the difference in cost between two alternatives

Answer 44

Differential or Incremental Cost

Question 45

What is another name for differential costs?

Answer 45

Incremental

Question 46

A difference in revenue between two alternatives is called

Answer 46

Differential Revenue

Question 47

The potential benefit that is given up when one alternative is selected over another is known as

Answer 47

Opportunity Cost

Question 48

Costs have already been incurred and cannot be changed now or in the future are known as

Answer 48

Sunk Costs

Question 49

What costs should be ignored when making decisions?

Answer 49

Sunk Costs

Question 50

What type of format income statement is used by 3rd parties and conforms to GAAP

Answer 50

the Traditional Format

Question 51

What type of format income statement is only used by management and classifies costs by behavior( fixed or variable). This type also helps management predict how income will be affected by changes in volume

Answer 51

Contribution Format

Question 52

Suppose that your car could be sold now for $5,000. Is this a sunk cost? A. Yes, it is a sunk cost. B. No, it is not a sunk cost.

Answer 52

B. No, it is not a sunk cost.