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Accounting Chap 1-3 > Chapter 1 > Flashcards

Chapter 1 Flashcards

1
Q

What can cost objects be

A

Products, Lines of products, customers, divisions, departments, geographical regions, business segments

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2
Q

Direct Costs

A

Costs that can be directly and conveniently traced to a product

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3
Q

Indirect costs

A

Costs that cannot be easily and conveniently traced to a unit of a product or other cost

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4
Q

What are the three types of classifications for Manufacturing Costs

A

Direct Materials, Direct Labor, Manufacturing Overhead

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5
Q

What are direct materials

A

Direct Materials are raw materials that can be conveniently traced directly to units of product

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6
Q

Give an example of direct materials

A

free response

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7
Q

What is direct labor

A

Direct labor costs are those labor costs that can be easily traced to individual units of a product

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8
Q

Give an example of direct labor costs

A

free response

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9
Q

Manufacturing overhead

A

Includes all manufacturing costs except direct material and direct labor. These costs cannot be readily traced to finished products

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10
Q

What are the two components of manufacturing overhead

A

indirect materials and indirect labor

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11
Q

Give examples of manufacturing overhead

A

free response

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12
Q

Prime Costs =

A

Prime Cost = Direct Material + Direct Labor

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13
Q

Convergent Costs =

A

Convergent Costs = Direct Labor + Manufacturing Overhead

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14
Q

What is classified as a non manufacturing cost

A

SG& A (Selling costs and administrative costs), R&D Expenses (Research and Development)

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15
Q

What is classified as a manufacturing cost

A

Direct Labor + Direct Material = Prime Costs; Direct Labor + Manufacturing Overhead = Conversion Costs

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16
Q

Selling Costs

A

Costs necessary to secure the order and delivery of a product. Selling can be indirect or direct

17
Q

Administrative Costs

A

All executive, organizational, and clerical costs. Administrative costs can be either direct or indirect costs

18
Q

Research costs

A

Costs of planned search or critical investigation aimed at discovery of new knowledge.

19
Q

Development Costs

A

Costs incurred to translate research findings into a plan or design for a new product or process

20
Q

What is the difference between product costs vs period costs

A

Product costs includes all the costs that are involved in acquiring or making a product

21
Q

Product costs “attach to”

A

Product costs “attach” to a unit of a product as it is purchased or manufactured and they stay attached to each unit of product as long as it remains in inventory awaiting sale

22
Q

Period costs are all costs

A

That are not product costs

23
Q

3 Components of Manufacturing Product Costs

A

Raw materials, work in process, finished goods

24
Q

Raw materials

A

Includes any materials that go into the final product. Also includes indirect materials

25
Q

Work in process

A

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

26
Q

Finished goods

A

Consists of completed units of product that have not yet been sold to customers

27
Q

Outline of Cost flows

A

Draw Picture (See Chap 1 Slides)

28
Q

What is cost behavior

A

Cost behavior refers to how a cost will react to changes in level of activity

29
Q

Three most common classifications of cost behavior

A

Variable costs, fixed costs, mixed costs

30
Q

What is Variable Cost

A

A cost that varies, in total, in direct proportion to changes in the level of activity

31
Q

A variable cost per unit is

A

constant

32
Q

What is a fixed cost

A

A cost that remains constant, in total, regardless of changes in the level of the activity

33
Q

If fixed cost is expressed on a per unit basis

A

the average fixed cost per unit varies inversely with changes in activity

34
Q

What is the relevant range

A

refers to a normal range of volume or normal amount of activity in which the total amount of a company’s fixed costs will not change as the volume or amount of activity changes

35
Q

A mixed cost

A

Is a cost that contains both variable and fixed elements

36
Q

An example of a mixed cost

A

Utility cost

37
Q

draw fixed, mixed, variable, and relevant range graphs

A

see Chap 1 slides for help with drawing

Accounting Chap 1-3 (2 decks)

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