Chapter 1: Managerial Accounting and Cost Concepts

Question 1

What is an Activity Base?

Answer 1

A measure of what causes variable costs.

Question 2

What is an example of an activity base?

Answer 2

Total cost of gloves in a hospital will increase as surgeries increase.

Question 3

Administrative costs include any:

Answer 3

Executive, Orginization, and Clerical costs

Question 4

What are committed Fixed Costs?

Answer 4

Investments that cannot be reduced without a fundamental change

Question 5

What are common costs?

Answer 5

Cost incurred to support cost objects that cannot be traced to a single individual

Question 6

What is a Contribution Approach?

Answer 6

An income statement organized by variable and fixed cost behavior

Question 7

What is a Contribution Margin?

Answer 7

The remaining money from sales revenue after variable expenses have been deducted

Question 8

Conversion Cost

Answer 8

Direct Labor + Manufacturing Overhead

Question 9

What is Cost Behavior?

Answer 9

How product costs react to various activity levels

Question 10

Describe a cost object

Answer 10

Anything for which cost data is desired such as product, customer or geographic data.

Question 11

Cost Structure

Answer 11

How many fixed, variable, and mixed costs are found in an organization

Question 12

Differential cost

Answer 12

Future costs that differ between two different products

Question 13

Differential Revenue

Answer 13

Revenue that differes between two different products

Question 14

Direct Labor

Answer 14

Easy to Trace Costs

Question 15

Direct Labor

Answer 15

Easy to trace

Question 16

Direct Materials

Answer 16

Materials used to manufacture a finished product

Question 17

Discretionary Fixed Costs

Answer 17

Fixed costs from managerial decisions within a company

Question 18

Financial Accounting

Answer 18

Reporting historical financial information to stockholders, creditors, and regulatiors

Question 19

Finished Goods

Answer 19

Unsold completed products

Question 20

Fixed Cost

Answer 20

Cost that stay the same regardless of how activity levels change

Question 21

Incremental Costs

Answer 21

Increase in cost between two alternatives

Question 22

Indirect Costs

Answer 22

Costs the cannot be traced to a specific cost object

Question 23

Indirect Labor

Answer 23

Salaries of janitors, supervisors, materials handlers, and other factory workers

Question 24

Indirect materials

Answer 24

Small items such as glue or nails

Question 25

Inventoriable costs

Answer 25

“Product Costs”

Question 26

Managerial Accounting

Answer 26

Accounting Providing information to managers

Question 27

Manufacturing Overhead

Answer 27

Manufacturing costs outside of Direct Materials and Direct Labor

Question 28

Mixed Cost

Answer 28

Costs with both variable and fixed factors

Question 29

Period Costs

Answer 29

Cost taken directly to the income statement as expenses

Question 30

Prime Costs

Answer 30

Direct Materials + Direct Labor

Question 31

Raw Materials

Answer 31

Wood, Metal, Glass etc

Question 32

Relevant Benefit

Answer 32

Benefits that should be considered when making a decision

Question 33

Relevant Range

Answer 33

The range of activity wher assumptions of variable and fixed cost behavior are valid

Question 34

Selling Costs

Answer 34

Costs incurred to secure an order and get finished goods sent out

Question 35

Sunk Costs

Answer 35

Costs that cannot be changed by any decision

Question 36

Variable Cost

Answer 36

A cost that varies in relation to activity level

Question 37

Work in Process

Answer 37

Units of product that are partially complete and not ready to sell

Question 38

What are the five-types of Cost Classification?

Answer 38

(1) Assigning Costs to Cost Objects, (2) Accounting for Cost in Manufacturing, (3) Prepping Financial Statements, (4) Predicting Cost Behavior, (5) Making Decsisions

Question 39

Examples of Direct Costs

Answer 39

Making a product

Question 40

What are the three types of Manufacturing Costs?

Answer 40

(1) Direct Materials, (2) Direct Labor, (3) Manufacturing Overhead

Question 41

What is Manufacturing Overhead?

Answer 41

Things such as solder, glue, janitors, depreciated equipment, utility costs, taxes, and premiums

Question 42

What are cost of goods sold?

Answer 42

Beginning Inventory + Purchases - Ending Inventory