Chapter 2

Question 1

Cost

Answer 1

Sacrifice of resource to achieve objective.

Question 2

COST OBJECT

Answer 2

Anything for which a separate cost measurement is required.

Question 3

COST ACCUMULATION

Answer 3

collection (accumulation) of actual cost data in an organized way

Question 4

COST ASSIGNMENT

Answer 4

Assigns cost pool to cost object

Question 5

Direct cost

Answer 5

Cost that can be directly traced to the cost object

Question 6

Indirect cost

Answer 6

Cost that cannot be directly traced to the cost object

Question 7

Cost tracing

Answer 7

Assigning direct costs to cost object

Question 8

Cost allocation

Answer 8

Assigning indirect costs to cost assignment

Question 9

COST DRIVER, AKA COST GENERATOR, COST DETERMINANT

Answer 9

Factor that affects costs over time period

Question 10

COST MANAGEMENT

Answer 10

Trying to reduce costs while satisfying customers

Question 11

Prime costs

Answer 11

Direct manufacturing costs

Question 12

CONVERSION COSTS

Answer 12

Costs of converting raw materials to finished goods

Question 13

Variable costs

Answer 13

Cost per unit, which does not change, regardless of the sales volume

Question 14

Fixed costs

Answer 14

Costs that remain the same in total, constant over relevant range

Question 15

TOTAL COSTS

Answer 15

Sum of variable costs and fixed costs

Question 16

RELEVANT RANGE

Answer 16

Range of activity expected

Question 17

SERVICE - SECTOR COMPANIES

Answer 17

provide services or intangible products

Question 18

MERCHANDISING - SECTOR COMPANIES

Answer 18

purchase and resell tangible
products without changing the form of the product

Question 19

MANUFACTURING - SECTOR COMPANIES

Answer 19

purchase raw materials and other components, and convert them to finished goods

Question 20

Capitalized costs

Answer 20

First recorded as assets, later expensed.

Question 21

CAPITALIZED INVENTORIABLE COSTS

Answer 21

Recorded as asset until sold then turns into costs of goods sold

Question 22

DIRECT MATERIALS (DM)

Answer 22

Materials directly associated with cost object

Question 23

Direct labour (DL)

Answer 23

Labour costs directly traced to cost object

Question 24

Indirect manufacturing costs (overhead)

Answer 24

Manufacturing costs that can not be directly traced to cost object