Chapter 2

Question 1

Cost

Answer 1

resource sacrificed or foregone to acchieve spec objective usually meaured as a monetary amount paid

Question 2

Cost object

Answer 2

Any object, llike product machine, service or process for which cost info is accumulated

Question 3

Cost accumulation

Answer 3

Cost of collection data- organzed
AKA cost pools

Question 4

Cost assignment

Answer 4

Systemically links an actual cost pool to a distinct object

Question 5

Direct costs

Answer 5

Traced to cost object in cost effective way
manual / electronic documentation

Question 6

DM

Answer 6

Direct Material

Question 7

Examples of DM

Answer 7

raw materials
parts
freight in
sales taxes
customs duties

Question 8

DML

Answer 8

Direct manufacturing labour

Question 9

dml costs

Answer 9

compensation of manufacturing labour that can be traced to a cost object economically

Question 10

DML exampes

Answer 10

wages of assembly line workers

Question 11

Indirect Costs

Answer 11

Cannot be traced cost effectively
benefits from use resources shared among diverse cost objedts

Question 12

Indirect cost examples

Answer 12

Electricity to run the factory

Question 13

MOH

Answer 13

Manufacturing overhead

Question 14

Indirect manufacturing (MOH) costs

Answer 14

Manufacturing costs related to the cost object that cannot be traced to the cost object in an economically feasible way
Allocated to cost objects

Question 15

MOH examples

Answer 15

Depreciation
Maintenance supplies
supervisors salaries

Question 16

Prime costs

Answer 16

DM + DML
DIRECT MANUFACTURING COSTS

Question 17

Conversion Costs

Answer 17

All manufacturing costs other than DM required to convert DM to finished goods

Question 18

Conversion cost equation

Answer 18

DML+MOH

Question 19

VC

Answer 19

Change in total porportion to changes in outpur with a relevant range
Constant on a per unit basis

Question 20

FC Fixed costs

Answer 20

Constant in total within a relevant range of output
Change on a per unit basis as level of activity or volume changes

Question 21

Total costs and unit costs

Answer 21

Decision makers should think of relevant costs (not unit costs)
The higher the quantity produced by a CA (a FC) the lower the average FC per unit

However the FC is constant

As a rule: First calculate TOTAL COSTS then calculate a unit cost

Question 22

Period Costs

Answer 22

Little evidence of future evidence (not asset)

Expensed in period incurred

All costs on statement of comprehensive income other than cogs

Question 24

nv

Question 25

Inventorial costs (product)

Answer 25

Costs of a product that are considered asset when incurred

Become Cogs on SCI when product sold

Question 26

Flow of inventoriable costs

Answer 26

1. cost of dm used
2. total manufacturing costs incurred
3. cost of goods manufactured
4. cogs

Question 27

Measuring and classifying costs requires judgement

Answer 27

Definition and classification of costs depends on the decision, the cost object and the company

Measuring labour costs:
-DML costs can be traced to individual products
-Many ways to classify INDIRECT labour
factory office staff
factory security
rework labour
ot
idle time
managers sary
health care premiums
pension costs

Question 28

OT premiums and ide time

Answer 28

Indirect cost or overhead costs (not related to particular product)

Question 29

Idle time

Answer 29

wages paid for unproductive time caused by lack of orders, machine or computer breakdowns, poor scheduling

Question 31

Different costs for different purposes

Answer 31

product cost: sum of costs assigned to a product for a spec purpose like:

Identify and manage cost-control problems
For product pricing and product mix decisions
For contracting with government agencies
For IFRS and ASPE complaint Financia statements

Question 32

Different cost classification systems

Answer 32

Business function
Assigment to a cost object
Behaviour pattern in relation the to the level of activity/volume
Aggregate or average
assets or expenses

Question 33

Business function

Answer 33

a. reserach/developement
b. design of products, services or processes
c. production
d. marketing
e. distribution
f. customer service

Question 34

Assignment to a cost object

Answer 34

a. ditect cost
b. indirect cost

Question 35

pattern behaviur in relation to level of activity or volume

Answer 35

variable cost
fixed cost

Question 36

Aggregate or average

Answer 36

total cost
unit cost

Question 37

assets or expenses

Answer 37

inventoriable product cost
period cost