Chapter 2 Flashcards

(34 cards)

1
Q

Actual Cost

A

cost occurred (historical or past cost)

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2
Q

budgeted cost

A

predicted or forecasted cost (future cost)

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3
Q

What are budgeted costs used for

A
  • measuring performance/control behavior
    –planning and decision making
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4
Q

Direct Costs

A

the costs that are directly traced into a product

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5
Q

what are indirect costs

A

costs that are needed for continued production but cannot be physically traced

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6
Q

What is a product cost

A

a cost or expense that relates to the asset that gets consumed as part of generating the sale

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7
Q

how does a product cost get expensed

A

in the form of COGS and has to follow the matching principle

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8
Q

what is a period cost and how is it accounted for

A

cost not directly related to production of goods

recognized in the period incurred regardless of how many items are sold

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9
Q

how many T accounts do retailers have

A

one

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10
Q

for a retailer what you buy is…

A

what you sell

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11
Q

for a manufacturer what you buy…

A

is not what you sell, you buy as RM and then sell FG

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12
Q

If a company can continue to take RM and make FG while taking a cost away then is it the cost a product or period

A

period cost

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13
Q

What are the three product costs for manufactures

A

Direct Labor, Direct Materials and MOH

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14
Q

how are direct product costs accounted for?

A

they are assigned

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15
Q

how are indirect product costs accounted for?

A

they are allocated

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16
Q

what must the cost be in order for it to have to be allocated to various products

A

Necessary (product), common, and untraceable (indirect)

17
Q

What is a fixed cost

A

a cost that does not change in TOTAL based on the number of units sold or produced

It does change per unit based on the number of units sold produced

*rent is still going to be the same no matter how many units you have but will change per unit depending on if you have 100 or 1000 units

18
Q

What is a variable cost

A

a cost that does change in total based upon the number of units sold/produced but does not change per unit

19
Q

What is a cost driver

A

a variable that affects cost over a given time span

ex: miles driven

20
Q

what do unit costs approximate?

A

marginal costs (the cost added by producing one additional unit of a product or service)

21
Q

what happens to the inventory costs for manufacturing firms

A

they are capitalized as an asset until they are sold

22
Q

when we buy RM what do we not know until the product is turned into FG

A

the cost of the goods

23
Q

No sale No expense goes which what type of cost

A

product costs

24
Q

what is a materials requistion form

A

a document that shows the movement of raw materials out of RMI warehouse

25
what is the definiton of Direct Labor
work that provides quantifiable, identifiable economic benefit in relation to the product
26
What goes into the COGM
DL + DM + MOH
27
What is the Job Cost Sheet
the accumulation of costs, units produced and calculations of cost/unit for financial reporting purposes
27
What is the job time ticket/time card
where direct labor hours worked is recorded
28
what is the relevent range
range of x that the relationship between x and y remains relatively constant
29
why is using the average cost misleading when making decisions
because it includes fixed costs and fixed costs do not impact decisions due to the reason they are sunk
30
what makes RMI an asset and not an expense
they material provide an economic future benefit in the form of creating a potential for a sale and therefor are a asset
31
when is the MOH clearing account used?
1. common and indirect 2. identical products sold 3. there are seasonal fluctuations
32
If someone says hey how about I buy 4 sandwhiches at $20/sandwhich before we take the offer what do we need to know
how much the cost/unit is
33
we cannot know the cost per unit until...
we know the actual number of units that were manufactured from our RM