Chapter 2

Question 1

Opportunity costs

Answer 1

?

Question 2

Differential costs

Answer 2

?

Question 3

Sunk costs

Answer 3

make no difference in decision making

Question 4

fixed costs expenses examples

Answer 4

google it

Question 5

variable cost expenses examples

Answer 5

google it

Question 6

direct cost

Answer 6

can be easily traced

Question 7

indirect cost

Answer 7

cannot be easily traced

Question 8

manufacturing costs

Answer 8

direct materials, direc t labor and manufacuring overhead, and
wages

Question 9

manufacturing overhead

Answer 9

indirect labor, repairs, property taxes, depreciation, insureance, heat and light . costs associated with operating the factory . also called factory burden

Question 10

non manufacturing costs

Answer 10

salaries, administrative costs and selling costs

Question 11

product costs

Answer 11

inventroiable as in if you count them as inventory

Question 12

period costs

Answer 12

if you count them as expensed and not inventory

Question 13

Variable costs

Answer 13

proportional to activity

Question 14

what do you use to predict cost behavior in repsonse to changes in activity?

Answer 14

variable cost, fixed cost, mixed cost

Question 15

fixed cost

Answer 15

constant in total. you can have

Question 16

mixed cost

Answer 16

has variable and fixed elements

Question 17

making decisions, what do you look at?

Answer 17

diffierential cost (differs between alternatives), sunk cost (should be ignored, already paid), and opportunity costs(foregone benefit )

Question 18

what costs do you use to prepare financial statements?

Answer 18

product costs (inventory) and period costs (expenses)

Question 19

accounting or assigning costs in manufacturing companies

Answer 19

manufacturing costs and non manufacturing costs.

Question 20

assigning costs to cost objects(this is whenever cost data is wanted)

Answer 20

direct cost and indirect cost

Question 21

product cost formula

Answer 21

direct materials + Direct Labor + Manufacturing overhead

Question 22

Period Cost Formula

Answer 22

Selling expenses + Administrative expenses

Question 23

Conversion cost

Answer 23

Direct labor + Manufacturing overhead

Question 24

Prime cost

Answer 24

Direct materials + direct labor

Question 25

cost behavior

Answer 25

how the cost will change due to changes in level of activity

Question 26

cost structure

Answer 26

when comparing variable fixed or mixed costs you wil see it on a chart and you will see how your costs are structured. Do you want fixed costs being the hhighest cost or do you want mixed costs to be lower proportioned to your other costs? things like that

Question 27

activity base

Answer 27

it is the measure by which it induces a variable costs

Question 28

common cost

Answer 28

type of indirect cost incurred to benefit more than on e cost object is a

Question 29

direct materials

Answer 29

also may be called raw materials but not always. they become important component of the finished producta nd their cost can be easily and ocnveniently traced to the finished product are direct materials

Question 30

how to calculate variable and fixed costs per hour when you add more hours.

Answer 30

you divide the fixed cost by the new hours and get a new number. you divide the variable cost by the old hours and get a number that you add the new fixed costs to and get the variable and fixed cost her hour. . since variable costs are a constant number that that multiplies at a fixed number for each hour. fixed costs are an overall cost. when you divide out the fixed cost it can have different per unit costs when doing different amounts of activities but the overall total number will remain fixed.

Question 31

how to find the average fixed cost per hour

Answer 31

divide the total fixed costs by the total number of hours

Question 32

contribution margin

Answer 32

subtract all variable costs from revenues

Question 33

variable cost formula

Answer 33

change in cost divided by change in activity (usually measured in hours)

Question 34

mixed cost equation

Answer 34

y=a +bX ``` y= total mixed cost a = total fixed cost (vertical intercept) b= the variable cost per unit of activity (hours o?) X = level of activity ( like total amount of hours) ```

Question 35

selling costs

Answer 35

advertising, sales commissions, sales salaries

Question 36

dress manufacture considers relatively inexpensive items like thread to be..

Answer 36

manufacturing overhead and indirect materias because it is not worth the time and cost to directly trace them to products

Question 37

bill of materials

Answer 37

deoc that lists type and quantity of each type of direxct material needed to complete a unit of product. used in the job-order costing

Question 38

materials requisition form

Answer 38

doc that specifies the type and quantity of materials to be drawn from eh storeroom and identifies the job that will be chargd for the cost of materials . used to control the flow of materials into production and also for making entries in the accoutning records.

Question 39

job cost sheet

Answer 39

records the materials labor and manufacturing overhead costs charged to that job

Question 40

indirect labor

Answer 40

maintenance, supervision and cleanup

Question 41

computing predetermined overhead rates can be hard because...

Answer 41

overhead is an indirect cost because it is hard to trace it to a particular product or job it consists of mnay different types of costs. COMPUTED BEFORE THE PERIOD BEGINS

Question 42

are manufacturing overhead costs relatively constant? or vary significantly from one period to the next?

Answer 42

they ten to remain relatively constand due to the presence of fixed costs. Units produced fluctuate which casues the average cost per unit to vary

Question 43

formula for estimating total manufacturing overhead cost for the coming period

Answer 43

y= a + bX y= estimated total manufacturing overhead cost. a- the estimated total fixed manufacturing overhead cost b- the estimated variable manufacturing cost per unit of the allocation base.(like wage) X- the estimated total amount of the allocation base(like direct labor-hours)

Question 44

overhead application

Answer 44

Predetermined overhead rate x amount of allocation base INCURRED by job. (not estimate) determines the ammount of overhead cost to apply to a particular job. always use the estimated #'s not the actual predetermined overhead % x ammount of the allocation base inccurred by the job(like hours used)

Question 45

Predetermined overhead rate formulat

Answer 45

%% estmiated manufacturing overhead/ estimated allocation base (or if they are the same then it is estimated direct labor costs) or... estimated total manufacturing over head cost(y=a+ bX) divided by estimated total amount of the allocation base(like direct labor hours worked)

Question 46

direct costs are ___ while overhead costs are____

Answer 46

direct costs are traced to products while overhead costs are applied

Question 47

cost driver

Answer 47

a factor that causes overhead costs to occur

Question 48

total cost of a job is calculated by adding the

Answer 48

total of direct labor cost + direct materials cost + APPLIED manufacturing overhead cost.

Question 49

calculate unit product cost using the job cost sheet...

Answer 49

divide the total job cost by the number of units produced.

Question 50

raw materials

Answer 50

when materials are purchased they are recorded int eh Raw materials inventory account. Raw materials traced to specific jobs are transferred to work in process as direct materials

Question 51

work in process inventory

Answer 51

units of product that are only paritally complete

Question 52

the schedule of cost of goods manufactured

Answer 52

raw materials used in production= beginning raw materials inventory + purchases of raw materials - ending raw materials inventory

Question 53

total manufacturing costs

Answer 53

= direct materials + direct labor + manufacturing overhead APPLIED to work in process

Question 54

cost of goods manufactured

Answer 54

total manufacturing costs + beginning work in process inventory - ending work in process inventory

Question 55

unadjusted cost of goods sold

Answer 55

beginning finished goods inventory + costs of goods manufactured - ending finished goods inventory

Question 56

the schedule of cost of goods sold

Answer 56

summarizes costs that remain in the Finished goods inventory and that have been transferred to Cost of goods sold