Chapter 2 final

Question 1

Costs

Answer 1

-Outlay = past, present, or future cash outflow; “sacrifice’ resources: recognized as an asset or expense in an accounting system
- Opportunity = the foregone benefit from alternative courses of action (not recognized in accounting system) ex. going to college might not allow a student to work full-time

Question 2

Expense

Answer 2

Charged to P&L in period its incurred

Question 3

Product Costs

Answer 3

“manufacturing”/”Inventory” - expense as COGS
- Direct Materials, Direct Labor, Over head

Question 4

Period cost

Answer 4

“non-manufacturing” - expense when incurred (regardless of product sales)
- Selling, General & administrative, abnormal spoilage

Question 5

Prime Cost

Answer 5

direct material + direct labor

Question 6

Conversion cost

Answer 6

direct labor + manufacturing overhead (costs to convert raw materials)
- Variable costs = fixed per unit/variable in total

Question 7

Full costs

Answer 7

all manufacturing and selling costs

Question 8

Full absorption costs

Answer 8

all fixed and variable manufacturing costs (GAAP) - “Gross Margin”

Question 9

Variable Costs

Answer 9

all variable manufacturing and selling costs (Cost Acct) - “contribution Margin”