Chapter 2 Simplified Flashcards
Indirect materials: what are there 2 Characteristics ?
i. Don’t physically become part of finished product (polishing compounds)
ii. Can’t be easily traced because physical association with finished product is so small (glue)
Indirect Labor: what are there 2 Characteristics?
ii. Work for which it is impractical to trace costs to the good produced (work of supervisors, maintenance people)
i. Work has no physical associated with finished product
Give examples of manufacturing overhead
Indirect materials or indirect labour, depreciation, insurance, taxes, maintenance
Total manufacturing costs are ?
Total manufacturing costs are the sum of the product costs—direct materials, direct labour, and manufacturing overhead.
a) In the real world, the relationship between the behaviour of a variable cost and changes in the activity level is often …?
b) also Fixed costs can be …? give example
a) curvelinear
b) nonlinear, example: For example, a dance studio’s rent might start out variable and then become fixed at a certain amount. It could then increase to a new fixed amount when the size of the studio increases beyond a certain point
For most companies, operating at almost zero or at 100% capacity is the ….. Instead, companies often operate over a narrower range, such as … to … of capacity. The range that a company expects to operate in during a year is called the …
For most companies, operating at almost zero or at 100% capacity is the exception rather than the rule. Instead, companies often operate over a narrower range, such as 40% to 80% of capacity. The range that a company expects to operate in during a year is called the relevant range of the activity index
Mixed costs change in …but …with changes in the activity level.
Mixed costs change in total but not proportionally with changes in the activity level.
The high-low method uses the total costs incurred at the ….and … levels of activity.
The high-low method uses the total costs incurred at the high and low levels of activity.
D
