Chapter 23

Question 1

absorption costing

Answer 1

Also know as full costing – a costing method where inventory absorbs direct costs and variable and fixed factory overhead

Question 2

contribution income statement

Answer 2

An internal report that identifies each segment’s controllable elements; the contribution margin, controllable fixed costs, uncontrollable fixed costs, and segment margin.

Question 3

dashboard

Answer 3

Customized business software that delivers key rel time business data in an easily monitored layout.

Question 4

direct method/allocating service cost

Answer 4

An allocation process whereby service department costs are assigned directly to productive departments (compare to step method)

Question 5

residual income

Answer 5

An internal assessment technique that adjusts income for a presumed cost of capital (or other threshold rate of return); operating income - (operating assets X cost of capital).

Question 6

segment

Answer 6

A business unit for which separate financial information is evaluated by an operating decision maker who allocates resources and judges performance of the unit.

Question 7

step method/allocating service cost

Answer 7

An allocation process whereby some service department costs may be assigned to other service departments as part of a sequential methodology.

Question 8

variable costing

Answer 8

A costing method where inventory absorbs direct costs and variable factory overhead; the income statement identifies the contribution margin.