Chapter 3: Using Cost in Decision Making

Question 1

Cost that has already occured

Answer 1

Actual Cost

Question 2

Cost that did not happen yet

Answer 2

Budget Cost

Question 3

Item or object in consideration

Answer 3

Cost Object

Question 4

A collection of cost data

Answer 4

cost accumulation

Question 5

Assigning an accumulated costs to a cost object

Answer 5

cost assignment

Question 6

2 types of cost assignment

Answer 6

Direct cost and Indirect cost

Question 7

These are costs that can be conveniently and economically traced to cost object

Answer 7

Direct Cost

Question 8

These are costs that can allocated to a cost object in a rational and systematic manner

Answer 8

Indirect Cost

Question 9

This is the reason why a cost is incurred

Answer 9

Cost Driver

Question 10

Band of normal activity level in which there is a relationship between cost and activity level

Answer 10

Relevant range

Question 11

3 types of businesses

Answer 11

manufacturing, merchandising, service

Question 12

Types of Inventory in Manufacturing

Answer 12

Direct Materials, Work in progress, Finished goods

Question 13

Types of Inventory in Merchandising

Answer 13

Finished Goods

Question 14

These are cost incurred during the manufacturing or conversion process

Answer 14

Product Costs

Question 15

3 types of product costs

Answer 15

Direct Materials, Labor Costs, Manufacturing overhead

Question 16

These are costs that has no future value and recorded as operating expense in Income statement

Answer 16

Period costs

Question 17

True or False
Unsold goods are recorded as inventory in Income statement while sold goods are recorded as COGS in Balance Sheet

Answer 17

False
Unsold goods are recorded as inventory in Balance statement while sold goods are recorded as COGS in Income Sheet

Question 18

A cost that has a fix portion and variable portion

Answer 18

Mixed Cost