Chapter 9

Question 1

Capital Budgeting

Answer 1

systematic planning for long-term investments in operating assets

Question 2

Controlling

Answer 2

implementing management plans and identifying how plans compare with actual performance

Question 3

Cost-Volume-Profit (C-V-P) Analysis

Answer 3

techniques for determining how changes in revenues, costs, and level of activity affect the profitability of an organization

Question 4

Differential Costs

Answer 4

future costs that change as a result of a decision; also called incremental or relevant costs

Question 5

Direct Costs

Answer 5

costs that are specifically traceable to unit of business or segment being analyzed

Question 6

Direct Labor

Answer 6

wages paid to those physically work on direct materials to transform them into a finished product and are traceable to specific products

Question 7

Direct Materials

Answer 7

materials that become part of the product and are traceable to it

Question 8

Evaluating

Answer 8

analyzing results, rewarding performance, and identifying problems

Question 9

Fixed Costs

Answer 9

costs that remain constant in total, regardless of activity level, over a certain range of activity

Question 10

Indirect Costs

Answer 10

costs normally incurred for the benefit of several segments within the organization; sometimes called common costs or joints costs

Question 11

Indirect Labor

Answer 11

labor that is necessary to a manufacturing or service business but is not directly related to the actual production of the product

Question 12

Indirect Materials

Answer 12

materials that are necessary to a manufacturing or service business but are not directly included in or are not a significant part of the actual product

Question 13

Manufacturing Overheard

Answer 13

all costs incurred in the manufacturing process other than direct materials and direct labor

Question 14

Operational Budgeting

Answer 14

managerial planning decisions regarding current and immediate future (a year or less) operations that are characterized by regularity and frequency

Question 15

Opportunity Costs

Answer 15

the benefits lost or forfeited as a result of selecting one alternative course of action over another

Question 16

Out-of-Pocket Costs

Answer 16

costs that require an outlay of cash or other resources

Question 17

Period Costs

Answer 17

costs not directly related to a product, service, or asset. they are charged as expenses to the income statement in the period in which they are incurred

Question 18

Planning

Answer 18

outlining the activities that need to be performed for an organization to achieve its objectives

Question 19

Products Costs

Answer 19

costs associated with products or services offered

Question 20

Production Prioritzing

Answer 20

management’s continual evaluation of various product lines and divisions’ profitability in order to analyze and identify opportunities to improve profits

Question 21

Return on Investment

Answer 21

a measure of operating performance and efficiency in utilizing assets; computed in its simplest form by dividing net income by average total assets (also known as return on assets or ROA)S

Question 22

Strategic Planning

Answer 22

broad, long-range planning usually conducted by top management

Question 23

Sunk Costs

Answer 23

costs that are past costs and do not change as a result of a future decision

Question 24

Variable Costs

Answer 24

costs that change in total in direct proportion to changes in activity level