Cost Accounting Chapter 1-4 Flashcards
A cost that remains constant in totals but varies in per unit with changes in activity
Fixed Cost
Indirect cost of converting raw material into finished goods are called
Overhead costs
Conversation does not include
Direct Materials
Costs that are related to manufacturing of a company
Product Cost
All costs are applicable and valid only within contemplated level of activity. Hence, total variable costs may be constant in total outside such range.
True
Fixed Cist increase per unit as the activity level increases and decreases per unit as the activity level falls
False
Party Company .. formula
Y = a + bX
There is no single definition of cost.
False
A cost that is useful for one decision may not be useful for another decision.
True
Opportunity costs are the additional costs incurred when the best alternative is chosen.
False
Product cost are expenses on the income statement when raw materials are issued to production.
False
Advertising cost is an example of period cost expensed in the period incurred.
True
An example of direct costs to an educational institution is the wages paid to its faculty members.
True
Salary of company driver who delivers finished goods to distributors is treated as factory overhead.
False
In a RTW cost of threads, buttons, and zippers are treated as direct costs.
True
For a cost to be variable it must be variable to uts activity base. Such activity base should directly affect variability of this cost and is synonymous to the cost driver.
True
Fixed costs increase per unit as the activity level rises and decreases per unit as the activity level falls.
False
In analyzing mixed cost, the variable portion represents the costs incurred for the actual consumption of the service. This means that its fixed component does not necessarily represent the level of activity that actually took place
True
Itemizing each major class of factory overhead which is later divided into variable and fixed components is a step involved under work measurement method of cost estimation.
False
For a purposes of profit analysis and control, a peso increase in contribution margin is a peso increase in operating profit. Fixed costs constant, decrease in CM directly reduces operating profit too.
True
Wages of raw materials inventory clerk
MOH
Transportation and representation allowance of plant managers and supervisors
MOH
Transportation and representation allowance of sales managers
Marketing
Paper and plastic bags used by supermarket
Marketing
Lubricating oil used by factories
MOH
Freight in cost of direct materials
DM
Depreciation of delivery truck of manufacturing company used in transporting finised goods to customers.
Marketing
Cloth used by advertising companied in making billboards
DM
OT paid to employee who repaired company’s copying machine
G&A
Depreciation of sports equipment by fitness center
MOH
Salaries paid to factory workers during idle time
MOH
Factory supplies such as glue, soap, floorwax etc
MOH
Manufacturing costs include raw materials used and wages paid to factory workers but do not include costs of wages paid to factory personnel who are not directly involved in the conversion of raw materials into finished product.
False
A manufacturing plant produces two product lines: canned meat products and bottled drinks. Direct costs for the two product lines include the compensation and benefits paid to the company president since he is the overall in-charge person to supervise the whole company’s operations.
False
For a company engaged in the manufacture of books, the bond paper used in printing company announcements are indirect costs.
True
Product costs for a trading company include the costs of merchandise purchased and the freight costs to bring the goods to the place of thebuyer.
False
Management accounting produces certain information that are exclusively available for internal users only at all times, unlike the reports furnished by financial accounting which are available to both internal and external users.
False
Even though accounting in general needs to follow the promulgated standards by standard-setting bodies, management accounting is an exception since it need not follow such rules.
True
Product costs are deducted from revenue when cash is already paid for them and the production is completed.
False
Signing off on financial statements is an activity done by the chief financial officer; not by the treasurer or the controller.
True
Cost and expenses can be interchangeably used since both of them refer to the expenditures recorded in a business.
False
An increase in the cost driver would always increase the cost related to it.
True
Compliance with the Standards of Ethical Conduct for Practitioners of Management Accounting and Financial Management means maintaining a fair level of ethical conduct.
False
In analyzing a mixed cost, the variable portion represents the costs incurred for the actual consumption of the service. This means that its fixed component does not necessarily represent the level of activitythat actually took place.
True
The state where costs do not react with changes in the factor selected for estimating their behavior would produce a low coefficient of determination. This means that the performance of the entity withregards to controlling such costs is poor.
False
An increase in the contribution margin rate would always result to an increase in the net income after taxes even if total fixed costs behave outside the relevant range
False
The breakeven point formula used in firms selling multi-products is thesame with that of single-product businesses except that thedenominator is average contribution margin per unit or peso
False
A facet of accounting that determines the cist of services, products, and processes with the goals of reporting the correct amounts on a company’s financial statements, assisting management in the planning and control of the organization, and preparing special analysis in arriving at the best decision.
Cost Accounting
Set of activities that transforms raw resources into the goods and services that end users purchase and consume and the treatment of disposal of any waste generated by them.
Value Chain
Business Functions in the Value Chain: (6)
Research and Development
Design of products…
Production
Marketing
Distribution
Customer Service
What kind of cost is marketing and administrative
Period Costs
Control Account
Actual Costs
Applied Account
Actual or Budgeted Costs
process of accumulating, classifying, and assigning direct materials, direct labor and factory overhead costs to products or services.
Product Costing
Nag accumulate/absorb ng cost
Cost object
Cost object: Job or Batch of products
Job order
Costing system used for heterogeneous items or products.
Job order
Costing system which is more costly.
Job order
What costing system is used for construction companies
Job order
What costing system is used for printing companies
Job order
What costing system is used for medical services
Job order
Costing system used for homogeneous items or products
Process Costing
In this costing system the cost object is process
Process Costing
What costing system is used for petroleum companies
Process Costing
What costing system is used for bottling companies and food products
Process Costing
Types of Cost: Normal Costing
FOH- inaassume or nag eestimate ka based sa mga pased data mo then iaaverage
Applied
Types of Costs
Desired level of activity/cost
Standard Cost
Overhead Assignment:
Uses one common cost driver (DLH, no. of units produced)
Volume-based
Overhead Assignment:
Uses multiple cost drivers based on a cause and effect association
Activity Based
Raw Materials Inventory and Direct Materials Inventory are synonymous
False Raw Materials Inventory can have both/either Direct or Indirect
Is a factory janitor cost a product or period cost?
Product
Period
Product
Is the cost of market research a product or period cost?
period
