COST MGMT First

Question 1

Examples of Direct Costs

Answer 1

• Direct Material

- Direct Labor

Question 2

Examples of Indirect Costs

Answer 2

-Manufacturing Overhead

Question 3

The three classifications of Manufacturing Costs

Answer 3

• Direct Mats
• Direct Labor
• Manufacturing Overhead

Question 4

Example of Direct Labor cost

Answer 4

Wages paid to bakers

Question 5

Define Manufacturing Overhead

Answer 5

Manufacturing costs that cannot be easily traced directly to specific units produced

Question 6

What is Manufacturing Overhead made up of (2)

Answer 6

• Indirect Mats

- Indirect Labor

Question 7

Define Indirect Mats

Answer 7

Materials used to support the production process

Question 8

Define Indirect Labor

Answer 8

Wages paid to employees who are not directly involved in production work

Question 9

Examples of Indirect Mats (2)

Answer 9

• Lubricants

- Cleaning supplies to maintain baking equipment

Question 10

Examples of Indirect Labor (2)

Answer 10

• Janitors

- Security guards

Question 11

What is Nonmanufacturing Costs made up of (2)

Answer 11

• Selling Costs

- Admin Costs

Question 12

Define Selling costs

Answer 12

Costs necessary to secure the order and deliver the product

Question 13

Define Admin costs

Answer 13

All executive, organizational, and clerical costs

Question 14

Product costs include

Answer 14

• Direct Mats
• Direct Labor
• Manufacturing Overhead

Question 15

Period costs include

Answer 15

All Selling costs and Admin costs

Question 16

Prime Cost is made up of

Answer 16

• Direct Mats

- Direct Labor

Question 17

Conversion Cost is made up of

Answer 17

• Direct Labor

- Manufacturing Overhead

Question 18

Is the Variable Cost Per Unit constant or nonconstant

Answer 18

CONSTANT

Question 19

Does the Fixed Cost Per Unit vary inversely with the changes in activity?

Answer 19

YES

Question 20

Define Committed Fixed Costs

Answer 20

Long term, cannot be significantly reduced in the short term

Question 21

Define Discretionary Fixed Costs

Answer 21

May be altered in the short term by current mgmt decisions

Question 22

Examples of Committed Costs (2)

Answer 22

• Depreciation on Buildings and Equip

- Real Estate Taxes

Question 23

Examples of Discretionary Costs (2)

Answer 23

• Advertising

- R&D

Question 24

Define the engineering approach

Answer 24

Classifies costs based upon an industrial engineer’s evaluation of production methods, mats, labor, and OH requirements

Question 25

Coefficient of Determination (r2) equation

Answer 25

Unexplained variation / Total variation (RUT)

Question 26

Significance of Independent Variables (tvalue)

Answer 26

Coefficient / Standard error (ToCallSaul)

Question 27

Income Statements in the Traditional Format is used for

Answer 27

External Reporting

Question 28

Income Statements in the Contribution Format is used for

Answer 28

Management

Question 29

Variable and Fixed Expenses are included in which Income Statement Format?

Answer 29

Contribution

Question 30

Define Differential Costs and Revenue

Answer 30

Costs and revenues that differ among alternatives ($300 per month to drive to different job in city)

Question 31

Define Contribution Margin

Answer 31

Sales revenue - Variable Expenses

Question 32

Contribution Margin - Fixed Expenses = ?

Answer 32

Net operating income

Question 33

Profit =

Answer 33

(PxQ - VxQ) - Fixed Exp

Question 34

Contribution Margin Ratio =

Answer 34

CM per unit / SP per unit

Question 35

23

Answer 35

90