MI

Question 1

Cost Object-

Answer 1

Anything for which we are trying to ascertain the cost of.

Question 2

Cost Centre-

Answer 2

A department, process or function where costs can be accumulated.

Question 3

Cost Unit-

Answer 3

A product or service for which costs are determined. (batch of marmalade, one widget etc).

Question 4

Composite Cost Unit-

Answer 4

A cost unit made up of two parts. Most commonly it is a service provided where a unit of “production” is hard to calculate and compare.

Question 5

Direct or Prime Cost-

Answer 5

Costs that can be traced in full to a cost unit.

Question 6

Indirect Costs or Overheads-

Answer 6

Costs that cannot be traced directly and in full to a cost unit.

Question 7

Product Cost-

Answer 7

Any costs incurred in the manufacture of goods/services.

Question 8

Period Costs-

Answer 8

Costs that are deducted as an expense in the income statement in a particular period.

Question 9

Fixed Costs-

Answer 9

Costs that remain total over a range of activity levels.

Question 10

Variable Costs-

Answer 10

Costs that change in total as the level of activity changes.

Question 11

Semi-Variable Costs-

Answer 11

Costs that have both a fixed and variable element.

Question 12

Stepped-Fixed Costs-

Answer 12

Costs that are constant within the relevant range for each activity level but when a critical activity level is reached, the total cost incurred increases to the next step.

Question 13

Responsibility Accounting-

Answer 13

A system ensuring that responsibility for all the activities of the business can be assigned to individuals.

Question 14

Responsibility Centre-

Answer 14

A department whose performance is the responsibility of a specific manager.

Question 15

Controllable Costs-

Answer 15

Can be influenced/changed by a manager’s decisions.

Question 16

Uncontrollable Costs-

Answer 16

Cannot be influenced/changed by a manager’s decisions.