test 1 Flashcards
Each of the following would be a period cost except:
A. the salary of the company president’s secretary
b. the cost of a general accounting office
c. depreciation of a machine used in manufacturing
d. sales commission.
depreciation of a machine used in manufacturing
A contribution margin income statement is more useful that a GAAP income statement when analyzing changes in volume and the impact on profits.
True. GAAP takes product or period. CM - takes expenses says fixed or variable.
Indirect costs, such as manufacturing overhead, are always fixed costs.
False, mixed cost.
Which of the following costs is often important in decision making, but is omitted from conventional accounting record?
opportunity cost
Which of the following would probably be the least appropriate allocation base for allocating overhead in a highly automated manufacturer of specialty valves? Hint: Remeber that the denominator in the POHR should be a cost driver for overhead.
Machine setups, machine hours, direct labor hours, power consumption.
Direct labor-hours.
Manufacturing overhead consists of
all indirect manufacturing costs.
An absorption costing income statement is also a GAAP income statement and is more useful when analyzing the total product and period costs than a contribution margin income statement.
True.
Randy decides to stay in his ECO 201 class only due to his large investment in the class. Randy worked very hard to raise the money necessary to pay the tuition for this class. Which terms best describes this thinking?
Sunk cost bias.
If Serena Williams decides to play tennis professionally in the Spring 2016 semester rather than teach at Tennis University then the $85,000 salary she would make at Teniss University would be what type of cost?
Opportunity cost.
As technology increase and machine replace direct labor in the production process, what general impacts would you except on production costs? Hint: Technology and automation will generally only be introduced if costs are less than human labor.
(Increase or decrease)
Fixed cost ______, overhead _____, unit cost ______.
Fixed cost increase, overhead increases, unit cost decreases.
For the in-class activity on name tents, please complete the following chart.
Paper is a _____ cost, professor time is a ____ cost, the pens were a _____ cost. For fixed and variable cost, please consider the number of name tents as the X variable.
Paper is a product cost, professor time is a product cost, the pens were a variable cost.
In the name tent in-class activity, why did the per-unit cost of the name tents decrease as the number of tents produced increased?
fixed cost.
On which income statement (GAAP or CM) could you use to more eaisly find the following line items. If the line item is equal between the income statements then “equal” is a third choice. Accordingly, the choices are GAAP, CM or Equal.
Total production cost of units sold Variable cost per unit Total Period Costs Contribution margin per unit Sales
Total production cost of units sold - COGS - GAAP Variable cost per unit - CM Total Period Costs - GAAP Contribution margin per unit - CM Sales - Equal
XYZ Company has a Human Resources department that spends all of their time serving the employees of the Rockson Factory and the HR department is included on the grounds of the factory. The factory manufactures bikes (primary product for XYZ)
Please label the HR department costs in the following catergories with respect to the production of bikes. If the cost doeds not fit in either category then say “neither”.
Fixed, variable Product, period Direct, indirect overhead, expense conversion, prime Administrative cost, selling cost.
Fixed Product indirect overhead conversion Neither.
