ACC 241 Chapter 1

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ACC 241 Chapter 1
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ACC 241 Chapter 1
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  1. A method for analyzing cost behavior in which an account is classified as either variable or fixed based on the analyst's prior knowledge of how the cost in the account behaves.
    Account analysis
  2. A measure of whatever causes the incurrence of a variable cost.
    Activity base
  3. All executive, organizational, and clerical costs associated with the general management of an organization rather than with manufacturing or selling.
    Administrative costs
  4. Investments in facilities, equipment and basic organizational structure that can't be significantly reduced even for short periods of time without making fundamental changes.
    Committed fixed costs
  5. A cost that is incurred to support a number of cost objects but that cannot be traced to them individually.
    Common cost
  6. An income statement format that organizes costs by their behavior. Costs are separated into variable and fixed categories rather than being separated into product and period costs for external reporting purposes.
    Contribution approach
  7. The amount remaining from sales revenues after all variable expenses have been deducted.
    Contribution margain
  8. Direct labor cost plus manufacturing overhead cost.
    Conversion cost
  9. The way in which a cost reacts to changes in the level of activity.
    Cost behavior
  10. Anything for which cost data are desired.
    Cost object
  11. The relative proportion of fixed, variable, and mixed costs in an organization.
    Cost structure
  12. A variable that responds to some causal factor; as represented by the letter Y, in the equation Y=a+bX
    Dependent variable
  13. A difference in cost between two alternatives
    Differential cost
  14. The difference in revenue between two alternatives.
    Differential revenue
  15. A cost that can be easily and conveniently traced to a specific cost object.
    Direct cost
  16. Factory labor costs that can be easily traced to individual units of product. Also called touch labor.
    Direct labor
  17. Materials that become an integral part of a finished product and whose costs can be conveniently traced to it.
    Direct materials
  18. Those fixed costs that arise from annual decisions by management to spend on certain fixed cost items, such as advertising and research.
    Discretionary fixed costs
  19. A detailed analysis of cost behavior based on an industrial engineer's evaluation of the inputs that are required to carry out a particular activity and of the prices of those inputs.
    Engineering approach
  20. A cost that remains constant, in total, regardless of changes in the level of activity within the relevant range.
    Fixed cost
  21. A method of separating a mixed cost into its fixed and variable elements by analyzing the change in cost between the high and low activity levels.
    High-low method
  22. An increase in cost between two alternatives.
    Incremental cost
  23. A variable that acts as a casual factor; as represented by the letter X, in the equation Y=a+bX
    Independent variable
  24. A cost that cannot be easily and conveniently traced to a specified cost object
    Indirect cost
  25. The labor costs of janitors, supervisors, materials handlers, and other factory workers that cannot be conveniently traced to particular products.
    Indirect labor
  26. Small items of material such as glue and nails that may be an integral part of a finished product, but whose costs cannot be easily or conveniently traced to it.
    Indirect materials
  27. Synonym for product costs
    Inventoriable costs
  28. A method of separating a mixed cost into its fixed and variable elements by fitting a regression line that minimizes the sum of the squared errors.
    Least-squares regression method
  29. Cost behavior is said to be linear whenever a straight line is reasonable approximation for the relation between cost and activity.
    Linear cost behavior
  30. All manufacturing costs except direct materials and direct labor.
    Manufacturing overhead
  31. A cost that contains both variable and fixed cost elements.
    Mixed costs
  32. The potential benefit that is given up when one alternative is selected over another.
    Opportunity cost
  33. Costs that are taken directly to the income statement as expenses in the period in which they are incurred or accrued.
    Period costs
  34. Direct materials cost plus direct labor cost.
    Prime cost
  35. All costs that are involved in acquiring or making a product. In the case of manufactured goods, these costs consist of direct materials, direct labor, and manufacturing overhead.
    Product costs
  36. Any materials that go into the final product.
    Raw materials
  37. The range of activity within which assumptions about variable and fixed cost behavior are valid.
    Relevant range
  38. All costs that are incurred to secure customer orders and get the finished product or service into the hands of the customer.
    Selling costs
  39. A cost that has already been incurred and that cannot be changed by any decision made now or in the future.
    Sunk cost
  40. A cost that varies, in total, in direct proportion to changes in the level of activity
    Variable cost

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