ACC202 Chapter 2

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eddiewala
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ACC202 Chapter 2
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2015-02-04 10:57:51
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chapter 2
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  1. what are the two type of cost classifications?
    direct and indirect costs
  2. what is a cost object?
    anything to which cost data are desired
  3. what is a direct cost?
    a cost that can be easily and conveniently traced to a specified cost object.
  4. a cost that cannot be easily and conveniently traced to a specified cost object is called
    indirect cost
  5. a regional sales manager's salary would be a direct cost of the regional office in which the sales manager works. T/F
    True
  6. A particular cost is either direct or indirect, regardless of the cost object. T/F
    False
  7. an individual cost may be indirect to one cost object and direct to another. T/F
    True
  8. A direct cost can be easily and conveniently traced to a specific cost object. T/F
    True
  9. A direct cost is sometimes referred to as a common cost. T/F
    False
  10. direct labor is also called ___ labor
    touch
  11. indirect materials and indirect labor are classified as:
    manufacturing overhead
  12. a(n) _____ cost is a type of cost incurred to benefit more than one cost object
    common
  13. sales commissions and company president's salary are manufacturing costs. T/F?
    True
  14. assembly-line workers wages and insurance on plant equipment are nonmanufacturing costs. T/F?
    False
  15. produce costs are also called:
    inventoriable costs
  16. cost objects include:
    • customers
    • anything for which cost data is desired
    • organizational subunits
  17. manufacturing costs can be divided into three categories:
    • direct labor
    • direct materials
    • manufacturing overhead
  18. production costs flow through the inventory accounts until the goods are sold, at which time they become an expense in the cost of goods sold section on the ___ ____
    income statement
  19. period costs are expensed on the income statement:
    in the period in which they occur
  20. a dress manufacturer would consider the cost of relatively inexpensive items like thread to be a part of
    • indirect materials
    • manufacturing overhead
  21. direct materials and direct labor are both:
    manufacturing costs
  22. another term for direct materials is raw materials. T/F?
    False
  23. Raw materials may include both direct and indirect materials. T/F?
    True
  24. Direct labor and overhead costs incurred to change raw materials into finished products are known as:
    Conversion costs
  25. The components of prime costs are:
    direct materials and direct labor
  26. product costs that attach to a specific product are known as ____ costs
    inventoriable
  27. The materials that go into the final product are called ____ materials
    raw
  28. inventoriable costs is another term for ___ costs
    product
  29. mixed costs are commonly known as semi- _____ costs
    variable
  30. fixed costs generally include rent and supervisor salaries. T/f?
    True
  31. fixed costs remain constant regardless of changes in activity. T/F?
    true
  32. fixed costs should not be expressed on a per unit basis when making decisions. T/F?
    • True. While it is  fixed sometimes necessary, when fixed costs are expressed on a per unit basis, it gives the false impression that fixed costs behave like variable costs. Thus it should not be done for decision making purposes
  33. a ____ cost changes in direct proportion to changes in the activity level
    variable
  34. within the _____ ____ of activity, cost assumptions are reasonably valid
    relevant range
  35. within the relevant range of activity, variable costs vary in total. T/F?
    True
  36. within the relevant range of activity, variable costs remain constant per unit. t/F?
    true
  37. within the relevant range of activity, variable costs vary per unit. T/F?
    false
  38. within the relevant range of activity, variable costs remain constant in total. T/f
    false
  39. contribution margin is:
    sales revenue minus variable costs
  40. a fixed cost remains fixed ____ within the relevant range of activity
    in total
  41. in the equation y= a+bx, b denotes the 
    variable cost per unit of activity and the slope of the line
  42. the revenue  obtained from selling one additional unit of product is called _____ revenue
    marginal
  43. the difference in cost between two alternatives is called a(n) ___ cost
    differential
  44. within the relevant relevant range, ____ costs remain constant on a per unit basis
    variable
  45. the level of activity within which variable and fixed cost assumptions are valid is known as the ____ _____
    relevant range
  46. using the high-low method, the fixed cost is calculated:
    • after the variable cost is calculated
    • using either the high or low level of activity
  47. the equation for a straight-line can be used to express the relationship between mixed costs and the level of activity. T/F?
    true
  48. what type of cost is never relevant and should therefore be disregarded when making decisions?
    sunk
  49. the relative proportion of each type of cost in an organization is known as the company's ___ _____
    cost structure
  50. variable costs:
    remain constant per unit and vary in total
  51. when using the high low method, the change in cost divided by the change in units is:
    the variable cost per unit
  52. examples of common activity bases are:
    • machine hours
    • number of purchase orders
    • direct labor hours
  53. the formula used to prepare a contribution income statement:
    • sales-variable expenses=contribution margin-fixed expenses= net income
    • sales-cost of goods sold=contribution margin-fixed expenses=net income
  54. a change in revenues between two alternatives is known as ____ revenue or incremental revenue
    differential
  55. another name for incremental revenue is ____ revenue
    differential
  56. an activity base:
    • measures whatever causes cost to vary
    • is sometimes called a cost driver
  57. _____ is based on the rise-over-run formula for the slope of a straigh line
    the high-low method
  58. a contribution margin income statement:
    can assist with management decision making
  59. cost ____ refers to how individual costs change as the level of activity level increases or decreases
    behavior
  60. the formula to calculate the variable cost per unit using the high-low method is:
    change in cost divided by change in activity
  61. in the least-squares regression line, the vertical intercept (a) of the line represents the total ___  cost
    fixed
  62. the statement that organizes costs by their behavior instead of their function is the:
    contribution format income

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