Chapter 1

Question 1

A cost that remains constant, in total, regardless of changes in the level of activity within the relevant range

Answer 1

Fixed cost

Question 2

Fixed cost on a per unit basis do what as the level of activity increases

Answer 2

Decrease

Question 3

A type of accounting concerned with reporting historical financial information to external parties (i.e. stockholders, creditors and regulators)

Answer 3

Financial accounting

Question 4

Whatever causes variable cost

Answer 4

Activity base

Question 5

Cost associated with general management

Answer 5

Administrative cost

Question 6

Investment in facilities, equipment and basic organizational structure that can’t be significantly decreased in the short run without making fundamental changes.

Answer 6

Committed fixed cost

Question 7

Cost incurred to support a number of cost objects that can’t be traced to them individually

Answer 7

Common cost

Question 8

An income statement organized by cost behaviors

Answer 8

Contribution approach

Question 9

Sales revenue after variable expenses are deducted

Answer 9

Contribution margin

Question 10

Direct materials + MOH

Answer 10

Conversion cost

Question 11

The way cost react to changes in the level of activity

Answer 11

Cost behaviors

Question 12

Anything for which cost data is desired (e.g. products, customers, geographic regions, parts of an organization)

Answer 12

Cost object

Question 13

Relative proportion of fixed, variable and mixed cost in an organization

Answer 13

Cost structure

Question 14

A future cost that differs between alternatives

Answer 14

Differential cost

Question 15

A future revenue that differs between alternatives

Answer 15

Differential revenue

Question 16

A cost easily traced to a specific cost object

Answer 16

Direct cost

Question 17

Material that becomes a integral part of a finished product whose cost are easily traced

Answer 17

Direct materials

Question 18

Fixed cost that arise from annual decisions by management to spend a certain fixed cost on the item (i.e. advertising)

Answer 18

Discretionary fixed cost

Question 19

Units of product that are finished but not sold to customers

Answer 19

Finished goods

Question 20

An increase in cost between two alternatives

Answer 20

Incremental cost

Question 21

A cost that can’t be easily or conveniently traced to a specified cost object

Answer 21

Indirect cost

Question 22

The labor costs of janitors, supervisors, materials handlers, and other factory workers that can’t be conveniently traced to a particular products

Answer 22

Indirect labor

Question 23

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.

Answer 23

Indirect materials

Question 24

Same a product cost: 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 cost.

Answer 24

Inventoriable cost

Question 25

A type of accounting concerned with providing information to managers for use within the organization

Answer 25

Managerial accounting

Question 26

All manufacturing costs except direct materials and direct labor

Answer 26

Manufacturing overhead

Question 27

A cost that contains both variable and fixed cost elements

Answer 27

Mixed cost

Question 28

The potential benefit given up when one alternative is selected over another

Answer 28

Opportunity cost

Question 29

Direct materials cost plus direct labor cost

Answer 29

Prime cost

Question 30

Costs that are taken directly to the income statement as expenses in the period in which they are incurred or accrued

Answer 30

Period costs

Question 31

Any materials that go into the final product

Answer 31

Raw materials

Question 32

A benefit that should be considered when making decisions

Answer 32

Relevant benefit

Question 33

A cost that should be considered when making decisions

Answer 33

Relevant cost

Question 34

Same as inventoriable cost: 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 cost.

Answer 34

Product cost

Question 35

The range of activity within which assumptions about variable and fixed cost behaviors are valid

Answer 35

Relevant range

Question 36

All cost that are incurred to secure customer orders and get the finished product or service into the hands of the customer

Answer 36

Selling cost

Question 37

A cost that has already been incurred and that cannot be changed by any decision made now or in the future

Answer 37

Sunk cost

Question 38

A cost that varies, in total, in direct proportion to changes in the level of activity. Constant on a per unit basis

Answer 38

Variable cost

Question 39

Units of product that are only partially complete and will require further work before they are ready for sale to the customer

Answer 39

Work in process