Chapter 1: Managerial Accounting and Cost Concepts Flashcards
(42 cards)
What is an Activity Base?
A measure of what causes variable costs.
What is an example of an activity base?
Total cost of gloves in a hospital will increase as surgeries increase.
Administrative costs include any:
Executive, Orginization, and Clerical costs
What are committed Fixed Costs?
Investments that cannot be reduced without a fundamental change
What are common costs?
Cost incurred to support cost objects that cannot be traced to a single individual
What is a Contribution Approach?
An income statement organized by variable and fixed cost behavior
What is a Contribution Margin?
The remaining money from sales revenue after variable expenses have been deducted
Conversion Cost
Direct Labor + Manufacturing Overhead
What is Cost Behavior?
How product costs react to various activity levels
Describe a cost object
Anything for which cost data is desired such as product, customer or geographic data.
Cost Structure
How many fixed, variable, and mixed costs are found in an organization
Differential cost
Future costs that differ between two different products
Differential Revenue
Revenue that differes between two different products
Direct Labor
Easy to Trace Costs
Direct Labor
Easy to trace
Direct Materials
Materials used to manufacture a finished product
Discretionary Fixed Costs
Fixed costs from managerial decisions within a company
Financial Accounting
Reporting historical financial information to stockholders, creditors, and regulatiors
Finished Goods
Unsold completed products
Fixed Cost
Cost that stay the same regardless of how activity levels change
Incremental Costs
Increase in cost between two alternatives
Indirect Costs
Costs the cannot be traced to a specific cost object
Indirect Labor
Salaries of janitors, supervisors, materials handlers, and other factory workers
Indirect materials
Small items such as glue or nails
