Chapter 2

Question 1

Costs required to manage the organization and provide staff support, including executive salaries, costs of data processing, and legal costs

Answer 1

Administrative Costs

Question 2

Sales price minus Variable cost per unit`

Answer 2

Contribution Margin

Question 3

Sum of direct labor and manufacturing overhead

Answer 3

Conversion Costs

Question 4

Sacrifice of resources

Answer 4

Cost

Question 5

Process of assigning indirect costs to products, services, people, business units, etc.

Answer 5

Cost Allocation

Question 6

Method used to assign costs in the cost pool to the cost objects

Answer 6

Cost Allocation Rule

Question 7

Diagram or flowchart illustrating the cost allocation process

Answer 7

Cost Flow Diagram

Question 8

Any end to which a cost is assigned

Answer 8

Cost Object

Question 9

Expense assigned to products sold during a period

Answer 9

Cost of Goods Sold

Question 10

Collection of costs to be assigned to the cost objects

Answer 10

Cost Pool

Question 11

Any cost that can be directly (unambiguously) related to a cost object

Answer 11

Direct Cost

Question 12

Work that actually transforms materials into finished products during the production process

Answer 12

Direct Labor

Question 13

Product costs that can be feasibly identified with units of production

Answer 13

Direct Manufacturing Costs

Question 14

Those materials that can feasibly be identified directly with the product

Answer 14

Direct Materials

Question 15

Cost that is charged against revenue in an accounting period

Answer 15

Expense

Question 16

Product fully completed, bunt not yet sold

Answer 16

Finished Goods

Question 17

Costs that are unchanged as volume changes within the relevant range of activity

Answer 17

Fixed Costs

Question 18

All variable and fixed manufacturing costs; used to cote product’s inventory value under GAAP

Answer 18

Full Absorption Cost

Question 19

Sum of all costs of manufacturing and selling a unit or product (includes both variable and fixed costs)

Answer 19

Full Cost

Question 20

Revenue minus cost of goods sold on income statements. Per unit, the blank equals Sales price minus full absorption cost per unit

Answer 20

Gross Margin

Question 21

Any cost that cannot be directly related to a cost object

Answer 21

Indirect Cost

Question 22

All product costs except direct costs

Answer 22

Indirect Manufacturing Costs

Question 23

Costs added to inventory accounts

Answer 23

Inventoriable Costs

Question 24

All production costs except direct labor and direct materials

Answer 24

Manufacturing Overhead

Question 25

Costs required to obtain customer orders and provide customers with finished products, including advertising, sales, commissions, and shipping costs

Answer 25

Marketing Costs

Question 26

Excess of operating revenue over the operating costs necessary to generate those revenues

Answer 26

Operating Profit

Question 27

Forgone benefit from the best foregone alternative course of action

Answer 27

Opportunity Cost

Question 28

Past, present, or future cash outflow

Answer 28

Outlay Cost

Question 29

Costs recognized for financial reporting when incurred

Answer 29

Period Costs

Question 30

Sum of all direct materials and direct labor

Answer 30

Prime Costs

Question 31

Costs assigned to the manufacturing of products and recognized for financial reporting when sold

Answer 31

Product Costs

Question 32

Activity levels within which a cost estimate is valid; the range within which a given fixed of unit variable cost will be unchanged even though the volume changes

Answer 32

Relevant Range

Question 33

Cost that has both fixed and variable components

Answer 33

Semi-variable/Mixed Cost

Question 34

Cost that increase with volume in steps

Answer 34

Step/Semifixed Cost

Question 35

Costs that change in direct proportion with a change in volume within the relevant range of activity

Answer 35

Variable Costs

Question 36

Product in the production process but not yet complete

Answer 36

Work in Process