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principles Flashcards

ch 1 (91 cards)

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1
Q

What are the 3 cost classifications of inventory for manufacturing costs?

A

Raw materials, Work in process, Finished goods

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2
Q

Fill in the Blank: When direct materials are used in production, their costs are transferred from _ to __

A

Raw Materials, Work in Process

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3
Q

Fill in the Blank: Direct labor and manufacturing overhead costs are added to _ to convert direct materials into finished goods

A

Work in Process

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4
Q

Fill in the Blank: Once units of product are completed, their costs are transferred from _ to __

A

Work in Process, Finished Goods

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5
Q

Fill in the Blank: When a manufacturer sells its finished goods to customers, the costs are transferred from _ to __

A

Finished Goods, Costs of Goods Sold

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6
Q

What are the 3 cost categories included in product costs?

A

Direct materials, direct labor, manufacturing overhead

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7
Q

What includes all selling costs and administrative costs?

A

Period costs

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8
Q

What does period costs include?

A

Selling costs, administrative costs

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9
Q

Which of the following costs would be considered a period rather than a product cost in a manufacturing company? A. Manufacturing equipment depreciation B. Property taxes on corporate headquarters C. Direct materials costs D. Electrical costs to light the production facility E. Sales commissions

A

B. Property taxes on corporate headquarters, E. Sales commissions

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10
Q

What refers to how a cost will react to changes in the level of activity?

A

Cost behavior

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11
Q

What are the 3 most common classifications of cost behavior?

A

Variable costs, Fixed costs, Mixed costs

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12
Q

What is a cost that varies, in total, in direct proportion to changes in the level of activity?

A

Variable costs

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13
Q

What is a measure of what causes the incurrence of a variable cost?

A

A cost driven activity base

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14
Q

What is a cost that remains constant, in total, regardless of changes in the level of the activity?

A

Fixed costs

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15
Q

What are the 2 types of fixed costs?

A

Committed, Discretionary

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16
Q

Which fixed cost is long term?

A

Committed fixed costs

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17
Q

Can committed fixed costs be significantly reduced in the short term?

A

No

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18
Q

Which type of fixed cost may be altered in the short-term by current managerial decisions?

A

Discretionary fixed costs

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19
Q

What 2 costs does the relevant range of activity pertain to?

A

Fixed costs, variable costs

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20
Q

What is the range of activity over which the graph of the cost is flat?

A

The relevant range of activity for fixed cost

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21
Q

What happens to variable costs per unit as the activity level increases or decreases?

A

It remains constant

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22
Q

What happens to total variable costs as the activity level increases or decreases?

A

It increases or decreases depending on the proportion of change to the activity level

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23
Q

What happens to total fixed costs as the activity level increases or decreases?

A

It isn’t affected

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24
Q

Fill in the Blank: Fixed cost per unit as the activity level rises and _ as the activity level falls

A

Decreases, Increases

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25
Which of the following costs would be variable with respect to the number of ice cream cones sold at a Baskin & Robbins? (There may be more than one correct answer.) A. The cost of lighting the store. B. The wages of the store manager. C. The cost of ice cream. D. The cost of napkins for customers.
C. The cost of ice cream, D. The cost of napkins for customers
26
What contains both variable and fixed elements?
Mixed costs
27
What is the formula to find total mixed costs?
TMC = TFC + (VC per unit x the level of activity)
28
If your fixed monthly utility charge is $40, your variable cost is $0.03 per kilowatt hour, and your monthly activity level is 2,000 kilowatt hours, what is the amount of your utility bill?
$100
29
What is the differences in cost between any two alternatives?
Differential costs
30
What is the difference in revenue between two alternatives?
Differential revenue
31
Can differential costs be either fixed or variable costs?
Yes
32
What are costs that have already been incurred and cannot be changed now or in the future?
Sunk costs
33
Should sunk costs be taken into consideration when making decisions?
No
34
What is the potential benefit that is given up when one alternative is selected over another?
Opportunity costs
35
Is the cost of the train ticket relevant in this decision? A. Yes, the cost of the train ticket is relevant. B. No, the cost of the train ticket is not relevant.
A. Yes, the cost of the train ticket is relevant
36
Is the annual cost of licensing your car relevant in this decision? A. Yes, the licensing cost is relevant. B. No, the licensing cost is not relevant.
B. No, the licensing cost is not relevant
37
Is the car that could be sold now for $5,000 a sunk cost? A. Yes, it is a sunk cost. B. No, it is not a sunk cost.
B. No, it is not a sunk cost
38
What is the formula to find the gross margin?
Sales - Costs of Goods Sold
39
What is used as an internal planning and decision-making tool?
The contribution income statement format
40
What is anything for which cost data are desired?
A cost object
41
What is the sum of direct material costs and direct labor costs?
Prime costs
42
What are small raw materials whose costs cannot be easily or conveniently traced to finished products?
Indirect Materials
43
What refers to employees that play an essential role in running a manufacturing facility?
Indirect Labor
44
What is based on the accrual concept that costs incurred to generate a particular revenue should be recognized as expenses only when the sale takes place?
The matching principle
45
True or False: Product Costs stay attached to each unit of product as long as it remains in inventory awaiting sale
True
46
What are product costs also known as?
Inventoriable costs
47
What are costs that are taken directly to the income statement as expenses in the period in which they are incurred or accrued?
Period Costs
48
True or False: Period costs are included as part of the cost of either purchased or manufactured goods
False
49
Fill in the Blank: Mixed Costs is represented by a line
Straight
50
What is variable costs per unit equal to?
The slope of the straight line
51
Fill in the Blank: The steeper the slope, the _ the variable cost per unit
Higher
52
What is the formula to find total manufacturing overhead?
(VMO x new # of units) + (FMO x original # of units)
53
What is the formula to find total selling expense?
Variable selling expense + fixed selling expense
54
What is the formula to find total administrative expense?
Variable administrative expense + fixed administrative expense
55
What is the formula to find period costs?
Selling expense + administrative expense
56
What is the formula to find product costs?
Direct material + direct labor + manufacturing overhead
57
What is the formula to find conversion costs?
Direct labor + manufacturing overhead
58
What is the formula to find prime costs?
Direct material + direct labor
59
What is the formula to find variable manufacturing costs?
Direct materials + direct labor + variable manufacturing overhead
60
What is the formula to find total fixed cost?
Fixed manufacturing overhead + fixed selling expense + fixed administrative expense
61
What is an example of a relevant cost?
Differential cost
62
What is an example of a relevant benefit?
Differential revenue
63
True or False: The accountant’s differential cost concept can be compared to the economist’s marginal cost concept
True
64
What is the revenue that can be obtained from selling one more unit of product?
Marginal revenue
65
What is the cost involved in producing one more unit of product?
Marginal cost
66
What is the formula to find the costs of goods sold?
Beginning inventory + purchases - ending inventory
67
What is another name for nonmanufacturing costs?
Period costs
68
What is another name for manufacturing costs?
Product costs
69
What is the formula to find the total variable manufacturing cost per unit?
(DM + DL + VMO) x # of units sold
70
What are the 2 formulas to find the total fixed manufacturing cost per unit?
(FMO x original number of units) - new number of units, Average fixed manufacturing cost x original number of units sold
71
What are the 2 formulas to find the total product cost?
TVMCPU + TFMCPU, ((DM + DL + VMO) x # of U sold) + (AFMO x # of Orig U)
72
What is the formula to find the total variable cost?
Direct material + direct labor + variable manufacturing overhead + variable selling expense + variable administration expense
73
What is the formula to find the total variable cost per unit sold?
Total variable cost x number of units
74
What is the formula to find the average fixed manufacturing cost per unit?
Total fixed manufacturing cost / new number of units
75
True or False: Total fixed marginal cost per unit doesn't change
True
76
What is the total amount of manufacturing cost equal to?
The total fixed manufacturing cost
77
What is the formula to find the manufacturing overhead per unit?
TMOC / # of units produced
78
What is the formula to find the total direct manufacturing cost per unit?
(DM + DL) x # of units
79
What is the formula to find the total indirect manufacturing cost per unit?
(VMOH + FMOH) x # of units
80
What are the 2 formulas to find total period costs?
TNMVCPUS + TNMFCPUS, ((Sales Com + Var Admin Exp) x # of U) + ((FSE + FAE) x # of Orig. U)
81
What is the formula to find the total nonmanufacturing cost?
SC + FSE + TAE
82
What is the formula to find the incremental cost per unit sold?
Total incremental cost / # of units sold
83
What is the formula to find the total incremental cost?
DM + DL + VMC
84
True or False: None of the manufacturing costs should be treated as indirect costs when the cost object is the Manufacturing Department
True
85
What is the formula to find indirect manufacturing cost?
VMOC + FMOC
86
What is the formula to find direct manufacturing cost?
DM + DL
87
True or False: Sales commission and variable selling expense are the same thing
True
88
What is the formula to find total nonmanufacturing variable cost per unit sold?
(Sales Com + Var Admin Exp) x # of U
89
What is the formula to find total nonmanufacturing fixed cost per unit sold?
(FSE + FAE) x # of Orig. U
90
What is AFMC equal to?
FMO
91
Which of the following changes or remains constant? Variable cost per unit, Total variable cost, Fixed cost per unit, Total fixed cost
It remains constant, It increases or decreases depending on the proportion of change to the activity level, It decreases as the activity level rises and increases as the activity level falls, It isn't affected

managerial accounting (1 decks)

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