a cost that can be easily and conveniently traced to a specified cost object.
a cost that cannot be easily and conveniently traced to a specified cost object is called
indirect cost
a regional sales manager's salary would be a direct cost of the regional office in which the sales manager works. T/F
True
A particular cost is either direct or indirect, regardless of the cost object. T/F
False
an individual cost may be indirect to one cost object and direct to another. T/F
True
A direct cost can be easily and conveniently traced to a specific cost object. T/F
True
A direct cost is sometimes referred to as a common cost. T/F
False
direct labor is also called ___ labor
touch
indirect materials and indirect labor are classified as:
manufacturing overhead
a(n) _____ cost is a type of cost incurred to benefit more than one cost object
common
sales commissions and company president's salary are manufacturing costs. T/F?
True
assembly-line workers wages and insurance on plant equipment are nonmanufacturing costs. T/F?
False
produce costs are also called:
inventoriable costs
cost objects include:
customers
anything for which cost data is desired
organizational subunits
manufacturing costs can be divided into three categories:
direct labor
direct materials
manufacturing overhead
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
period costs are expensed on the income statement:
in the period in which they occur
a dress manufacturer would consider the cost of relatively inexpensive items like thread to be a part of
indirect materials
manufacturing overhead
direct materials and direct labor are both:
manufacturing costs
another term for direct materials is raw materials. T/F?
False
Raw materials may include both direct and indirect materials. T/F?
True
Direct labor and overhead costs incurred to change raw materials into finished products are known as:
Conversion costs
The components of prime costs are:
direct materials and direct labor
product costs that attach to a specific product are known as ____ costs
inventoriable
The materials that go into the final product are called ____ materials
raw
inventoriable costs is another term for ___ costs
product
mixed costs are commonly known as semi- _____ costs
variable
fixed costs generally include rent and supervisor salaries. T/f?
True
fixed costs remain constant regardless of changes in activity. T/F?
true
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
a ____ cost changes in direct proportion to changes in the activity level
variable
within the _____ ____ of activity, cost assumptions are reasonably valid
relevant range
within the relevant range of activity, variable costs vary in total. T/F?
True
within the relevant range of activity, variable costs remain constant per unit. t/F?
true
within the relevant range of activity, variable costs vary per unit. T/F?
false
within the relevant range of activity, variable costs remain constant in total. T/f
false
contribution margin is:
sales revenue minus variable costs
a fixed cost remains fixed ____ within the relevant range of activity
in total
in the equation y= a+bx, b denotes the
variable cost per unit of activity and the slope of the line
the revenue obtained from selling one additional unit of product is called _____ revenue
marginal
the difference in cost between two alternatives is called a(n) ___ cost
differential
within the relevant relevant range, ____ costs remain constant on a per unit basis
variable
the level of activity within which variable and fixed cost assumptions are valid is known as the ____ _____
relevant range
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
the equation for a straight-line can be used to express the relationship between mixed costs and the level of activity. T/F?
true
what type of cost is never relevant and should therefore be disregarded when making decisions?
sunk
the relative proportion of each type of cost in an organization is known as the company's ___ _____
cost structure
variable costs:
remain constant per unit and vary in total
when using the high low method, the change in cost divided by the change in units is:
the variable cost per unit
examples of common activity bases are:
machine hours
number of purchase orders
direct labor hours
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
a change in revenues between two alternatives is known as ____ revenue or incremental revenue
differential
another name for incremental revenue is ____ revenue
differential
an activity base:
measures whatever causes cost to vary
is sometimes called a cost driver
_____ is based on the rise-over-run formula for the slope of a straigh line
the high-low method
a contribution margin income statement:
can assist with management decision making
cost ____ refers to how individual costs change as the level of activity level increases or decreases
behavior
the formula to calculate the variable cost per unit using the high-low method is:
change in cost divided by change in activity
in the least-squares regression line, the vertical intercept (a) of the line represents the total ___ cost
fixed
the statement that organizes costs by their behavior instead of their function is the:
