question

Cost

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Are assigned using direct tracing and resource drivers

question

Overhead

answer

Type of cost poses the most problems in using an actual cost system

question

Expenses

answer

Expired cost

question

A home builder

answer

Least likely to use a process costing system

question

Finished Goods

answer

Process costing, the cost of units finished in the last department will be transferred from work in process to:

question

Overhead

answer

Indirect materials Supplies Indirect labor

question

The order that cost elements flow through accounts until they are recognized as an expense

answer

Work in process Finished goods Cost of good sold

question

Work in process

answer

At the time, they are used, raw materials, direct labor, and applied overhead costs are recorded in

question

Chemical Plant

answer

Most likely to use process accounting

question

Required activity

answer

Complying with the filing requirements of the IRS

question

Production and Non-Production

answer

Cost are subdivided functional categories

question

Production Cost

answer

Direct material Direct labor Overhead

question

Work in Process Finished Goods

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Job is completed but not sold

question

Types of inputs for process accounting

answer

Overhead labor Material

question

An indirect cost

answer

Is hard to trace

question

Activity-based accountinn

answer

Can help a company become more competitive by providing more accurate cost data

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Direct labor

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Chef in a restaurant

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Efficiency

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Focuses on the relationship of activity inputs to activity outputs

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Quality

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Is concerned with doing the activity right the first time it's performed

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Conversion Cost

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Direct labor Manufacturing overhead

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Cost production report

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The production report is the document that summarizes the manufacturing activity that takes place in a process department for a given period

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Activity based costing

answer

A costing system that first assigns cost to activities and then the products is:

question

Activity based management

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Add new activities that increase value Increase the efficiency of necessary activities Identify and eliminate all unnecessary activities

question

Process costing

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Large number of the same products

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Job order cost sheet

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Total cost of a single job

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Unit Cost Calculated

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By dividing total cost associated with the units produced by the number of units produced

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Labor Cost

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Direct Labor

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Sales Budget

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The starting point in preparing a master budget is the preparation of it

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For an activity base to be useful in cost behavior analysis

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There should be a correlation between changes in the level of activity and changes in cost

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Manufacturing overhead budget

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Not a financial budget

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The direct materials budget details

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The quantity of direct materials to be purchased The cost of direct materials to be purchased

question

Margin of safety in dollars is

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Expected sales less break even sales

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Contribution margin

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Equals sales revenue minus variable cost

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Budget

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Communicate goals and provide basis for evaluation Aid to management

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Sales Forecast

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Show a forecast for the industry and for the firm

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Net income under absorption costing is higher than net income under variable costing

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When units produced exceed units sold

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Long range planning usually encompasses a period of at least

answer

5 years

question

Budget needs to be accepted by

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Supervisors Division managers Department head

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Contribution margin ratio

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Contribution margin divided by sales

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Net income under absorption costing is gross profit less

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variable selling and administrative expenses and fixed selling and administrative expenses

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If a firm increases its activity level

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Some cost will change, others will remain the same

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Cost behavior analysis is a study of how a firm's costs

answer

Respond to changes in level of business activity

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Budget Period

answer

One year

question

Cost structure

answer

Refers to the relative proportion of fixed versus variable costs that a company incurs

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CVP income statement classifies costs

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As variable or fixed and computes contribution margin

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The break even point is where

answer

Contribution margin equals total fixed cost

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In using the high-low method, the fixed cost

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May be determined by subtracting the total variable cost from either the total cost at the low or high activity level

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The financing section of a cash budget is needed if there is a cash deficiency or if the ending cash balance is less than

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Management's minimum required balance

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CVP analysis does not consider

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Fixed cost per unit

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A budget period should be

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Long enough to provide an obtainable goal under normal business conditions

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Variable Cost

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A cost which remains constant per unit at various levels of activity is a

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Firm operating at 100% capacity

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Are the exception rather than the rule

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Mixed cost

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A variable element and a fixed element

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Variable cost is a cost that

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Varies in total in proportion to changes in the level of activity

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Incremental analysis

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Both cost and revenues may be analyzed

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A distinguishing characteristics of an investment center that

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The profitability of the center is related to the funds invested in the center

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Profit Center

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A responsibility center that incurs cost and generates revenues

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Incremental revenue

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A revenue that differs between alternatives and makes a difference in decision making is called

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A major accounting contribution to the managerial decisions making process in evaluating possible courses of action is to

answer

Provide relevant revenue and cost data about each course of action

question

Always a relevant cost

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Opportunity cost

question

Ideal standards

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Reflect optimal performance under perfect operating conditions

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Capital budgeting is the process

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Of making capital expenditures decisions

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Standard cost

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Help establish expected future cost Are the budgeted cost per unit in the present May show past cost experience

question

A product line should be eliminated whenever

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The product line generates a negative contribution margin

question

Opportunity cost

answer

Is the potential benefit that may be obtained by following an alternative course of action Potential benefit

question

Flexible budget

answer

Series of static budgets at different levels of activity Projects budget data for various levels of activity

question

Relevant cost are always

answer

Avoidable costs

question

Sunk cost

answer

Irrelevant cost

question

Incremental Analysis would be appropriate

answer

Retain or replace equipment decision A sell or process further decision Acceptance of an order at a special price

question

Using standard costs

answer

Provides a basis for evaluating cost control

question

Standards cost may be used by

answer

Universities Government agencies Charitable organizations

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Incremental analysis is most useful

answer

In developing relevant information for management decisions

question

Cost center

answer

Only incurs cost and does not directly generate revenues

question

Standard Cost

answer

The amount management thinks should be incurred to produce cost

question

Static budget

answer

Shows planned results at the original budgeted activity level

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