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Cost Accounting 1.5
| Question | Answer |
|---|---|
| The ____ is based on the accrual concept that cost incurred to generate a particular revenue should be recognized. | matching principle |
| When preparing a balance sheet and income statement, companies need to classify their costs? | products or period costs |
| all costs involved in acquiring or making a product. in the case of manufactured goods, these consist of DM, DL, and MOH. | product cost |
| Costs taken directly to the income statement as expenses in the period incurred or accrued. | period Cost |
| A cost that varies, in total, in direct proportion to changes in the level of activity. Constant per unit | variable cost |
| A measure of whatever causes the incurrence of a variable cost. Example gloves in a hospital | activity base |
| A cost that remains constant, in total, regardless of changes in the level of activity within the relevant range. | fixed cost |
| if fixed cost is expressed on a per unit basis, _______ with the level of activity | varies inversely |
| Investment in facilities, equipment, or basic organizational structure that can't be significantly reduced even for short periods of time without making fundamental changes | committed fixed costs |
| Fixed costs that arise from annual decisions by management to spend on certain fixed cost items, such as advertising and research. sometimes call managed fixed costs | discretionary fixed costs |
| _______ cost contains both variable and fixed cost elements, also known as semi variable costs | mixed costs |
| is a range of activity with which the assumption that cost behavior is strictly linear i s reasonably valid. | relevant range |
| every decision involves choosing from at least 2 alternatives. | relevant costs and benefits |
| A Cost that should be considered when making decisions | relevant cost |
| A benefit that should be considered when making decisions | relevant benefit |
| A future cost between 2 alternatives known as | differential cost |
| future revenue that differs between 2 alternatives is known as | differential revenue |
| Any future cost or benefit that does not differ between the alternatives is irrelevant and should be | ignored |
| A differential cost that increase is | incremental cost |
| A differential cost that decreases is | decremental cost |
| The potential benefit given up when one alternative is selected over another | opportunity cost |
| A cost incured that cannot be changed by any decision made now or in the future | sunk cost |
| An income statement format that organizes costs by their behavior. costs are separated into product or period costs for external reporting purposes | contribution approach |
| the amount remaining from sales after all variable expenses have been deducted | contribution margin |
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