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Cost Accounting
Test 1 - Chapter 1, 2, 3
| Question | Answer |
|---|---|
| Field of accounting that measures, records, and reports information about costs. | Cost Accounting |
| Costs that change in response to a particular course of action. | Differential Costs |
| Cost is the monetary value needed to manufacture a product or to render a service. | Cost |
| Cost that is charged against revenue in an accounting period. | Expense |
| Past, present, or future cash outflow. | Outlay Cost |
| Forgone benefit from the best (forgone) alternative course of action. | Opportunity Cost |
| Excess of operating revenues over the operating costs necessary to generate those revenues. | Operating Profit |
| Expense assigned to products sold during a period. | Cost of Goods Sold |
| Costs assigned to the manufacture of products and recognized for financial reporting when sold. | Product Costs |
| Costs recognized for financial reporting when incurred. | Period Costs |
| Product costs that can be feasibly identified with units of production. | Direct Manufacturing Costs |
| All product costs except direct costs. | Indirect Manufacturing Costs |
| Materials that can be identified directly with the product at reasonable cost. | Direct Materials |
| Labor that can be identified directly with the product at reasonable cost. | Direct Labor |
| All production costs except those for direct labor and direct materials. | Manufacturing Overhead |
| Sum of direct materials and direct labor. | Prime Costs |
| Sum of direct labor and manufacturing overhead. | Conversion Costs |
| Costs required to obtain customer orders and provide customers with finished products, including advertising, sales commissions, and shipping costs. | Marketing Costs |
| Costs required to manage the organization and provide staff support, including executive salaries; costs of data processing, and legal costs. | Administrative Costs |
| Process of assigning indirect costs to products, services, people, business units, etc. | Cost Allocation |
| Any end to which a cost is assigned. | Cost Object |
| Collection of costs to be assigned to the cost objects. | Cost Pool |
| Method used to assign costs in the cost pool to the cost objects. | Cost Allocation Rule |
| Diagram or flowchart illustrating the cost allocation process. | Cost Flow Diagram |
| Any cost that can be directly (unambiguously) related to a cost object at reasonable cost. | Direct Cost |
| Any cost that cannot be directly related to a cost object. | Indirect Cost |
| Product in the production process but not yet complete. | Work in Process |
| Product fully completed but not yet sold. | Finished Goods |
| Costs added to inventory accounts. | Inventoriable Costs |
| Costs that are unchanged as volume changes within the relevant range of activity. | Fixed Costs |
| Costs that change in direct proportion with a change in volume within the relevant range of activity. | Variable Costs |
| Sum of all costs of manufacturing and selling a unit of product (includes both fixed and variable costs). | Full Cost |
| Revenue - Cost of goods sold on income statements. Per unit, the gross margin equals Sales price - Full absorption cost per unit. | Gross Margin |
Created by:
AbbyP
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