Chapter Two; Cost Terminology And Cost Behaviors

Front 1

an expired cost

Back 1

portion of an asset that was consumed during a period

Front 2

relationship between variable cost and per unit basis as production increases

Back 2

remains constant

Front 3

relationship between variable cost and total cost basis as production increases

Back 3

varies

Front 4

relationship between fixed cost and per unit basis as production increases

Back 4

varies

Front 5

relationship between variable cost and total cost basis as production increases

Back 5

constant

Front 6

relevant range

Back 6

normal operating range

Front 7

two primary cost behaviors in relevant range

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fixed and variable

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type of cost that can be easily traced to a cost object

Back 8

direct cost

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type of cost that can not be easily traced to a cost object

Back 9

indirect cost

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cost object

Back 10

anything for which management wants to accumulate or collect costs

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step cost

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cost increases or decreases in intervals as activity changes

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another name for inventoriable costs

Back 12

product

Front 13

three stages of production for a manufacturing firm are

Back 13

raw materials, work in process, finished goods

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prevention costs

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costs incurred to improve quality by precluding defects and improper processing

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appraisal costs

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costs incurred for monitoring or inspecting products

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failure costs

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costs that result from defective units, product returns, and complaints

Front 17

the term 'relevant range' used in cost accounting means

Back 17

the range over which cost relationships are valid

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variable cost behavior: total cost reaction to increase in activity

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increases

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variable cost behavior: cost per unit reaction to increase in activity

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remains constant

Front 20

prime costs

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direct materials plus direct labor

Front 21

when cost relationships are linear total variable prime costs will vary in proportion to changes in

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production volume

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example of fixed cost

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straight line depreciation, insurance, and supervisors salary

Front 23

when the number of units manufactured increases, the most significant change in unit cost will be reflected as a

Back 23

decrease in the fixed element

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cost driver

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direct cause-effect relationship to a cost

Front 25

product costs are deducted from revenue

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as goods are sold

Front 26

a selling cost is a

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period cost

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when are period costs generally expensed

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same period in which they were incurred

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period costs include

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distribution costs and sales commission

Front 29

cost of goods sold is what type of cost

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expired product cost

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what are overhead costs

Back 30

indirect costs of converting raw materials into finished goods

Front 31

DM

DL

direct production costs or

indirect production costs

which would need to be allocated to a cost object?

Back 31

indirect production costs

Front 32

Broussard Company is a construction company that builds houses on special request. What is the proper classification of the carpenters' wages?

Back 32

product costs and direct costs

Front 33

Broussard Company is a construction company that builds houses on special request. What is the proper classification of the cost of the cement building slab used?

Back 33

direct costs

Front 34

Broussard Company is a construction company that builds houses on special request. What is the proper classification of indirect material used?

Back 34

conversion cost and variable cost

Front 35

all costs related to the manufacturing function in a company are

Back 35

product cost

Front 36

plastic used to manufacture dolls is a

Back 36

prime cost, product cost, and direct cost

Front 37

conversion of inputs to outputs is recorded in the

Back 37

work in process inventory account

Front 38

formula to compute cost of goods manufractured

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beginning work in process inventory + direct labor + direct material used + overhead incurred - ending work in process inventory

Front 39

the final figure in the Schedule of Cost of Goods Manufactured represents the

Back 39

total cost of goods completed for the period

Front 40

formula to compute cost of goods sold for a manufacturer is

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beginning finished goods inventory + cogm - ending finished goods inventory

Front 41

calculate cost of raw material purchased during the year

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raw materials used + ending raw materials - beginning raw materials

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calculate raw materials used during the month

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beginning raw material inventory + purchases - ending raw material inventory

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example of variable cost

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direct material, direct labor, and possibly utilities

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product cost

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associated with making or acquiring inventory

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example of product cost

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direct material, direct labor, overhead

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period cost

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any cost other than those associated with making or acquiring product and is not considered inventory

Front 47

example of period costs

Back 47

selling and administrative expenses