Cost Exam 1

dm

direct materials

dl

direct labor

voh

variable overhead

foh

fixed overhead

vma

variable marketing and administrative

fma

fixed marketing and administrative

variable cost per unit

dm + dl + voh + vma

variable manufacturing or production cost per unit

dm + dl + voh

full cost per unit

dm + dl + voh + vma + foh +fma

full absorption cost per unit

dm + dl + voh + foh

profit margin per unit

sales price - full cost (dm, dl, voh, vma, foh, fma)

gross margin per unit

sales - COGS (dm, dl, voh, foh)

contribution margin per unit

sales - variable costs (dm, dl, voh, vma)

full absorption cost is also…

COGS

conversion cost per unit

dl + voh +foh

prime cost per unit

dm + dl

full absorption costing income statement

sales revenue - COGS = gross margin - marketing and admin costs = operating profits

Variable costing income statement

sales revenue - variable costs = contribution margin - fixed costs = operating profit

True or False: the value chain comprises activities from research and development through the production process but does not include activities related to the distribution of products or services

false

True or False: a cost driver is a factor that causes costs

true

True or False: in general, if activities that do not add value to the company can be eliminated, then costs associated with them will also be eliminated

true

True or False: accounting systems are important because they are a primary source of information for managers

true

True or False: critical thinking is a systematic process used to analyze a business issue or decision

true

True or False: data visualization is the systematic evaluation of information to address a decision problem

false

True or False: big data is defined by the amount of data, the speed the data is generated and made available, or the variety of data available

true

True or False: managers face ethical situations on a daily basis, while accountants face them infrequently

false

the set of activities that transforms raw resources into the goods and services end users purchase and consume is called the

value chain

the process of creating a financial plan of the revenues and resources needed to carry out activities and meet financial goals is referred to as

budgeting

True or False: in general, cost behavior results are likely to differ between the engineering method and the account analysis method

true

True or False: one disadvantage of the high-low method is the highest and lowest points may not be representative of normal operating activities

true

a method that calls for a review of each account making up the total cost is which of the following cost estimation methods

account analysis

the correlation coefficient is

the measure of the linear relation between two or more variables

which of the following refers to the systematic relationship between the amount of experience in performing a task and the time required to perform it

learning phenomenon

ballard company incurred a total cost of $8600 to produce 400 unites of pulp. Each unit required five direct labor hours to complete. What is the total fixed cost if the variable cost was $1.50 per direct labor hour

$5600

the cost per unit of the allocation base used to charge overhead to products is the

predetermined overhead rate

the basic cost flow model is

EB = BB + TI - TO

when a manufacturing company has a highly automated manufacturing plant producing many different products, what is probably the most appropriate basis of applying overhead costs to work-in-process

machine hours

which of the following is the correct formula to compute the predetermined overhead rate

estimated total manufacturing overhead costs / estimated total units in the allocation base

cost pools are

costs that are accumulated before being allocated to cost objects on some common basis

for which of the following businesses would a job costing system be appropriate

law office

the paris manufacturing company produces a single uniform product throughout the year. which of the following product costing systems should be used by paris

process costing

given the following information, what is the beginning balance? ending balance = 75,000

transferred in = 157,600

transferred out = 172,600

beginning balance = 90,000

quickcard processes credit card receipts for local banks. quikcard processed 1,600,000 receipts in october. all receipts are processed the same day they are received. october costs were labor of $41,000 and overhead of $55,000. what is the cost to process 1,400 receipts?

$84.00

the following information has been gathered for the harrell manufacturing company for its fiscal year ending december 31. what is the predetermined manufacturing overhead rate per direct labor hour?

estimated manufacturing overhead costs = $235,620

estimated direct labor = $435,000

estimated direct labor hours = 56,100

$4.20

True or False: the three categories of product costs are direct materials, direct labor, and manufacturing overhead

true

What is the range within which fixed costs remain constant as volume of activity varies?

the relevant range

an opportunity cost is?

the foregone benefit from the best alternative course of action

what best distinguishes an opportunity cost from an outlay cost?

opportunity costs are sacrifices from foregone alternative uses of resources, whereas outlay costs are cash outflows

tallon company manufactures a single product. The product’s prime costs consist of

direct materials and direct labor

marketing costs include all of the following except":

advertising, shipping costs, sales commissions, or legal and accounting fees

legal and accounting fees

the three basic elements of manufacturing cost are direct materials, direct labor, and…

manufacturing overhead

the process of assigning indirect costs to products, services, people, business units, etc, is

cost allocation

True or False: the cost in the ending finished goods inventory account consists of the direct materials, direct labor, and manufacturing overhead for all jobs still in process at the end of the period

false

what is used as the basis for posting to the direct materials section of the job cost sheet?

materials requisition

for which of the following businesses would a job costing system be appropriate?

auto repair shop

which of the following is not a characteristic of job costing

identical units are produced on an ongoing basis

the balance in the work-in-process inventory account equals

the balances on the job cost sheets of uncompleted jobs