ACC 220

What is the total product cost?

DM+DL+MOH

Manufacturing Overhead includes all manufacturing costs except

direct materials and direct labor

The sum of direct materials and direct labor is called the

prime cost

Salaries of factory supervisors and factory maintenance are examples of

indirect costs (indirect costs refers to employees)

Period costs include

Costs that are not product costs and are expensed in the period incurred

traditional income statements are

prepared primarily for external reporting costs

contribution format income statements are

prepared for internal management purposes

Contribution format statements make it easier to

predict how decisions affect the future

traditional income statements focus on

cost classification

contribution format statements focus on

cost behavior

indirect costs and indirect labor are considered

manufacturing overhead

depreciation expense on equipment is a

manufacturing overhead costs

the salary of a company’s accountant is an

administrative costs

the salary of an assembly shop supervisor is a

manufacturing overhead costs

sales commissions paid to the company salespeople are a

selling costs

wages of employees who assemble computers are considered a

direct labor cost

advertisement costs are a

selling cost

period costs are cost that not

product costs

variable costs are a

constant per unit

fixed costs are a

A cost that remains constant, in total, regardless of changes in the level of the activity

How individual costs react to changes in activity level is referred to as cost

behavior

What type of costs are factory maintenance workers' wages and factory supervisors' salaries?

manufacturing overhead costs

shipping costs and sales commissions

selling costs

sales commissions and factory supervisors' salaries

selling and a manufacturing overhead cost

What type of costs are executive compensation and public relations costs?

administrative costs

direct materials and direct labor are both

manufacturing costs

Which type of cost changes in total, in direct proportion to changes in activity level?

variable

Within the relevant range of activity,_____ costs remain constant in total

fixed

Presenting fixed costs on an average per unit basis makes them look like they are variable costs. T/F

True

A cost that contains both variable and fixed cost elements is called a

mixed

The contribution approach to constructing income statements distinguishes between

fixed and variable

Cost behavior ____

categorizes costs as fixed, mixed and variable and refers to how a cost will change as activity level changes

Period costs are always expensed on the income statement in the period in which

they are incurred

selling costs include

sales commissions, sales salaries, advertising, anything regarding the sale of the product to customers

contribution approach income statement

can assist with management decision making and separates costs into their fixed and variable components