Test Bank for Managerial Accounting, 18th Edition by Ray
Garrison QUESTIONS AND CORRECT ANSWERS
(FULLY SOLVED) | ALREADY GRADED A+
Product/ Inventorial Cost - ans -costs that are a necessary and integral part of
producing the finished product. shows up on the balance sheet until product is sold.
Period Cost - ans -all non-manufacturing costs, deducted as an expense in the
accounting period in which they are incurred.
Variable Cost - ans -a cost that rises or falls depending on how much is produced. they
are constant.
Fixed Cost - ans -a cost that does not change, no matter how much of a good is
produced
Differential Cost - ans -A relevant costs: costs that can be avoided when alternatives
are changed.
Opportunity Cost - ans -Cost of the next best alternative use of money, time, or
resources when one choice is made rather than another
Sunk Cost - ans -Any cost that has already been incurred and that cannot be changed
by any decision made now or in the future. It is never relevant
TQM - ans -Total Quality Management: A process developed by Dr. W. Ed Deming to
increase productivity through quality control techniques.
Theory of Constraints - ans -A specific approach used to identify and manage
constraints in order to achieve the company's goals.
Gross Margin a.k.a. Gross Profit - ans -Net Sales - COGS
Linear Equation - ans -Y= a+bx
Y - total mixed cost
a - fixed costs
b - y intercept
Committed Fixed Cost - ans -Cannot be changed or eliminated with ease.
Discretionary Fixed Cost - ans -Can change/eliminate the fixed cost.
, Contribution Margin - ans -Amount of money available after subtracting your variable
costs. Sales Revenue-Variable Cost
Prime Costs - ans -Direct Materials + Direct Labor
Conversion Costs - ans -Direct Labor + Manufacturing Overhead
Direct Costs - ans -a.k.a. Product Costs, Inventorial Costs
Product Costs - ans -Direct Labor, Direct Materials, Manufacturing Overhead
Inventories - ans -Raw Materials, Work in Progress, FG
Performance Report - ans -A report showing a comparison of projected and actual
amounts for a specific period of time.
High-Low Method - ans -A mathematical method that uses the total costs incurred at the
high and low levels of activity to classify mixed costs into fixed and variable
components.
Step Variable Costs - ans -total cost remains constant within a narrow range of activity,
total cost increases to a new higher cost for the next higher range of activity
Cost of Goods Sold equation - ans -D. Beginning inventory + net purchases - ending
inventory.
Contribution Approach to Income Statement - ans -An income statement format that
organizes costs by their behavior. Costs are separated into variable and fixed
categories rather than being separated into product and period costs for external
reporting purposes.
Process Costing - ans -A cost accounting system in which the costs are collected by
time period and averaged over all the units produced during the period. This system can
be used with either actual or standard costs in the manufacture of a large number of
identical units. i.e.
Flow of Costs in a manufacturing system - ans -
Relevant Cost - ans -A cost that is relevant to a particular decision because it is a future
cost and differs among alternatives
COGM equation - ans -raw material + labor +manufacturing overhead
COGS equation - ans -COGS = BI + P - EI
Marginal Cost - ans -Extra cost of producing one additional unit of production.
Garrison QUESTIONS AND CORRECT ANSWERS
(FULLY SOLVED) | ALREADY GRADED A+
Product/ Inventorial Cost - ans -costs that are a necessary and integral part of
producing the finished product. shows up on the balance sheet until product is sold.
Period Cost - ans -all non-manufacturing costs, deducted as an expense in the
accounting period in which they are incurred.
Variable Cost - ans -a cost that rises or falls depending on how much is produced. they
are constant.
Fixed Cost - ans -a cost that does not change, no matter how much of a good is
produced
Differential Cost - ans -A relevant costs: costs that can be avoided when alternatives
are changed.
Opportunity Cost - ans -Cost of the next best alternative use of money, time, or
resources when one choice is made rather than another
Sunk Cost - ans -Any cost that has already been incurred and that cannot be changed
by any decision made now or in the future. It is never relevant
TQM - ans -Total Quality Management: A process developed by Dr. W. Ed Deming to
increase productivity through quality control techniques.
Theory of Constraints - ans -A specific approach used to identify and manage
constraints in order to achieve the company's goals.
Gross Margin a.k.a. Gross Profit - ans -Net Sales - COGS
Linear Equation - ans -Y= a+bx
Y - total mixed cost
a - fixed costs
b - y intercept
Committed Fixed Cost - ans -Cannot be changed or eliminated with ease.
Discretionary Fixed Cost - ans -Can change/eliminate the fixed cost.
, Contribution Margin - ans -Amount of money available after subtracting your variable
costs. Sales Revenue-Variable Cost
Prime Costs - ans -Direct Materials + Direct Labor
Conversion Costs - ans -Direct Labor + Manufacturing Overhead
Direct Costs - ans -a.k.a. Product Costs, Inventorial Costs
Product Costs - ans -Direct Labor, Direct Materials, Manufacturing Overhead
Inventories - ans -Raw Materials, Work in Progress, FG
Performance Report - ans -A report showing a comparison of projected and actual
amounts for a specific period of time.
High-Low Method - ans -A mathematical method that uses the total costs incurred at the
high and low levels of activity to classify mixed costs into fixed and variable
components.
Step Variable Costs - ans -total cost remains constant within a narrow range of activity,
total cost increases to a new higher cost for the next higher range of activity
Cost of Goods Sold equation - ans -D. Beginning inventory + net purchases - ending
inventory.
Contribution Approach to Income Statement - ans -An income statement format that
organizes costs by their behavior. Costs are separated into variable and fixed
categories rather than being separated into product and period costs for external
reporting purposes.
Process Costing - ans -A cost accounting system in which the costs are collected by
time period and averaged over all the units produced during the period. This system can
be used with either actual or standard costs in the manufacture of a large number of
identical units. i.e.
Flow of Costs in a manufacturing system - ans -
Relevant Cost - ans -A cost that is relevant to a particular decision because it is a future
cost and differs among alternatives
COGM equation - ans -raw material + labor +manufacturing overhead
COGS equation - ans -COGS = BI + P - EI
Marginal Cost - ans -Extra cost of producing one additional unit of production.
