Garrison, Chapter 1, Managerial Accounting Questions and Answers with complete solution

Committed fixed Costs - ️️Investments in facilities, equipment, and basic organizational structure that can't be significantly reduced even for short periods of time wihtout making fundamental changes. Contribution Approach - ️️An income statement format that organizations 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. Activity Base - ️️A measure of whatever causes the incurrence of a variable cost. For example, the total cost of surgical gloves in a hospital will increase as hte number of surgeries increases. Therefore, the number of surgeries in the activity base that explaines th total cost of surgical gloves. Administrative Costs - ️️All executive, organizational, clerical costs associated with the general management of an organization rather than with manufacturing or selling. Common costs - ️️A cost that is incurred to support a number of cost objects but that cannot be traced to them individually. Contribution Margin - ️️The amount remaining from sales revenues afer all variable expenses have been deducted. Conversion Cost - ️️Direct Labor Cost Plus Manufacturing Overhead Cost Cost Behavior - ️️The way in which a cost reacts to changes in the level of activity Cost Structure - ️️The relative proportion of fixed, variable, and mixed costs in an organization. Differential Costs - ️️A future costs that differs between an two alternatives Differential Revenue - ️️A future revenue that differs between two alernatives Direct Cost - ️️A cost that can be easily an conveniently traced to a specified cost object.Direct Labor - ️️Factory labor costs that can be easily traced to individual units of product.. Discretionary Fixed Costs - ️️Those fixed costs that arise from annual decisions by management to spend on certain fixed cost items, such as advertising and research.