ACC 312 FINAL STUDY GUIDE
4 basic management activities - Answers - decision-making, planning, directing
operational activities, controlling
When are period costs recognized? - Answers - in the period that they are incurred
types of period costs - Answers - research and development, selling and administration
examples of selling costs - Answers - salaries, commissions, and travel costs of sales
personnel and the costs of advertising and promotion
3 types of manufacturing costs - Answers - direct material, direct labor, and
manufacturing overhead
3 types of manufacturing overhead - Answers - indirect labor, indirect costs, and other
manufacturing costs (depreciation of plant and equipment, property taxes, insurance,
utilities, costs of operating service departments)
conversion costs - Answers - direct labor and overhead costs since they are the costs of
"converting" raw material into finished products
prime costs - Answers - direct material and direct labor
cost drivers - Answers - the activities that cause costs to be incurred
what remains the same with variable costs? - Answers - per unit cost
what remains the same with fixed costs? - Answers - total cost
responsibility accounting - Answers - cost management is facilitated by tracing costs to
the department or work center in which the cost was incurred
cost object - Answers - an entity, such as a particular product, service, or department, to
which a cost is assigned
activity accounting - Answers - trace as many costs as possible directly to the activities
that cause them to be incurred
non-value-added costs - Answers - costs of activities that can be eliminated without
deterioration of product quality, performance, or perceived value
, sunk cost - Answers - costs that have been incurred in the past; do not affect future
costs and cannot be changed by any current or future action
marginal cost - Answers - extra cost incurred when one additional unit is produced
engineered cost - Answers - bears a definitive physical relation to the activity measure
committed cost - Answers - cost that results from an organization's ownership or use of
facilities and its basic organization structure
discretionary cost - Answers - arises as a result of a management decision to spend
money for some purpose
common cost drivers - Answers - production quantity, direct labor hours, machine hours
examples of variable costs - Answers - direct material, direct labor
examples of fixed costs - Answers - depreciation, property taxes, manager's salary
account-classification method - Answers - cost-estimation method involving a careful
examination of the ledger accounts for the purpose of classifying each cost as variable,
fixed, or semi-variable
visual-fit method - Answers - method of cost estimation (usually for semi-variable costs)
that involves plotting recent observations of the cost at various activity level within the
relevant range
high-low method - Answers - high and low ACTIVITY LEVELS are chosen from data
set; difference between the costs/difference between highest and lowest activity levels
engineering method - Answers - studying the process that results in cost incurrence;
time-consuming and expensive, but they provide highly accurate estimates of cost
behavior
learning curve - Answers - as labor time declines, labor cost declines as well because
production efficiency increases with experience
experience curve - Answers - same as learning curve but includes costs other than
direct labor
cost-volume-profit analysis - Answers - summarizes the effects of changes in an
organization's volume of activity on its costs, revenue, and profit
total contribution margin - Answers - total revenue - total variable expenses
break-even volume in units - Answers - fixed expenses/UCM
4 basic management activities - Answers - decision-making, planning, directing
operational activities, controlling
When are period costs recognized? - Answers - in the period that they are incurred
types of period costs - Answers - research and development, selling and administration
examples of selling costs - Answers - salaries, commissions, and travel costs of sales
personnel and the costs of advertising and promotion
3 types of manufacturing costs - Answers - direct material, direct labor, and
manufacturing overhead
3 types of manufacturing overhead - Answers - indirect labor, indirect costs, and other
manufacturing costs (depreciation of plant and equipment, property taxes, insurance,
utilities, costs of operating service departments)
conversion costs - Answers - direct labor and overhead costs since they are the costs of
"converting" raw material into finished products
prime costs - Answers - direct material and direct labor
cost drivers - Answers - the activities that cause costs to be incurred
what remains the same with variable costs? - Answers - per unit cost
what remains the same with fixed costs? - Answers - total cost
responsibility accounting - Answers - cost management is facilitated by tracing costs to
the department or work center in which the cost was incurred
cost object - Answers - an entity, such as a particular product, service, or department, to
which a cost is assigned
activity accounting - Answers - trace as many costs as possible directly to the activities
that cause them to be incurred
non-value-added costs - Answers - costs of activities that can be eliminated without
deterioration of product quality, performance, or perceived value
, sunk cost - Answers - costs that have been incurred in the past; do not affect future
costs and cannot be changed by any current or future action
marginal cost - Answers - extra cost incurred when one additional unit is produced
engineered cost - Answers - bears a definitive physical relation to the activity measure
committed cost - Answers - cost that results from an organization's ownership or use of
facilities and its basic organization structure
discretionary cost - Answers - arises as a result of a management decision to spend
money for some purpose
common cost drivers - Answers - production quantity, direct labor hours, machine hours
examples of variable costs - Answers - direct material, direct labor
examples of fixed costs - Answers - depreciation, property taxes, manager's salary
account-classification method - Answers - cost-estimation method involving a careful
examination of the ledger accounts for the purpose of classifying each cost as variable,
fixed, or semi-variable
visual-fit method - Answers - method of cost estimation (usually for semi-variable costs)
that involves plotting recent observations of the cost at various activity level within the
relevant range
high-low method - Answers - high and low ACTIVITY LEVELS are chosen from data
set; difference between the costs/difference between highest and lowest activity levels
engineering method - Answers - studying the process that results in cost incurrence;
time-consuming and expensive, but they provide highly accurate estimates of cost
behavior
learning curve - Answers - as labor time declines, labor cost declines as well because
production efficiency increases with experience
experience curve - Answers - same as learning curve but includes costs other than
direct labor
cost-volume-profit analysis - Answers - summarizes the effects of changes in an
organization's volume of activity on its costs, revenue, and profit
total contribution margin - Answers - total revenue - total variable expenses
break-even volume in units - Answers - fixed expenses/UCM
