Activity Base - CORRECT ANSWER ️ a measure of
whatever causes the incurrence of a variable cost
Activity Base (example) - CORRECT ANSWER ️ The
total cost of surgical gloves in a hospital will increase as
the number if surgeries increases. Therefore, the number
of surgeries is the activ...
Activity Base - CORRECT ANSWER ✔️ a measure of
whatever causes the incurrence of a variable cost
Activity Base (example) - CORRECT ANSWER ✔️ The
total cost of surgical gloves in a hospital will increase as
the number if surgeries increases. Therefore, the number
of surgeries is the activity base that explains the total cost
of surgical gloves
Administrative Costs - CORRECT ANSWER ✔️ All
executive, organizational, and clerical costs associated
with the general management of an organization rather
that manufacturing or selling
Committed fixed costs - CORRECT ANSWER ✔️
investments, equipment, and basic organizational
structure that cant be significantly reduced even for a short
period of time without making fundamental changes
,common cost - CORRECT ANSWER ✔️ a cost that is
incurred to support a number of cost objects but that
cannot be traced to them individually.
Common cost (example) - CORRECT ANSWER ✔️ The
Wage cost of the pilot of a 747 airliner is a common cost of
all the passengers on the aircraft. without the pilot, there
would be no flight and no passengers. but no part of the
pilots wage is caused by any one passenger taking the
flight.
Contribution approach - CORRECT ANSWER ✔️ 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.
Contribution Margin - CORRECT ANSWER ✔️ The
amount remaining from sales revenues after all variable
expenses have been deducted.
Conversion Cost - CORRECT ANSWER ✔️ direct labor
cost plus manufacturing overhead cost
cost behavior - CORRECT ANSWER ✔️ the way in which
a cost reacts to changes in the level of activity
, Cost object - CORRECT ANSWER ✔️ anything for which
cost data are desired
Examples of cost objects - CORRECT ANSWER ✔️
products, customers, geographic regions, and parts of the
organization such as departments or divisions
Cost structure - CORRECT ANSWER ✔️ the relative
proportion of fixed, variable, and mixed costs in an
organization
Differential cost - CORRECT ANSWER ✔️ a difference in
cost between two alternatives
Differential revenue - CORRECT ANSWER ✔️ future
revenue that differs between any two alternatives
Direct cost - CORRECT ANSWER ✔️ a cost that can be
easily and conveniently traced to a specified cost object
Direct labor - CORRECT ANSWER ✔️ factory labor costs
that can be easily traced to individual units of product
Direct labor is also called - CORRECT ANSWER ✔️
Touch labor
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