Purposes of Managerial Accounting - CORRECT ANSWER- ✔✔Provide information for
decision making and planning
Assist managers in directing and controlling operations
Motivate managers/employees to accomplish organizations' goals
Measure performance against goals
Assess competitive position
,direct materials - CORRECT ANSWER- ✔✔Those materials that become an integral part of
the finished product and whose costs can be conveniently traced to the finished product
direct labor - CORRECT ANSWER- ✔✔Those factory labor costs that can easily be traced to
individual
units of product
differential cost - CORRECT ANSWER- ✔✔Any cost that differs between alternatives in a
decision-making
situation. In managerial accounting, this term is synonymous with
avoidable cost and relevant cost (
fixed cost - CORRECT ANSWER- ✔✔A cost that remains constant, in total, regardless of
changes in the
level of activity within the relevant range. If a fixed cost is expressed on a per unit
basis, it varies inversely with the level of activity
indirect labor - CORRECT ANSWER- ✔✔The labor costs of caretakers, supervisors,
materials handlers,
and other factory workers that cannot conveniently be traced directly to particular
products
indirect materials - CORRECT ANSWER- ✔✔Small items of material such as glue and nails.
These items
may become an integral part of a finished product but are traceable to the product
only at great cost or inconvenience
manufacturing overhead - CORRECT ANSWER- ✔✔All costs associated with
manufacturing except
direct materials and direct labor
NOT directly traced to individual jobs or batched
, overhead application - CORRECT ANSWER- ✔✔The process of assigning manufacturing
overhead costs to production jobs
opportunity costs - CORRECT ANSWER- ✔✔The potential benefit that is given up when
one alternative
is selected over another
period costs - CORRECT ANSWER- ✔✔Those costs that are taken directly to the profit and
loss account as
expenses in the period in which they are incurred or accrued; such costs consist of
selling (marketing) and administrative expenses
product costs - CORRECT ANSWER- ✔✔All costs that are involved in the purchase or
manufacture of
goods. In the case of manufactured goods, these costs consist of direct materials,
direct labor, and manufacturing overhead.
sunk costs - CORRECT ANSWER- ✔✔Any cost that has already been incurred and that
cannot be changed
by any decision made now or in the future
variable costs - CORRECT ANSWER- ✔✔A cost that varies, in total, in direct proportion to
changes in the
level of activity. A variable cost is constant per unit
Example of Direct Labor - CORRECT ANSWER- ✔✔Cost of salaries, wages, and fringe
benefits for
personnel who work
directly on the product.
Example of Direct Materials - CORRECT ANSWER- ✔✔Cost of raw material
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