Exam 4: Cost Management Systems and an Introduction to Activity-Based Costing

Direct materials often do not include minor items such as tacks or glue.

_____ is the process of measuring products, services, and activities against the best levels of performance.

For many organizations, the single largest cost is advertising.

Where a specific product is the cost object, the wages of a security guard would probably be classified as an) _____.

Eventually, all direct service department costs will become indirect production department costs.

_____ are a cost objective.

This system first accumulates overhead costs for each of the activities of an organization, and then assigns the costs of activities to the products, services, or other cost objects that caused that activity

A cost accounting system typically includes two processes: cost allocation and cost determination.

Most firms' financial statements include research and development, and customer service costs as selling and administrative costs.

The cost of goods manufactured line on the income statement of a manufacturer is the equivalent to the _____ line on a retailer's income statement.

The system that first measures the resources used in performing the organization's activities and then assesses the effects on costs of changes in those activities

Managers have greater confidence in the accuracy of costs of products and services reported by activity-based systems because _____.

_____ need aggregate measures of inventory value and cost of goods sold.

Determining the relationships among cost objects, activities, and resources is the second step of design of an ABC system.

Accountants initially record costs by category.

Goods undergoing the production process but not yet fully completed

An example of a strategic decision is deciding on the optimal product and customer mix.

The finished goods inventory account is only found on the balance sheet.

An example of an unallocated cost is factory supervisor salaries.

Companies try to maximize non-value-added costs.