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

One of the important differences between traditional and activity-based costing systems is _____.

_____ is a name for a system that 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.

Activity?based accounting is a system that 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.

Examples of service departments include personnel, legal, and corporate accounting.

The following information was extracted from the accounting records of Lowe Company: Direct materials purchased \ 80,000 Direct material s used 76,000 Direct manufacturing labor costs 10,000 Indirect manufacturing labor costs 12,000 Sales sal aries 14,000 Other factory expenses 22,000 Selling and administrative expenses 20,000 The finished goods inventory was $0 at the beginning of the period and $30,000 at the end of the period.The cost of goods sold is _____.

Cost systems initially record costs, then group costs in different ways to make decisions.

Costs that cannot be identified specifically and exclusively with a given cost objective in an economically feasible way

Product costs only become an expense when sold.

Period costs become expenses during the current period.

Benchmarking is the continuous process of comparing products, services, and activities to the average industry standards.

_____ is are) not an inventory account.

Determining the key components of the Activity-Based Cost system is the first step of design of an ABC system.

For a manufacturing company, product costs first appear on the income statement, then are transferred to the balance sheet.

Collecting relevant data concerning costs and the physical flow of the cost-driver units among resources and activities is the third step of design of an ABC system.

Cost drivers are usually expressed in dollars.

Tracing or allocating costs to one or more cost objectives such as activities, processes, departments, customers, or products

Product costs first become part of the inventory on hand.

The application of computer technology has increased the number and amount of indirect costs.

Anything for which a separate measurement of costs is desired.Examples include departments, products, activities, and territories

_____ would appear on an income statement of both a retailer and a manufacturer.