106434
Question 1
Question
Define direct materials
Answer
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Integral part of product that can be traced directly to it.
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Anything that is not an indirect material
Question 2
Question
Define direct labour
Answer
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Easily traced to individual units of product.
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Anything that does not include indirect labour
Question 3
Question
Define manufacturing costs
Answer
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Cannot be traced to individual product, includes indirect materials and indirect labour.
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Includes manufacturing costs
Question 4
Question
Define non-manufactuing costs
Answer
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Includes marketing and selling costs to receive the order and the delivery and also administrative costs
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Not manufacturing costs
Question 5
Question
Product costs
Answer
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They are expenses in the period in which the product is sold.
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cost of products
Question 6
Question
Period costs
Answer
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They are treated as expenses in the period they are incurred.
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costs of the period
Question 7
Question
Define cost behaviour
Answer
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How cost will react to changes in level of business activity
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variable and fixed costs
Question 8
Question
Cost behaviour of variable costs
Answer
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Varies in direct proportion to changes in level of activity
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variable
Question 9
Question
Cost behaviour of fixed costs
Answer
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Costs remain constant regardless of changes in level of activity
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fixed
Question 10
Question
What are direct costs?
Answer
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Costs that can be easily traced to unit of product
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directly
Question 11
Question
What are indirect costs?
Answer
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Costs that cannot be traced to product, common costs have a number of objective so cannot be traced to an individual.
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not direct costs
Question 12
Question
What is differential costs/revenue?
Answer
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Difference between cost/revenue between alternatives. Increase in amount is incremental, decrease in amount is decremental.
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difference between cost products
Question 13
Question
What is marginal revenue or marginal cost?
Answer
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Amount attained by one more unit of product
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marginal amount
Question 14
Question
What are opportunity costs?
Answer
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Potential benefit that is given up when one alternative is selected over another
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costs made from opportunities
Question 15
Question
What are sunk costs?
Answer
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Cannot be changed by any decision as they are not seen as differential costs.
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costs that have decreased
Question 16
Question
Contribution Margin
Answer
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Is the amount remaining from sales revenue- variable expenses
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The margin that is contributed
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