A company which manufactures custom-made machinery routinely incurs sizable telephone costs in the process of taking orders from customers. What is the proper classification of this cost?
Differential costs are? (CMA adapted)
The difference in total costs that result from selecting one choice instead of another.
The relevance of a particular cost to a decision is determined by the? (CMA adapted 12/96)
Potential effect on the decision.
Pete's Pizza Place wishes to determine which of its costs will vary with the number of pizzas made. The Pizza Place has four pizza makers and ten other employees who take orders from customers and perform other tasks. The four pizza makers and the other employees are paid an hourly wage. How would one classify (1) the wages paid to the pizza makers and other employees and (2) materials (e.g.,
cheeses, sauce, etc.) used to make the pizza? The employees' wages would be considered a ______, while the materials to make the pizza are a ______.
variable cost; variable cost
Which of the following accounts would be a period cost rather than a product cost?
a) Maintenance on factory machines
b) Production manager's salary
c) Freight out
d) Depreciation on manufacturing machinery
e) Direct labor
c) Freight out
The field of accounting that depends on generally accepted accounting principles (GAAP) is called
The Cost of Goods Manufactured Statement summarizes the periodic production operations for a company. On the face of that schedule are intermediate calculations supporting the cost of goods manufactured figure. The beginning Work-in-Process inventory plus the total of the manufacturing costs equals
total work-in-process during the period.