Cost Management Techniques Quiz

Costs directly associated with producing a product, such as raw materials and direct labor.

Costs that cannot be directly linked to the production of a specific product, such as marketing, administration, and research and development.

Costs directly related to the materials used in making a product.

Costs directly related to the labor involved in making a product, like wages and salaries of workers.

Costs incurred in converting direct materials into finished goods.

The cost of direct materials and direct labor combined.

Costs incurred in managing a company, but not directly related to production, like marketing and administrative expenses.

Accounting classifications that categorize costs based on how they are related to the production process.

Costs that change based on how much is produced, such as the electricity used to run a factory.

Costs that stay the same, regardless of the level of production, such as the rent paid for a factory.

The costs of labor directly involved in producing a product, such as the wages of assembly line workers.

A cost allocation method used by management accountants to assign costs based on a specific activity or action.

The item that is the target of cost measurement, such as a product, a service, or a customer.

Costs associated with the manufacturing process that are not directly related to direct materials or direct labor. They include costs of production, utilities, and factory rent.

Costs associated with selling and supporting a business. These costs are not directly tied to producing goods or services.

Costs incurred for research and development. These costs are not directly tied to producing goods or services but are aimed at developing new products or processes.

A method used to analyze the relationship between revenues, costs, and profit. It helps managers understand how changes in price, volume, cost structure, or product mix affect their bottom line.

The point where total revenue equals total costs, resulting in zero profit or loss.

A specific profit amount that a business aims to achieve.

Analyzing how changes in variables like price, volume, cost structure, or product mix affect profitability.

Costs that change in relation to changes in the production or sale of goods.

Costs that remain constant regardless of the production or sale of goods.

The mix of different products or services that a company sells.

CVP analysis relies on some assumptions that should be kept in mind while using it.

In business, this refers to the uncertainty about the probability of a future event happening or the value it will have.

A type of probability distribution where each event has a specific probability of occurring. For example, flipping a coin has a 50% chance of landing on heads or tails.

A tool used to determine the average outcome of an event based on its probability. It's calculated by multiplying each possible outcome by its probability and then summing the results.

Used in decision-making, these tables match different actions a company can take with the possible events they can't control, showing the potential payoff for each combination.

The uncertain factors that can influence a decision, such as natural events or the actions of competitors.

The difference between the actual outcome and the expected value. It measures how much the outcome deviates from the average.

Costs directly tied to a specific product and easily traceable.

Costs that are not easily traceable to a specific product and are often incurred across multiple products.

Spoilage that is considered a normal part of production and is difficult to avoid, included as part of manufacturing overhead.

Spoilage that is unusual or unexpected, treated as a separate cost or allocated to specific jobs.

A system for tracking costs associated with specific jobs or projects, distinguishing normal spoilage from abnormal spoilage.