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Match the Following Descriptions with the Appropriate Term

Question 120

Matching

Match the following descriptions with the appropriate term.

Premises:

Responses:

Revenues minus variable costs

Absorption costing

Sales minus the variable cost of goods sold

Controllable fixed costs

Costs that the segment manager can control

Differential cost

Potential earnings or benefits that are given up because a certain course of action is take

Sunk cost

The accounting procedure whereby only variable costs are included in the cost of goods manufactured, and fixed manufacturing costs are written off as expenses in the period in which they are incurred

Manufacturing margin

The difference in cost between one alternative and another

Opportunity cost

A cost that has been incurred and will not change as a result of a decision

Contribution margin

The manufacturing margin minus variable operating expenses

Direct costing

Costs not directly traceable to a specific segment of a business

Common costs

The accounting procedure whereby all manufacturing costs, including fixed costs, are included in the cost of goods manufactured

Marginal income

Premises:

Revenues minus variable costs

Sales minus the variable cost of goods sold

Costs that the segment manager can control

Potential earnings or benefits that are given up because a certain course of action is take

The accounting procedure whereby only variable costs are included in the cost of goods manufactured, and fixed manufacturing costs are written off as expenses in the period in which they are incurred

The difference in cost between one alternative and another

A cost that has been incurred and will not change as a result of a decision

The manufacturing margin minus variable operating expenses

Costs not directly traceable to a specific segment of a business

The accounting procedure whereby all manufacturing costs, including fixed costs, are included in the cost of goods manufactured

Responses:

Absorption costing

Controllable fixed costs

Differential cost

Sunk cost

Manufacturing margin

Opportunity cost

Contribution margin

Direct costing

Common costs

Marginal income

Correct Answer:

Premises:

Responses:

Revenues minus variable costs

Sales minus the variable cost of goods sold

Costs that the segment manager can control

Potential earnings or benefits that are given up because a certain course of action is take

The accounting procedure whereby only variable costs are included in the cost of goods manufactured, and fixed manufacturing costs are written off as expenses in the period in which they are incurred

The difference in cost between one alternative and another

A cost that has been incurred and will not change as a result of a decision

The manufacturing margin minus variable operating expenses

Costs not directly traceable to a specific segment of a business

The accounting procedure whereby all manufacturing costs, including fixed costs, are included in the cost of goods manufactured