AC201Final – Flashcards
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Managerial accounting is different from financial accounting in that:
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Managerial accounting includes many projections and estimates whereas financial accounting has a minimum of predictions.
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A direct cost is a cost that is:
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Traceable to a cost object.
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An opportunity cost is:
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A cost of potential benefit lost.
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Labor costs that are clearly associated with specific units or batches of product because the labor is used to convert raw materials into finished products are called:
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Direct labor.
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Costs that are incurred as part of the manufacturing process but are not clearly associated with specific units of product or batches of production, including all manufacturing costs other than direct material and direct labor costs, are called:
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Factory overhead.
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The salary paid to the supervisor of an assembly line would normally be classified as:
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Indirect labor.
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Raw materials that physically become part of the product and can be treated to specific units or batches of product are called:
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Direct materials.
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The production activities for a customized product represent a:
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Job.
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A job order cost accounting system would best fit the needs of a company that makes:
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Custom machinery.
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A type of manufacturing cost that produces customized products or services for each customer is called:
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Job order manufacturing.
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The rate established prior to the beginning of a period that relates estimated overhead to an allocation factor such as estimated direct labor and that is used to assign overhead cost to jobs is the:
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Predetermined overhead rate.
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Which of the following would NOT be considered a product cost? Direct labor costs Factory supervisor's salary Factory line worker's salary Cost accountant's salary Manufacturing overhead costs
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Cost accountant's salary
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From an ABC perspective, what causes costs to be incurred?
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Activities
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What are 3 advantages of activity-based costing over traditional volume-based allocation methods?
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More accurate product costing, more effective cost control, and better focus on the relevant factors for decision making.
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A company's normal operating range, which excludes extremely high and low volumes that are not likely to occur, is called the:
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Relevant range.
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A target income refers to:
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Income planned for a future period.
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The difference between sales price per unit and variable cost per unit is the:
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Contribution margin per unit.
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When graphing cost-volume-profit data on a CVP chart:
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Units are plotted on the horizontal axis; costs on the vertical axis.
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The ratio of the sales volume for the various products sold by a company is called the:
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Sales mix.
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Regarding overhead costs, as volume increases:
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Unit fixed cost decreases, unit variable cost remains constant.
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A formal statement of future plans, usually expressed in monetary terms, is:
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Budgeting
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Operating budgets include all of the following except the: Sales budget Selling expense budget Cash budget Merchandise purchases budget General and administrative expense budget
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Cash budget
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A plan that shows the expected cash inflows and cash outflows during the budget period, including receipts from loans needed to maintain a minimum cash balance and repayments of such loans, is called:
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Cash budget.
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A managerial accounting report that presents predicted amounts of the company's assets, liabilities, and equity as the end of the budget period is called:
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Budgeted balance sheet
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In preparing a budgeted balance sheet, the amount for Accounts Receivable is primarily determined from:
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The sales budget.
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The costs that should be incurred under normal conditions to produce a specific product or component or to perform a specific service are:
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Standard costs.
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The difference between actual and standard cost caused by the difference between the actual quantity and the standard quantity is called the:
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Quantity variance.
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The difference between the actual cost incurred and the standard cost is called the:
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Cost variance.
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Static budget is another name for:
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Fixed budget.
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Regarding overhead costs, as volume decreases:
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Unit fixed cost increases, unit variable cost remains constant.
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The most useful evaluation of a manager's cost performance is based on:
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Controllable costs.
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Which of the following would NOT appear on a responsibility accounting performance report? Actual costs for a period Variance from the budget Budgeted costs for a period Controllable costs Uncontrollable costs
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Uncontrollable costs.
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A cost that cannot be avoided or changed because it arises from a past decision, and is irrelevant to future decisions, is called:
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Sunk cost.
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An additional cost that is incurred only if a particular action is taken:
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Incremental cost.
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A company paid $200,000 ten years ago for a specialized machine that has no salvage value and is being depreciated at the rate of $10,000 per year. The company is considering using the machine in a new project that will have incremental revenues of $28,000 per year and annual cash expenses of $20,000. In analyzing the new project, the $10,000 depreciation on the machine is an example of a(n):
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Sunk cost.
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To determine a product selling price based on the total cost method, management should include:
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Total production and non-production costs plus a markup.
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What decision rule should be followed when deciding if a business segment should be eliminated?
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Segments with revenues that are less than avoidable expenses should be considered for elimination.
