Question 1

Managerial accounting reports provides

Accepted Answer

decision-making information for internal users. The reports need not follow GAAP, and the reports often focus on the future.

Question 2

controller

Accepted Answer

top management accountant in a company

Question 3

Under Total Quality Management

Accepted Answer

a business strives to improve performance in conjunction with goal setting.

Question 4

Manufacturing or product costs have three components

Accepted Answer

direct materials, direct labor, and manufacturing overhead

Question 5

Direct costs

Accepted Answer

costs that can be traced conveniently and economically to a cost object

Question 6

indirect costs

Accepted Answer

not traced directly to a certain cost object.

Question 7

Selling and general/administration costs

Accepted Answer

nonmanufacturing or period costs that are reported on the Income Statement. These costs are used to generate revenues during the current period.

Question 8

A manufacturer has three inventory accounts

Accepted Answer

Raw Materials, Work-in-Process, and Finished Goods. These inventory accounts are assets that are reported on the Balance Sheet.

Question 9

cost object

Accepted Answer

any product, service, or department which receives allocated costs to determine its cost.

Question 10

Sunk costs

Accepted Answer

past costs that are not relevant for present decision-making purposes.

Question 11

The cost of goods manufacturing

Accepted Answer

cost of the items that are completed and transferred to Finished Goods during a period.

Question 12

job order costing system

Accepted Answer

used by a manufacturer who produces unique or special-order products.

Question 13

Process costing system

Accepted Answer

used by a manufacturer in a continuous flow or assembly line environment.

Question 14

Product costs flow from

Accepted Answer

Raw Materials to Work-in-Process to Finished Goods to Cost of Goods Sold.

Question 15

Direct material costs, direct labor costs, and manufacturing overhead costs are added to ...

Accepted Answer

Work-in-Process account during production.

Question 16

job order cost card

Accepted Answer

used in a job order costing system to record the direct materials, direct labor, and overhead costs associated with a specific job.

Question 17

. Overhead is allocated or assigned or applied to jobs using ...

Accepted Answer

estimated overhead allocation rate.

Question 18

Most companies prepare an estimated allocation rate. This estimated overhead allocation rate is called

Accepted Answer

predetermined overhead rate. It is usually calculated for a year\'s time period.

Question 19

Predetermined Overhead Rate

Accepted Answer

Estimated Factory Overhead/Estimated Allocation Base.

Question 20

The selected allocation base should be associated with the overhead costs

Accepted Answer

Common allocation bases are direct labor hours, direct labor costs, and machine hours.

Question 21

If the applied overhead is greater than the actual overhead, the difference is called

Accepted Answer

overapplied overhead

Question 22

If the actual overhead is larger, the difference is called

Accepted Answer

underapplied overhead

Question 23

A just-in-time (JIT) manufacturing system works to reduce

Accepted Answer

the inventory levels of a manufacturer.

Question 24

Cost allocation is the process of ...

Accepted Answer

assigning indirect costs.

Question 25

cost pool

Accepted Answer

total of costs that is allocated by an allocation base (activity driver)

Question 26

individual costs

Accepted Answer

cost pool should be similar or homogeneous

Question 27

Since the traditional cost allocation systems have used few pools and production bases, product prices are often ...

Accepted Answer

not accurate

Question 28

When an activity-based costing system is implemented, the accuracy of costing is...

Accepted Answer

improved

Question 29

the costs of high volume products ____ while the costs of low volume products ______.

Accepted Answer

decrease, increase

Question 30

A process costing system does ___ use job cost cards.

Accepted Answer

NOT

Question 31

In a process cost system, the product costs flow through...

Accepted Answer

multiple departments

Question 32

Direct materials, direct labor, and overhead costs for each department are accumulated in that department\'s

Accepted Answer

WIP account

Question 33

transferred-in costs

Accepted Answer

costs flow from one department\'s Work-in-Process account to the next department\'s Work-in-Process account.

Question 34

Conversion costs

Accepted Answer

include direct labor and manufacturing overhead costs

Question 35

A process costing system uses

Accepted Answer

equivalent units to calculate an average unit cost.

Question 36

A production cost report provides

Accepted Answer

information summarizing the units for which departments are accountable and the costs charged to the departments. In particular, it reconciles the units and the costs and calculates cost per equivalent unit.

Question 37

Variable costs vs. fixed costs

Accepted Answer

change in total with the level of business activity. The variable cost per unit remains constant. 

do not change in total with the level of business activity. However, the fixed cost per unit varies inversely with changes in the level of business activity.

Question 38

Mixed costs

Accepted Answer

contain both fixed and variable cost components.

Question 39

The high-low method

Accepted Answer

used to estimate the variable and fixed costs in a mixed cost.

Question 40

Full costing (absorption costing) is required by GAAP

Accepted Answer

Direct labor, direct materials, variable manufacturing overhead, and fixed manufacturing overhead are included in the cost of inventory.

Question 41

Variable costing is used internally

Accepted Answer

decision-making purposes. Direct labor, direct materials, and variable manufacturing overhead are included in the inventory costs.

Question 42

When the units produced equals the units sold, the net income under full costing equals the net income under....

When the units produced are greater than the units sold, the net income under full costing is greater than the net income under ...

When the units produced are less than the units sold, the net income under full costing is less than the net income under ....

Accepted Answer

variable costing

Question 43

A variable costing income statement reports

Accepted Answer

contribution margin

Question 44

A full costing income statement reports the...

Accepted Answer

gross margin

Question 45

The full costing method

Accepted Answer

be used by managers to manipulate performance results.

Question 46

An increase in fixed costs or variable costs will______ the breakeven.
An increase in sales price will _____the break-even point.

Accepted Answer

increase, decrease

Question 47

Operating leverage refers to

Accepted Answer

A business with high percentage of fixed costs is considered to have a high operating leverage

Question 48

Decision making is based on incremental analysis which investigates incremental revenues and incremental costs

Accepted Answer

Incremental costs are often called differential costs or relevant costs.

Question 49

Incremental analysis investigates the differences

Accepted Answer

revenues and costs for different decision alternatives.

Question 50

Opportunity costs are

Accepted Answer

benefits that are lost when one alternative is chosen over another alternative.

Question 51

Common costs

Accepted Answer

costs that are not directly traceable to a product line or department. Instead, these costs are allocated to the individual product lines or departments. If one product line or department is dropped, the common costs are allocated to the remaining product lines or departments.

Question 52

A product line should be dropped only when

Accepted Answer

the total net income of a business will increase if the product line is eliminated.

Question 53

When there is a resource constraint, a business should strive for the

Accepted Answer

highest contribution margin per unit of the constraint.

Question 54

A supplier or vendor is paid for the cost of production plus a fixed amount

Accepted Answer

cost plus amount

Question 55

A budget is

Accepted Answer

formal document that outlines a financial plan for achieving goals. A business is not required to prepare budgets.

Question 56

Budgets are used to

Accepted Answer

increase communication and coordination and to evaluate performance.

Question 57

When budgets are prepared using zero-based budgeting

Accepted Answer

all budgeted amounts are justified for each budget period.

Question 58

The master budget is

Accepted Answer

collection budgets such the sales budget, the production budget, and the direct materials budget.

Question 59

The sales or revenue budget

Accepted Answer

first budget prepared in the master budget sequence

For a manufacturer, the production budget is the second budget prepared

Question 60

decentralized business gives decision-making authority to

Accepted Answer

managers of ts subunits

Question 61

2 advantages of decentralization

Accepted Answer

1.better information at the manager level 2.quicker response time at the manager level
motivates and trains managers

Question 62

2 disadvantages of decentralization

Accepted Answer

1.duplication of activities at the different subunits 
2.a lack of goal congruence.

Question 63

Under responsibility accounting, managers are responsible for...

Accepted Answer

revenues and costs that are under their control (controllable costs)

Question 64

The subunits of a business often are referred to as

Accepted Answer

responsibility centers
3 most common:
cost centers, profit centers, and investment centers.

Accounting 2 – Flashcards

Unlock all answers in this set

Haven't found what you were looking for?

Search for samples, answers to your questions and flashcards