ACCT 2101- test 1 – Flashcards
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T/F Managerial accounting applies to all types of businesses, including service, merchandising, and manufacturing, as well as to all forms of business organizations.
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T
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Which of the following statements is not true about managerial accounting?
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It's highly aggregated
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T/F Planning is the process of keeping the company's activities on track.
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F
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Which of the following are considered to be management's three broad functions?
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Planning, directing and controlling
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T/F Indirect material costs are easily traced to products because of their physical association with the finished product.
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F
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T/F Manufacturing overhead consists of costs that are indirectly associated with the manufacture of the finished product.
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T
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T/F Product costs are costs that are a necessary and integral part of producing the finished product.
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T
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Barry's BarBQue incurred the following costs: $1,400 for ribs, 45 hours of labor to cook the ribs at $10 per hour, $50 for seasoning and sauce, $300 for signs to advertise the ribs, $150 to clean the grill after cooking the ribs, and $100 of administrative costs. How much are total product costs?
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$1,400 + (45*$10) + $50 + $150 = $2,050
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T/F Manufacturers compute cost of goods sold by adding the beginning finished goods inventory to the cost of goods purchased and subtracting the ending finished goods inventory.
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F
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Which of the following would you find on the income statement of a manufacturing company, but not on the income statement of a merchandising company?
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Cost of goods manufactured
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______ are major components that can be easily traced to a specific job
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Direct Materials
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As goods are completed, the cost of goods sols is transferred from Work in Process to this account-
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Finished goods
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Company's should try to seel more of the units with this attribute-
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CONTRUBTION MARGIN PER LIMITED RESOURCE
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The difference between actual or expected sales and break-even sales-
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Margin of safety
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Goods that are on hand and ready for sale-
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FINISHED GOODS INVENTORY
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A supervisor's salar of $2,000 per month-
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FIXED COST
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The relative combination in which a company's products are sold-
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SALES MIX
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COGS is increased (adjusted up) to absorb the amt by which actual expeditures exceeded projected expenditures
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DEBIT BALANCE OF MOH ACCOUNT
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The reason management is interested in utilizing the full capacity of production-
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SPREAD FIXED COSTS OVER A GREATER NUMBER OF UNITS
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T/F Under a job order cost system, costs are assigned to each job or to each batch of goods.
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T
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T/F A process cost system is used when a company manufactures a large volume of unique products.
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F
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T/F The two major steps in the job order cost flow are 1) accumulating the manufacturing costs incurred and 2) assigning the accumulated costs to the work done
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T
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T/F Labor costs are debited to Work in Process Inventory when they are incurred.
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F
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T/F Each entry to Work in Process Inventory must be accompanied by a corresponding posting to one or more job cost sheets.
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T
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T/F The predetermined overhead rate is based on the relationship between actual annual overhead costs and expected annual operating activity.
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F
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T/F Finished Goods Inventory is a control account that controls individual finished goods records in a finished goods subsidiary ledger.
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T
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T/F The cost of goods manufactured schedule shows actual overhead costs rather than applied manufacturing overhead.
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F
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T/F Underapplied overhead means that the overhead assigned to work in process is less than the overhead incurred.
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T
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T/F Fixed costs are costs that remain the same per unit regardless of changes in the activity level.
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F
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T/F The range over which a company expects to operate during a year is called the relevant range of the activity index.
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T
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Why is determination of a relevant range important?
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Cost behavior outside the relevant range may be distorted.
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Mixed costs
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are costs that vary as activity level changes, but do not stay the same per unit like variable cost.
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T/F Cost-volume-profit analysis assumes that changes in activity are the only factors that affect costs.
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T
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T/F- Margin of safety is the difference between actual sales and sales at the break-even point.
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T
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T/F Contribution margin ratio is contribution margin divided by sales.
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T
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Which one of the following describes the break-even point?
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It is the point where total sales equals total variable costs plus total fixed costs.
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T/F Determining the sales mix with limited resources requires determining the products with the highest contribution margin.
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F
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If the contribution per unit is $15 and it takes 3.0 machine hours to produce the unit, the contribution margin per unit of limited resource is:
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$5
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T/F Operating leverage refers to the extent to which a company's net income reacts to a given change in sales.
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T
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T/F Variable costing treats fixed manufacturing overhead as product costs.
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F
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Fixed manufacturing overhead costs are recognized as:
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product costs under absorption costing.
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Which of the following is not an advantage of variable costing?
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It makes it difficult to evaluate the impact of fixed costs on a company's results.
