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