question

Planning

answer

setting goals and objectives

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Directing

answer

overseeing day to day operations

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Controlling

answer

evaluating results of operation

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when a manager compares actual performance to the budget, this falls under the ________ category

answer

controlling

question

When management compares a number of different alternatives, this falls under the _________ category

answer

planning

question

Overseeing day to day operations falls under the ______category.

answer

directing

question

______ gathers, summarizes, and reports on the financial impact of changes to business operations. a. controlling b. managerial accounting c. planning d. directing

answer

b. managerial accounting

question

Which of the following is being fulfilled when management compares the budget to the actual results? a. controlling b. planning c. directing d. adjusting

answer

a. controlling

question

Which of the following positions typically manages the daily operations of a company? a. the stockholders b. the controller c. the board of directors d. The CEO

answer

D. The CEO

question

Which of the following persons or groups would be least likely to receive detailed managerial accounting reports? a. sales territory managers b. CEO c. current shareholders d. plant managers

answer

c. current shareholders

question

Financial vs. Managerial accounting -primary users -primary accounting product

answer

Managerial accounting is internal users such as managers. Financial accounting is external users, such as creditors, stockholders, and government regulators. The primary accounting product in managerial is any internal accounting report deemed worthwhile by management. In Financial it is Financial statements.

question

The focus of management accounting is on a. external reporting b. auditing c. tax preparation d. internal reporting

answer

d. internal reporting

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What is the name of the professional association for managerial accountants?

answer

Institute of management accountants

question

The CFO is the person responsible for the day to day operations of the company. True or False

answer

False

question

Management accountants spend more time planning, analyzing, and interpreting accounting data and less time recording routine accounting transactions than they have in the past. True or False

answer

True

question

The IMA is the professional for managerial accountants True or False

answer

True

question

3 Major themes of managerial accounting

answer

1) information and incentives 2) behavioral issues 3) costs and benefits

question

chief operating officer

answer

responsible for the company's operations, such as research and development, production, and distribution

question

treasurer

answer

reports directly to the CFO. Responsible for raising capital by issuing stocks and bonds, and for investing the company's excess cash

question

controller

answer

reports to CFO. The head accountant, responsible for financial, tax, and managerial accounting functions

question

The _____ is made up of members of the board of directors

answer

audit committee

question

The board of directors hires the ___

answer

CEO

question

the _____ is responsible for general financial accounting, managerial accounting, and tax reporting

answer

controller

question

EZ Rider motorcycles is considering whether to expand into Germany. If gas prices increase, the company expects more interest in fuel-efficient transportation such as motorcycles. As a result, the company is considering setting up a motorcycle assembly plant. EZ Rider motorcycles estimates it will cost $850,000 to convert an existing building to motorcycle production. Workers will need training, at a total cost of $65,000. The additional cost to organize the business and to establish relationships is estimated to be $150,000. The CEO believes the company can earn sales profits from this expansion of $1,624,000. Use the cost-benefit analysis to determine whether they should expand to Germany

answer

Expected Benefits Expected profits from expansion sales $1,624,000 Expected Costs Conversion of building to manufacturing plant 850,000 Workforce training 65,000 Organizing business and establishing relationships 150000 Total expected costs (1065000) Net expected benefits $559,000

question

Service companies

answer

in business to sell intangible services, such as health care, insurance, banking, and consulting, rather than tangible products. -NO inventory - All costs are period costs (no product costs), no COGS

question

Merchandising companies

answer

like Walmart and JCPenny resell tangible products they buy from suppliers. -one inventory account

question

Manufactoring companies

answer

use labor, plant, and equipment to covert raw materials into new finished products -3 inventory accounts.

question

Cost object

answer

Anything for which managers want a separate measurement of cost Individual units Different Models Alternative Marketing Strategies Geographic segments of a business Departments "Green" initiatives

question

Direct cost

answer

A direct cost can be traced to a cost object -Direct Materials -Direct Labor - touch labor, the cost of employees who are directly involved with the manufacturing process -Precise Allocation

question

indirect cost

answer

An indirect cost has to be assigned or allocated to a cost object (overhead is a common example), less precise allocation

question

Direct cost vs. indirect cost

answer

direct costs are traced back to a cost object, while indirect costs are allocated

question

What is overhead?

answer

Utilities Depreciation Rent Production Manager's Salary Security Janitorial Staff Insurance

question

Inventoriable products

answer

-Only the costs incurred during production (manufacturer) or purchase (if merchandiser) -Inventoriable product costs are treated as an asset (inventory) until the product is sold -When the product is sold, these costs are removed from inventory and expensed as cost of goods sold (These costs are capitalized and included as inventory until final products are sold. When products are sold, these costs are reported on the income statement as Cost of Goods Sold)

question

Direct Materials

answer

convert raw materials into finished products. Direct materials are the primary raw materials that become a physical part of the finished product. Ex- A car's direct materials would be steel, tires, engines, upholstery, carpet, dashboard instruments, etc.

question

Direct Labor

answer

the cost of compensating employees who physically convert raw materials into the company's products. At a car company, the labor includes wages and benefits of machine operators and technicians who assemble the parts.

question

Manufactoring overhead (MOH)

answer

inlcludes all manufactoring costs other than direct materials and direct labor. Includes all indirect manufacturing costs

question

What do indirect manufacturing costs include?

answer

Indirect materials- materials not easily traced to individual units, janitorial supplies,oil, and lubricants for the machine or any physical components of the finished products that are very inexpensive. Indirect Labor-salaries, wages, and benefits of the plan forklift operators, plant security officers, plant janitors, and plant supervisors. Other indirect Costs- plant-related costs as insurance and depreciation on the plant and plant equipment, plant property taxed, plant repairs and maintenance, and plant utilities

question

Period cost

answer

everything that is not a product cost (operating expenses). They are immediately reported on the income statement - Include selling and marketing costs (including shipping expenses incurred to ship final products to customers) -Include all administrative expenses like the salaries of the office staff (accountants, marketing team, CEO).

question

Prime costs vs. Conversion costs

answer

Prime costs refer to the combination of direct material costs. Conversion costs refer to the combination of direct labor and manufacturing overhead. Prime costs=direct materials+direct labor Conversion costs=manufacturing overhead+direct labor

question

Relevant vs. Irrelevant costs

answer

Relevant costs include differential costs (costs that are different between two alternatives) and controllable costs. Irrelevant costs include uncontrollable costs, sunk costs, and costs that are the same across two alternatives

question

Fixed costs vs. Variable costs

answer

Variable costs are constant per unit, but changes in total as product levels change. Fixed costs are constant in total across all activity within the relevant range.

question

Marginal Cost

answer

Is the cost of making one more unit Because total fixed costs will not change, the marginal cost is the same as the variable cost

question

_______ buy products in bulk from producers, marks them up and resell to retailers

answer

wholesalers

question

Most for-profit organizations can be described as being in one (or more) of three categories:

answer

merchandising companies, service companies, and manufacturing companies

question

Honda motors converts ______ into finished products

answer

raw materials

question

_______ for a company such as Staples includes all of the costs necessary to purchase products and get them onto the store shelves

answer

inventory (merchandise)

question

Lands End, Sears, and LL Bean are examples of

answer

merchandising companies

question

An insurance company, a health care provider, and a bank are all examples of

answer

service companies

question

________ is composed of goods partially through the manufacturing process (not yet finished).

answer

Work in process inventory

question

_______ report three types of inventory on the balance sheet

answer

manufactoring companies

question

_______ typically do not have an inventory account

answer

service companies

question

Direct or indirect cost? a. managers of juniors department b. cost of juniors clothing c. cost of radio advertising for the store d. cost of bags used to purchase at the main registers for the store e. junior department sales clerk f. electricity for the building g. depreciation of the building h. cost of hangers used to display the clothing in the store i. the Medina Kohl's store manager's salary j. juniors clothing buyers salaries( these buyers buy for all the juniors departments of kohl stores) k. cost of costume jewelry on the mannequins in the juniors department l. cost of the security staff at the medina store

answer

a.direct. b. direct c. indirect d. indirect e. direct f. indirect g. indirect h. indirect i. indirect j. indirect k. direct l. indirect

question

Fixed or viable cost a. shipping costs for amazon.com b. cost of fuel used for a national trucking company c. sales commissions for a car dealership d. cost of fabric used at a clothing manufacturer e. monthly office lease costs for a CPA firm f. cost of fruit sold at a grocery store g. cost of coffee used for a starbucks store h. monthly rent for a nail salon i. depreciation of exercise equipment at the ymca j. hourly wages paid to sales clerks at best buy k. property taxes for a restaurant l. monthly insurance costs for the home office of a company m. monthly flower costs for a florist n. monthly depreciation of equipment for a customer service office o. monthly cost of french fried at a mcdonald's restaurant

answer

a. V b. V c. V d. V e. F f. V g. V h. F i. F j. V k. F l. F m. V n. F o. V

question

Indirect manufacturing costs should be included in manufacturing overhead True or false

answer

True

question

The cost of lighting the factory would be classified as _____ when determining the cost of a manufactured product

answer

an indirect cost

question

Variable costs per unit decrease as production volume increases True or False

answer

False

question

The total cost of a cost object can only include the direct costs that are directly traced to that cost object

answer

False

question

All of the following are period costs except a. direct labor expenses b. research and development c, distribution expenses d. marketing expenses

answer

a.

question

A merchandiser's purchases are equivalent to a manufactorers ___________

answer

Cost of goods manufactured

question

The marginal cost is the most of making one more unit of a product. True or False

answer

True

question

Product costs and period costs receive similar treatment when presented in the financial statements True or false

answer

False

question

How do total fixed costs behave

answer

They will remain the same throughout production levels within the relevant range.

question

Process costing

answer

Is the cost of making one more unit Because total fixed costs will not change, the marginal cost is the same as the variable cost

question

Job costing

answer

Unique, custom products or small batches Total costs are accumulated by job Examples Hospitals Custom home builders Advertising agencies Jewelry Different jobs can vary considerably in direct materials, direct labor, and MOH, so we must accumulate costs separately for each individual job

question

Job cost record

answer

Once the necessary raw materials have arrived, and production is ready, the job will be started A job cost record will be used to accumulate all of the direct materials and direct labor used on the job, as well as the manufacturing overhead allocated to the job Each job will have its own job cost record Notice that the job cost record keeps track of the three manufacturing costs associated with each job: Direct Materials, Direct Labor, and Manufacturing Overhead

question

Total estimated manufacturing overhead costs = $1,000,000 Cost allocation base is direct labor hours (DLH) Total estimated direct labor hours for the year = 62,500 DLHs Job #603 used 500 DLHs

answer

$1,000,000 estimated overhead costs 62,500 direct labor hours =$16 per direct labor hours

question

which product costing system would be better for customer order products?

answer

job costing system

question

in the flow of costs, which of the following comes first?

answer

raw materials inventory

question

A _____ is a document which is prepared by manufactoring personnel to request materials for the production process.

answer

materials requisition

question

Manufacturers follow four steps to implement a manufacturing allocation system. What is the first step?

answer

estimate total manufacturing overhead costs for the coming year.

question

if manufacturing overhead has been undercoated during the period, then which of the following is true?

answer

the jobs produced during the period have been undercoated

question

for toyota, which is a direct cost with respect to the prius?

answer

cost of vehicle engine

question

Total variable costs ______ as production volume ______.

answer

total variable costs increase as production volume increases.

question

Total product costs formula

answer

total fixed costs + total variable costs=total product costs

question

product cost per unit formula

answer

total product costs/current years produced units

question

current fixed cost per unit formula

answer

total fixed costs/current years produced units

question

forecasted total product costs formula

answer

forecasted total variable costs+total fixed costs

question

forecasted average product cost per unit formula

answer

forecasted total product cost/next years forecasted units

question

forecasted fix cost per unit formula

answer

total fixed costs/next years forecasted units

question

the average product cost decreases as production volume increases because the company is ______ over 5 million units. The company will be operating _____ efficiently, so the average cost of making each unit decreases

answer

spreading its fixed costs more

question

Classify each of the following as either fixed or variable. In some cases, your answer may depend on specific circumstances. a. water and sewer bill b. cell phone bill c. health club dues d. bus fare e. apartment rental f. internet cable service g. cost of groceries

answer

a. variable, assuming no flat monthly hookup fee b. fixed or variable depending on the plan c. fixed d. variable, unless unlimited monthly passes are available e. fixed f. fixed g. variable

question

monthly profit formula

answer

total revenues-total costs

question

companies want to run at full capacity to better utilize the resources they spend on ____ costs. The more units they produce, the lower the _______ cost per unit

answer

fixed average fixed

question

which of the following types of companies has raw materials, work in process, and finished goods inventory

answer

manufactorers

question

which of the following is not an example of an indirect cost incurred in manufacturing automobiles?

answer

cost of the automobile engines

question

before operating income can be determined for a manufacturer, which of the following is calculated?

answer

cost of goods manufactured cost of goods available for sale cost of goods sold

question

how do total variable costs behave?

answer

they decrease as production decreases

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