Chapters 1, 2 And 3

Front 1

Financial accounting: users

Back 1

Outsiders who make financial decisions

Front 2

Financial accounting: time focus

Back 2

historical perspective

Front 3

Financial accounting: verifiability vs relevance

Back 3

emphasis on objectivity and verifiability

Front 4

Financial accounting: precision vs timeliness

Back 4

emphasis on precision

Front 5

Financial accounting: subject

Back 5

companywide reports

Front 6

Financial accounting: rules

Back 6

must follow GAAP/IFRS and prescribed formats

Front 7

Financial accounting: requirement

Back 7

mandatory for external reports

Front 8

Managerial accounting: users

Back 8

managers who plan and control an organization

Front 9

Managerial accounting: time focus

Back 9

time emphasis (future perspective - planning)

Front 10

Managerial accounting: verifiability vs relevance

Back 10

emphasis on relevance

Front 11

Managerial accounting: precision vs timeliness

Back 11

emphasis on timeliness

Front 12

Managerial accounting: subject

Back 12

focus on segment reports

Front 13

Managerial accounting: rules

Back 13

not bound by GAAP/IFRS

Front 14

Managerial accounting: requirement

Back 14

not mandatory

Front 15

What are the three main functions of management?

Back 15

1. planning

2. controlling

3. decision making

Front 16

What are the three steps in planning done by managers?

Back 16

1. establish goals

2. specify how the goals will be achieved

3. develop budgets

Front 17

What is the main purpose of the controlling function?

Back 17

gathers feedback to ensure that plans are being followed

Front 18

What is involved in decision making?

Back 18

making a selection among competing alternatives. What? who? how?

Front 19

What are the four elements of the IMA ethical guidelines?

Back 19

1. competence

2. confidentiality

3. integrity

4. credibility

Front 20

What is a strategy?

Back 20

a "game plan" that enables a company to attract customers by distinguishing itself from competitors.

Front 21

What are the three customer value propositions?

Back 21

customer intimacy, operational excellence, product leadership

Front 22

What is customer intimacy?

Back 22

understand and respond to individual customer needs

Front 23

what is operational excellence?

Back 23

deliver products and services faster, more conveniently, and at lower prices

Front 24

what is product leadership?

Back 24

offer higher quality products.

Front 25

a ___ ____ is a series of steps that are followed in order to carry out some task in a business.

Back 25

business process

Front 26

what is lean production?

Back 26

products are manufactured in response to orders; #units produced = #units sold

Front 27

name three benefits of lean production

Back 27

fewer defects, less wasted effort, quicker customer response times

Front 28

what is marginal revenue?

Back 28

the revenue obtained from selling one additional unit of product

Front 29

what is a cost object?

Back 29

anything for which cost data are desired

Front 30

what are the three cost object classifications

Back 30

direct costs, indirect costs, common costs

Front 31

___ costs can be easily and conveniently traced to a unit of product or other cost object

Back 31

direct

Front 32

___ costs cannot be easily and conveniently traced to a unit of product or other cost object

Back 32

indirect

Front 33

____ costs are incurred to support a number of cost objects

Back 33

common

Front 34

manufacturing costs include:

Back 34

direct labor, indirect labor, direct materials

Front 35

__ materials are any material used in final product.

Back 35

raw

Front 36

__ materials are materials used to support the production process

Back 36

indirect materials

Front 37

what is indirect labor

Back 37

wages paid to employees who are not directly involved in production work; ex: janitors and security

Front 38

production line worker wages can be classified as ___ labor

Back 38

direct

Front 39

maintenance and repairs; insurance; depreciation on equipment are examples of ___ costs

Back 39

manufacturingoverhead

Front 40

identify two categories of nonmanufacturing costs

Back 40

selling, administrative

Front 41

advertising, shipping, sales commissions are examples of ___ costs

Back 41

selling

Front 42

__ costs are all executive, organizational,and clerical costs

Back 42

administrative

Front 43

public relations, general account, and executive compensation are examples of ___ costs

Back 43

administrative

Front 44

direct materials, direct labor, manufacturing overhead are all ____ costs.

Back 44

product

Front 45

selling and administrative are ____ costs.

Back 45

period

Front 46

prime costs consist of:

Back 46

direct material and direct labor

Front 47

conversion costs consist of:

Back 47

direct labor and manufacturing overhead

Front 48

a cost incurred to convert materials into a finished product

Back 48

conversion

Front 49

name the three classifications of cost behavior

Back 49

variable costs, fixed costs, mixed costs

Front 50

a cost that varies, in total, in direct proportion to changes in the level of activity

Back 50

variable

Front 51

in regards to a change in level of activity, variable cost per unit will ___

Back 51

remain constant

*ex: the cost per text sent is a constant 5 cents per message

Front 52

a measure of _______ causes the incurrence of a variable cost

Back 52

the activity base/cost driver

Front 53

a cost that remains constant, in total, regardless of changes in the level of activity

Back 53

fixed

Front 54

in regards to a change in level of activity, a fixed cost per unit will ___

Back 54

varies inversely with changes in activity.

ex: the average fixed cost per cell phone call made decreases as more calls are made.

Front 55

two types of fixed costs

Back 55

committed and discretionary

Front 56

long term costs that cannot be significantly reduced in short term are known as _____ costs

Back 56

committed

ex: real estate taxes, insurance expenses

Front 57

___ costs may be altered in the short-term by current managerial decisions.

Back 57

discretionary

ex: advertising research, PR, management development

Front 58

t/f : the relevant range of activity pertains to fixed and variable costs.

Back 58

TRUE

Front 59

a _____ cost contains both variable and fixed elements.

Back 59

mixed

"semi-variable costs"

Front 60

the equation for total mixed costs

Back 60

TC = FC + VC(q)

Front 61

the equation for a variable cost per unit of activity

Back 61

change in cost/change in activity

Front 62

the equation for fixed costs:

Back 62

FC = TC - (VC*q)

Front 63

the least-squares regression method:

Back 63

uses all of the data to separate a mixed cost into its fixed and variable components by fitting a regression line to reveal a linear relationship

Front 64

least-squares regression also provides a statistic called ____

Back 64

goodness of fit, or R^2

Front 65

the traditional format is used primarily for ___ reporting

Back 65

external

Front 66

the contribution format is used primarily by ___

Back 66

management

Front 67

In a traditional format:

gross margin =

net operating income =

Back 67

gross margin = sales - cost of goods sold

net operating income = gross margin - selling&admin expenses

Front 68

in a traditional format, cost of goods sold may contain

Back 68

variable and fixed components

Front 69

the main difference in the contribution format is the distinguishing of

Back 69

fixed and variable costs

Front 70

t/f: only those costs and benefits that differ between alternatives are relevant in a decision. all other costs and benefits should be ignored.

Back 70

TRUE

Front 71

in contribution format:

contribution margin=

net operating income=

Back 71

contribution margin = sales - variable expenses

net operating income = contribution margin - fixed expenses

Front 72

a differential cost and revenue is

Back 72

costs and revenues that differ among alternatives; "incremental"

Front 73

the potential benefit that is given up when one alternative is selected over another is

Back 73

opportunity cost

Front 74

t/f: opportunity costs should not be considered in decision making.

Back 74

FALSE

Front 75

___ are costs that have already been incurred and cannot be changed now or in the future.

Back 75

sunk costs

Front 76

t/f: sunk costs should be ignored when making decisions.

Back 76

TRUE

Front 77

job-order costing systems are used when:

Back 77

1. many different products are produced each period

2. products are manufactured to order

3. the uniqueness of each order requires tracing and allocating costs to a specific job, and maintaining cost records for each job"

Front 78

t/f: charge direct material and direct labor costs to each job as work is performed

Back 78

TRUE

Front 79

t/f: under the job-order costing system, manufacturing overhead can be allocated to all jobs rather than directly traced to each job

Back 79

TRUE

Front 80

a(n) ______, such as machine hours, is used to assign manufacturing overhead to individual jobs

Back 80

allocation base

Front 81

the predetermined overhead rate is used to ____ and is determined ____

Back 81

apply overhead to jobs and is determined before the period begins

Front 82

the equation for predetermined overhead rate

POHR =

Back 82

estimated cost / estimated units

Front 83

the equation for determining the total manufacturing overhead rate is

Back 83

TotalMO=FixMO+VarMO*Quantity

Front 84

an account on the job cost sheet that consists of units of production that are only partially complete and will require further work before they are ready for sale

Back 84

work in process

Front 85

the finished goods account consists of

Back 85

completed units of product that have not been sold to customers

Front 86

___ account include the manufacturing costs associated with the goods that were finished during the period

Back 86

cost of goods manufactured

Front 87

actual manufacturing overhead costs are

Back 87

the actual costs incurred during a period. includes actual indirect material, indirect labor and other manufacturing costs.

Front 88

non manufacturing costs are not assigned to individual jobs, but are _

Back 88

expensed in the period incurred

Front 89

equation for raw materials used

Back 89

beginning RM inventory

+ RM purchases

= RM available for use

- ending RM inventory

=raw material used in product

Front 90

t/f: as items are moved from raw materials inventory and placed into the production process, they are called direct materials.

Back 90

TRUE

Front 91

all manufacturing costs added to production during the period are added to the beginning balance of:

Back 91

work in process

Front 92

the work in process account, the equation for cost of goods manufactured:

Back 92

beginning WIP inventory

+ total manufacturing costs

= total WIP for the period

- ending WIP inventory

= cost of goods manufactured

Front 93

costs associated with goods that are completed during the period and transferred to:

Back 93

finished goods inventory

Front 94

when the actual overhead differs from the applied overhead it is said to be either:

Back 94

underapplied

overapplied

Front 95

underapplied overhead exists when:

Back 95

the amount of overhead applied using POHR is less than the actual amount of overhead incurred.

Front 96

overapplied overhead exists when:

Back 96

the amount of overhead applied using POHR is greater than the actual overhead incurred.

Front 97

if manufacturing overhead is overapplied & the company closes to cost of goods sold; it will ( increase/decrease) cost of goods sold and ( increase/decrease) income.

Back 97

decrease cost of goods sold

increase income

Front 98

if manufacturing overhead is underapplied & the company closes to cost of goods sold; it will (increase/decrease) cost of goods sold and (increase/decrease) income.

Back 98

increase COGS

decrease income

Front 99

if manufacturing overhead is underapplied & the company chooses allocation; it will (increase/decrease) work in process, finished goods, and cost of goods sold.

Back 99

increase

Front 100

if manufacturing overhead is overapplied & the company chooses to allocate the balance to different accounts ; it will (increase/decrease) work in process, finished goods, and cost of goods sold.

Back 100

decrease