Managerial Accounting Exam I

Front 1

Which form of accounting reports to those inside an organization?

Back 1

Managerial

Front 2

Which form of accounting emphasizes decisions affecting the future?

Back 2

Managerial

Front 3

Which form of accounting emphasizes relevance?

Back 3

Managerial

Front 4

Which form of accounting emphasizes timeliness?

Back 4

Managerial

Front 5

Which form of accounting emphasizes detailed segment reports about departments, products, and customers?

Back 5

Managerial

Front 6

Which form of accounting need not follow GAAP?

Back 6

Managerial

Front 7

Which form of accounting is not mandatory?

Back 7

Managerial

Front 8

Which form of accounting reports to those outside an organization?

Back 8

Financial

Front 9

Which form of accounting emphasizes financial consequences of past activities?

Back 9

Financial

Front 10

Which form of accounting emphasizes objectivity and verifiability?

Back 10

Financial

Front 11

Which form of accounting emphasizes precision?

Back 11

Financial

Front 12

Which form of accounting emphasizes summary data concerning the entire organization?

Back 12

Financial

Front 13

Which form of accounting must follow GAAP?

Back 13

Financial

Front 14

Which form of accounting is mandatory for external reports?

Back 14

Financial

Front 15

Direct Materials

Back 15

Raw Product that become an integral part of a finished product and can be conveniently traced into it

Front 16

Raw Product that become an integral part of a finished product and can be conveniently traced into it

Back 16

Direct Materials

Front 17

Direct Labor

Back 17

Factory labor costs that can be easily traced to individual units of product

Front 18

Factory labor costs that can be easily traced to individual units of product

Back 18

Direct Labor

Front 19

Manufacturing Overhead

Back 19

All costs associated with manufacturing except DM & DL.

Front 20

All costs associated with manufacturing except DM & DL.

Back 20

Manufacturing Overhead

Front 21

Raw Materials

Back 21

Any materials that go into the final product

Front 22

Any materials that go into the final product

Back 22

Raw Materials

Front 23

Work In Process

Back 23

Materials that have not been finished into the final product

Front 24

Materials that have not been finished into the final product

Back 24

Work In Process

Front 25

Finished Goods

Back 25

Materials that have been converted into the final product
No more processes are necessary to sell to the final customer.

Front 26

Materials that have been converted into the final product
No more processes are necessary to sell to the final customer.

Back 26

Finished Goods

Front 27

Variable Costs

Back 27

A cost that varies in total, in direct proportion to changes in the level of activity
constant per unit.

Front 28

A cost that varies in total, in direct proportion to changes in the level of activity
constant per unit.

Back 28

Variable Costs

Front 29

Fixed costs

Back 29

A cost that remains constant, in total, regardless of changes in the level of activity within the relevant range. If a fixed cost is expressed on a per unit basis, it varies inversely with the level of activity.

Front 30

A cost that remains constant, in total, regardless of changes in the level of activity within the relevant range. If expressed on a per unit basis, it varies inversely with the level of activity.

Back 30

Fixed costs

Front 31

Product Costs

Back 31

All costs that are involved in the purchase or manufacture of goods
In the case of manufactured goods, these costs consist of DM, DL, and OH, (or inventoriable costs)

Front 32

All costs that are involved in the purchase or manufacture of goods
In the case of manufactured goods, these costs consist of DM, DL, and OH, (or inventoriable costs)

Back 32

Product Costs

Front 33

Period Costs

Back 33

Costs that are taken directly to the income statement as expenses in the period in which they are incurred or accrued; such costs consists of selling (marketing) and administrative expenses

Front 34

Costs that are taken directly to the income statement as expenses in the period in which they are incurred or accrued; such costs consists of selling (marketing) and administrative expenses

Back 34

Period Costs

Front 35

Differential Cost/Revenue

Back 35

A difference in cost/revenue between any two alternatives (or incremental costs/revenues)

Front 36

A difference in cost/revenue between any two alternatives (or incremental costs/revenues)

Back 36

Differential Cost/Revenue

Front 37

Opportunity Cost

Back 37

The potential benefit that is given up when on alternative is selected over another

Front 38

The potential benefit that is given up when on alternative is selected over another

Back 38

Opportunity Cost

Front 39

Sunk Cost

Back 39

Any cost that has already been incurred and that cannot be changed by any decision made now or in the future.

Front 40

Any cost that has already been incurred and that cannot be changed by any decision made now or in the future.

Back 40

Sunk Cost

Front 41

Idle Time (Where are they charged?)

Back 41

costs for idle time are charged to OH

Front 42

Overtime Premium (Where are they charged?)

Back 42

costs for the premium of Overtime is charged to OH

Front 43

Labor Fringe Benefits (Where are they charged?)

Back 43

the superior method is to charge to Direct Labor Costs, but many companies charge to OH.

Front 44

Full Absorption Cost

Back 44

A costing method that includes all manufacturing costs – DM, DL, and both Variable and fixed OH, as part of the cost of a finished unit of product…this term is synonymous with FULL COST.

Front 45

A costing method that includes all manufacturing costs – DM, DL, and both Variable and fixed OH, as part of the cost of a finished unit of product.

Back 45

Full Absorption Cost

Front 46

Variable Costing

Back 46

Product cost only “absorbs” variable part of the manufacturing costs.

Front 47

Product cost only “absorbs” variable part of the manufacturing costs.

Back 47

Variable Costing

Front 48

Job Order Costing

Back 48

A costing system used in situations where many different products, jobs, or services are produced each period.

Front 49

A costing system used in situations where many different products, jobs, or services are produced each period.

Back 49

Job Order Costing

Front 50

Process Costing

Back 50

A costing system used in those manufacturing situations where a single, homogeneous product (such as flour, cement) is produced for long periods of time.

Front 51

A costing system used in those manufacturing situations where a single, homogeneous product (such as flour, cement) is produced for long periods of time.

Back 51

Process Costing

Front 52

Allocation base

Back 52

A measure of activity such as direct labor-hours or machine hours that is used to assign costs to cost objects (cost driver). In other words, a measure that is used to assign overhead costs to products and services

Front 53

A measure of activity such as direct labor-hours or machine hours that is used to assign costs to cost objects (cost driver). In other words, a measure that is used to assign overhead costs to products and services

Back 53

Allocation base

Front 54

Predetermined overhead rate

Back 54

A rate used to charge overhead cost to jobs in production; the rate is established in advance for each period by use of estimates of total manufacturing overhead cost and of the total allocation base for the period.

Front 55

A rate used to charge overhead cost to jobs in production; the rate is established in advance for each period by use of estimates of total manufacturing overhead cost and of the total allocation base for the period.

Back 55

Predetermined overhead rate

Front 56

Why have a pretermined OH rate, why not use actual OH used?

Back 56

-Timeliness
-So many expenditures, not easily trackable, simplicity
-Seasonal expenditures can easily warp smaller time periods of expenditures…such as winter heating bill, and summer cooling bill, etc.

Front 57

Just-in-time

Back 57

A production and inventory control system in which materials are purchased and units are produced only as needed to meet actual customer demand

Front 58

A production and inventory control system in which materials are purchased and units are produced only as needed to meet actual customer demand

Back 58

Just-in-time

Front 59

Six Sigma

Back 59

Relies on...
-customer feedback
-fact-based data gathering and analysis techniques
...to drive process improvement

Front 60

Relies on...
-customer feedback
-fact-based data gathering and analysis techniques
...to drive process improvement

Back 60

Six Sigma

Front 61

business process

Back 61

-a series of steps that are followed
-to carry out some task in a business

Front 62

-a series of steps that are followed
-to carry out some task in a business

Back 62

business process

Front 63

-five-step management approach
-organizes resources around the flow of business processes
-pulls units in response to customer orders

Back 63

lean thinking model

Front 64

What are the five steps of the lean thinking model?

Back 64

1. Identify value in specific products/services.
2. Identify the business process that delivers value.
3. Organize work arrangements around the flow of the business process.
4. Create a pull system that responds to customer orders.
5. Continuously pursue perfection in the business process.

Front 65

supply chain management

Back 65

-the coordination of business processes across companies
-to better serve end consumers

Front 66

-the coordination of business processes across companies
-to better serve end consumers

Back 66

supply chain management

Front 67

Enterprise risk management

Back 67

-a process used by a company to identify the risks that it faces
-develop responses to those risks
-enable the company to be reasonably assured of meeting its goals

Front 68

-a process used by a company to identify the risks that it faces
-develop responses to those risks
-enable the company to be reasonably assured of meeting its goals

Back 68

Enterprise risk management

Front 69

What do the debit and credit sides of a Management overhead T-account represent?

Back 69

Debit - Actual
Credit - Applied

Front 70

What do the debit and credit balances of a Management overhead T-account represent?

Back 70

Debit - Underapplied
Credit - Overapplied

Front 71

What is the journal entry when raw materials are purchased?

Back 71

Debit - Raw Materials
Credit - Cash (A/P etc...)

Front 72

What is the journal entry when raw materials are issued into production?

Back 72

Debit - WIP (Direct Materials)
Debit - MOH (Indirect Materials)
Credit - Raw Materials

Front 73

What is the journal entry for labor applied to production?

Back 73

Debit - WIP (Direct Labor)
Debit - MOH (Indirect Labor)
Credit - Salaries and Wages Payable

Front 74

What is the journal entry for manufacturing overhead as it is incurred?

Back 74

Debit - MOH
Credit - Accounts Payable

Front 75

What is the journal entry for accrued property taxes and prepaid insurance expiring?

Back 75

Debit - MOH
Credit - Property Taxes Payable
Credit - Prepaid Insurance

Front 76

What is the journal entry for depreciation on factory equipment?

Back 76

Debit - Manufacturing Overhead
Credit - Accumulated Depreciation

Front 77

What is the journal entry when MOH is applied?

Back 77

Debit - WIP
Credit - MOH

Front 78

What is the journal entry for S&A salaries?

Back 78

Debit - Salaries Expense
Credit - Salaries and Wages Payable

Front 79

What is the journal entry for Depreciation on office equipment?

Back 79

Debit - Depreciation Expense
Credit - Accumulated Depreciation

Front 80

What is the journal entry for Advertising and other S&A Expenses?

Back 80

Debit - Advertising Expense
Debit - Other S&A Expense
Credit - Accounts Payable

Front 81

What is the journal entry when a job is completed?

Back 81

Debit - Finished Goods
Credit - WIP

Front 82

What is the journal entry when Finished goods are sold?

Back 82

Debit - A/R (Cash)
Credit - Sales

Debit - COGS
Credit - Finished Goods

Front 83

What is the BASIC Form of a Schedule of Cost of Goods Manufactured?

Back 83

Direct Materials
Add: Direct Labor
Add: Manufacturing Overhead
= Total Manufacturing Cost
Add: Beginning WIP
Deduct: Ending WIP
= COGM

Front 84

What is the LONG Form of a Schedule of Cost of Goods Manufactured?

Back 84

Direct Materials:
-Raw Materials Inventory, Beginning
-Add: Purchases of Raw Materials
=Total Raw Materials Available
-Deduct: Raw Materials inventory, ending
= Raw Materials Used in Production
-Deduct: Indirect Materials Included in Manufacturing Overhead
=Total Direct Materials
Direct Labor
Manufacturing Overhead applied to WIP
=Total Manufacturing Costs
-Add: Beginning WIP
=
-Deduct: Ending WIP
=COGM

Front 85

What is the Form of a Schedule of Cost of Goods Sold?

Back 85

Finished Goods inventory, beginning
Add: COGM
=GAS
Deduct: Finished goods inventory, ending
=Unadjusted COGS
Add: Underapplied overhead
(Deduct: Overapplied overhead)
=Adjusted COGS

Front 86

What is the form of an Income Statement?

Back 86

Sales ($ Far)
COGS ($ Far)
=Gross Margin ($ Far)
Selling and administrative expense:
>Salaries Expense ($ Near)
>Depreciation Expense ($ Near)
>Advertising expense ($ Near)
>Other Expense ($ Near) (Total) ($ Far)
Gross Margin - S&A Exp = Net Operating Income ($ Far)

Front 87

Quality cost

Back 87

Costs that are incurred to prevent defective products from falling into the hands of customers or that are incurred as a result of defective units

Front 88

Costs that are incurred to prevent defective products from falling into the hands of customers or that are incurred as a result of defective units

Back 88

Quality cost

Front 89

four broad groups of quality costs

Back 89

Prevention Costs, Appraisal Costs, Internal failure costs, and External failure costs

Front 90

Quality costs incurred in an effort to keep defective products from falling into the hands of customers

Back 90

-Prevention costs
-Appraisal Costs

Front 91

Quality costs incurred despite efforts to prevent them

Back 91

-Internal Failure Costs
-External Failure Costs

Front 92

Prevention Costs

Back 92

support activities whose purpose is to reduce the number of defects

Front 93

support activities whose purpose is to reduce the number of defects

Back 93

Prevention Costs

Front 94

Quality circles

Back 94

consist of small groups of employees that meet on a regular basis to discuss ways to improve quality

Front 95

consist of small groups of employees that meet on a regular basis to discuss ways to improve quality

Back 95

Quality circles

Front 96

Statistical process control

Back 96

a technique that is used to detect whether a process is in or out of control

Front 97

a technique that is used to detect whether a process is in or out of control

Back 97

Statistical process control

Front 98

Appraisal costs

Back 98

incurred to identify defective products before the products are shipped to customers

Front 99

incurred to identify defective products before the products are shipped to customers

Back 99

Appraisal costs

Front 100

Internal failure costs

Back 100

result from identifying defects before they are shipped to customers

Front 101

result from identifying defects before they are shipped to customers

Back 101

Internal failure costs

Front 102

result when a defective product is delivered to a customer

Back 102

External failure costs

Front 103

External failure costs

Back 103

result when a defective product is delivered to a customer

Front 104

What is the difference between prevention and appraisal costs?

Back 104

Appraisal costs can only find defects while prevention costs can eliminate them.

Front 105

What are the uses of quality cost reports? (3)

Back 105

helps managers...
-see the financial significance of defects.
-identify the relative importance of the quality problems faced by their companies.
-see whether their quality costs are poorly distributed

Front 106

What are the three limitations of quality cost information that should be recognized?

Back 106

-Simply measuring and reporting quality costs does not solve quality problems. Problems can be solved only by taking action.
-results usually lag behind quality improvement programs.
-The most important quality cost, lost sales arising from customer ill will, is usually omitted from the quality cost report because it is difficult to estimate

Front 107

What are the quality control guidelines of the ISO 9000 Standards? (3)

Back 107

1. A quality control system is in use, and the system clearly defines an expected level of quality.
2. The system is fully operational and is backed up with detailed documentation of quality control procedures.
3. The intended level of quality is being achieved on a sustained, consistent basis.