Final

Question 1

Management accounting objectives

Answer 1

To provide information for decision making; and planning, controlling, evaluating and continuous improvement; for cost services, products, and other objects of interest to management

Question 2

Who occupies a line position?

Answer 2

VP of marketing

Question 3

Primary objective of management accounting

Answer 3

To provide management with information useful for planning and control of operations

Question 4

Investigating production variances and adjusting the production process is an example of

Answer 4

Controlling

Question 5

Example of non-manufacturing costs

Answer 5

Marketing and admin

Question 6

Costs are divided into what two major functional categories?

Answer 6

Production and non-production

Question 7

Examples of product costs

Answer 7

Direct materials, direct labor, OH
Are manufacturing costs
Are inventoriable costs

Question 8

Product costs are expensed when

Answer 8

The product is sold

Question 9

Example of fixed cost

Answer 9

Property taxes

Question 10

Variable costs within the relevant range

Answer 10

Stay constant on a per unit basis as output changes
Increase in total as output increases
Decrease in total as output decreases

Question 11

The high-low method…

Answer 11

Is not as accurate as other methods
Can be affected by the presence of outliers
Has the advantage of objectivity

Question 12

The relevant range

Answer 12

Is the normal range of output
Is the range of output where cost relationships or behaviors are valid
May change from period to period

Question 13

Formula for mixed cost

Answer 13

Total cost = total fixed cost + (variable rate x amount of output)

Question 14

Using the high-low method, the variable rate of a mixed cost equals

Answer 14

(High point cost - low point cost)

/ (High point output - low point output)

Question 15

Contribution margin is…

Answer 15

Difference between sales and variable costs

Question 16

Equation for operating income

Answer 16

(Price x units sold) - (unit variable cost x units sold) - fixed cost

Question 17

If actual sales = break even sales then…

Answer 17

Margin of safety equals 0

Question 18

Sales mix is the relative combination of

Answer 18

Products sold by a firm

Question 19

On a cost-volume-profit graph, the break even point is where

Answer 19

The revenue line intersects the total cost line

Question 20

A “what-if” technique that examines the impact of changes in underlying assumptions on an answer is:

Answer 20

Sensitivity analysis

Question 21

If fixed costs increase, the break even point in units will…

Answer 21

Increase

Question 22

Margin of safety in dollars is:

Answer 22

Expected sales minus sales at break even

Question 23

Difference between financial and managerial accounting

Answer 23

Financial: external users, objective, according to GAAP, fixed intervals

Managerial: management users, obj./sub., according to management needs, prepared at fixed intervals and on as-needed basis

Question 24

Product or non-product costs?
Manufacturing OH
non-manufacturing costs

Answer 24

Product

Non- product

Question 25

Difference between direct and indirect costs?

Answer 25

Direct - identified w/and can be traced to a cost object Indirect - can't be identified or traced to a cost object

Question 26

Difference between product and period costs

Answer 26

Product: manufacturing costs - DM, DL, and OH Period: non-manufacturing costs - selling and admin. exp.

Question 27

COGM statement

Answer 27

``` WIP DM DL FOH total man. Fact. Costs incurred Total man. Fact. Costs Less WIP COGM ```

Question 28

Calculate predetermined OH rate

Answer 28

OH/DL cost

Question 29

Applied overhead =

Answer 29

Predetermined OH x actual activity level

Question 30

Provides product costs for each quantity of product that is manufactured

Answer 30

Job order cost system

Question 31

Underapplied FOH has a debit or credit balance?

Answer 31

Debit

Question 32

Manner in which a cost changes as a related activity changes

Answer 32

Cost behavior

Question 33

Examples of mixed costs

Answer 33

Quality control dept. salaries Purchasing dept. salaries Maintenance expenses Warehouse expenses

Question 34

Examination of the relationships among selling prices, sales and production volume, costs, exp., and profits

Answer 34

Cost-volume profit analysis

Question 35

Contribution format income statement

Answer 35

``` Sales Less: variable exp. Manufacturing Selling Admin. Contribution margin Less: fixed exp. Manufacturing Selling Admin. Net income ```

Question 36

Cost-volume profit is also called

Answer 36

Break-even

Question 37

Break even formula (dollars)

Answer 37

Fixed cost/ CM ratio

Question 38

Integrated set of operating and financial budgets for a period of time

Answer 38

Master budget

Question 39

Calculate sales budget

Answer 39

Budgeted revenue = expected sales volume x expected unit sales price

Question 40

Production budget

Answer 40

Expected units to be sold Plus desired units in ending inventory Less estimated units in beginning inventory Total units to be produced

Question 41

DM Purchase budget

Answer 41

Budgeted DM required for production = budgeted production volume x DM qty expected per unit Materials required for production(step1) Plus desired ending materials inventory Less estimated beginning materials inventory Direct material quantity to be purchased Budgeted DM to be purchased = DM qty to be purch. X unit price(step2)

Question 42

DL cost budget

Answer 42

Budgeted DL hours required for production = budgeted production volume x DL hours expected per unit DL cost = DL required for production(step1) x hourly rate

Question 43

Factory OH cost budget

Answer 43

Add everything together

Question 44

Estimates the expected receipts and payment of cash for a period of time

Answer 44

Cash budget

Question 45

Calculate standard costs

Answer 45

Standard price x standard qty per unit = standard cost per unit

Question 46

In a favorable cost variance the actual cost is greater or lesser than the standard cost at actual volume?

Answer 46

Lesser

Question 47

Calculate - Materials price and usage (quantity) variance

Answer 47

Actual material used - standard material used = $ x standard price = $

Question 48

In a favorable cost variance the actual cost is greater or lesser than the standard cost at actual volume?

Answer 48

Lesser

Question 49

Calculate - Materials price and usage (quantity) variance

Answer 49

Actual material used - standard material used = $ x standard price = $

Question 50

Calculate DM quantity variance

Answer 50

=(A qty - Std qty) x Std price

Question 51

Calculate DL rate variance

Answer 51

= (A rate/hr. - Std rate/hr.) x A hrs.

Question 52

Calculate DL time variance

Answer 52

= (A DL hrs - Std DL hrs) Std rate/hr

Question 53

Price and rate are actual or standard?

Answer 53

Actual

Question 54

Quantity and time are actual or standard?

Answer 54

Standard

Question 55

Concerning hurdle rate, a positive number means...

Answer 55

We made hurdle rate

Question 56

Define sunk costs

Answer 56

Costs that have been incurred in past, cannot be recouped, and are not relevant to future decisions

Question 57

Define differential cost

Answer 57

Amount of increase or decrease in cost that is expected from a course of action as compared to an alternative

Question 58

Define opportunity cost

Answer 58

Revenue that is forgone from an alternative use of an asset such as cash

Question 59

Define sunk costs

Answer 59

Costs that have been incurred in past, cannot be recouped, and are not relevant to future decisions

Question 60

Concerning hurdle rate, a positive number means...

Answer 60

We made hurdle rate

Question 61

Quantity and time are actual or standard?

Answer 61

Standard

Question 62

Price and rate are actual or standard?

Answer 62

Actual

Question 63

Calculate DL time variance

Answer 63

= (A DL hrs - Std DL hrs) Std rate/hr

Question 64

Calculate DL rate variance

Answer 64

= (A rate/hr. - Std rate/hr.) x A hrs.

Question 65

Calculate DM quantity variance

Answer 65

=(A qty - Std qty) x Std price

Question 66

Calculate - Materials price and usage (quantity) variance

Answer 66

Actual material used - standard material used = $ x standard price = $

Question 67

Define opportunity cost

Answer 67

Revenue that is forgone from an alternative use of an asset such as cash

Question 68

Operating activity examples

Answer 68

``` Purchase inventory Pay employees Pay taxes From sale of products From providing services ```

Question 69

Investing activity examples

Answer 69

From sale of property, plant, and equipment From sale of investments To buy property, plant, equip. To purchase investments

Question 70

Financing activity examples

Answer 70

From issuing long term liabilities From issuing stock To pay dividends to shareholders To repurchase common stock(treasury stock)

Question 71

Net cash flow =

Answer 71

Ending balance - beginning balance