Final Exam Review - Lecture Notes

Question 1

Three types of product costs:

Answer 1

Direct Materials, Direct Labor, and Manufacturing Overhead

Question 2

Three categories of Manufacturing Overhead

Answer 2

Indirect Materials, Indirect Labor, and Other Costs

Question 3

Product Costs are included in ______ and are ______ when sold

Answer 3

Inventory, COGS

Question 4

Two basic categories of period costs: ________

Answer 4

Selling and Administrative

Question 5

DL, DM and MOH all combine to become _______.

Answer 5

Work In Process

Question 6

Once the product is completed it becomes ________.

Answer 6

finished goods

Question 7

Once the product is sold it becomes ____________.

Answer 7

cost of goods sold

Question 8

The formula for applying overhead is: _______

Answer 8

estimated manufacturing overhead / estimated cost driver

Question 9

The formula: “estimated manufacturing overhead / estimated cost driver” calculates __________

Answer 9

predetermined overhead rate

Question 10

Overhead is applied by multiplying _____ by _____

Answer 10

predetermined overhead rate, actual cost driver

Question 11

Debit MOH when __ MOH is incurred and credit MOH when _______ MOH

Answer 11

actual, applying

Question 12

The ending balance in MOH is _____.

Answer 12

always zero

Question 13

MOH is ____ when there is a debit balance

Answer 13

underallocated

Question 14

MOH is ____ when there is a credit balance

Answer 14

overallocated

Question 15

______ cost don’t change when activity changes

How to estimate costs

Answer 15

Fixed

Question 16

_____ cost changes directly with activity

How to estimate costs

Answer 16

Variable

Question 17

Mixed cost uses the formula: _____________________________

How to estimate costs

Answer 17

Y = mx + b

Question 18

Variable costs per unit are _____, but total variable costs _____ when activity increases

How to estimate costs

Answer 18

constant, increase

Question 19

Fixed costs in total are _______, but fixed costs per unit _______ when activity increases

How to estimate costs

Answer 19

constant, decrease

Question 20

__________ can estimate fixed costs in total and variable cost per unit. These stay the same at all levels of activity within the relevant range

How to estimate costs

Answer 20

Regression

Question 21

What is estimated total cost when m = 2.5 and b = 900 when units = 200? ____________

How to estimate costs

Answer 21

1,400

Question 22

CVP uses a _______ income statement

CVP

Answer 22

contribution format

Question 23

Break even formula is: ____________

CVP

Answer 23

fixed costs / unit contribution margin

Question 24

Target profit formula is: ________

CVP

Answer 24

(fixed costs + target profit) / unit contribution margin

Question 25

If target profit = $10,000 and fixed costs = $20,000 and unit contribution margin = $12, how many units must be sold? __________________ ## Footnote CVP

Answer 25

2,500

Question 26

Budgeting begins with the ___________ budget ## Footnote Budgeting

Answer 26

sales

Question 27

To prepare a cash receipts or disbursements budget, you must look to ____ periods ## Footnote Budgeting

Answer 27

prior

Question 28

To prepare a purchases or production budget, you must look to ____ periods ## Footnote Budgeting

Answer 28

future

Question 29

Flexible budgets adjust planning budgets so that meaningful _____ can be made ## Footnote Budgeting

Answer 29

comparisons

Question 30

The two variances in a flexible budget are __________ and _______ ## Footnote Budgeting

Answer 30

activity, revenue/spending

Question 31

You have to know how cost behave when doing a _______ budget ## Footnote Budgeting

Answer 31

flexible

Question 32

The difference between the actual costs and the flexible budget costs is called the _____ variance ## Footnote Budgeting

Answer 32

spending

Question 33

The two basic measures are ______ and ______ ## Footnote Budgeting

Answer 33

return on investment, residual income

Question 34

Operating Income divided by Total Assets = ______ ## Footnote Budgeting

Answer 34

return on investment

Question 35

The formula for residual income is _______________________________ ## Footnote Budgeting

Answer 35

Operating Income – (Target rate of return * Total Assets

Question 35

These costs do not go away when a segment goes away_______ ## Footnote Budgeting

Answer 35

common fixed costs

Question 36

The issue with ROI is _____ ## Footnote Budgeting

Answer 36

profitable investments that may be rejected

Question 36

These costs do go away when a segment goes away ____________ ## Footnote Budgeting

Answer 36

traceable fixed costs

Question 37

A relevant cost either has ________ or it differs between _______ ## Footnote Budgeting

Answer 37

a bearing on the future, alternatives

Question 38

Opportunity costs are __________ ## Footnote Budgeting

Answer 38

relevant

Question 39

Sunk costs are _____ ## Footnote Budgeting

Answer 39

not relevant

Question 40

The sections of a statement of cash flows are: ______, _________ and ____________ ## Footnote Cash Flows

Answer 40

operating, investing, financing

Question 41

Investing includes ____________ ## Footnote Cash Flows

Answer 41

any transaction that involves acquiring or disposing of long-term assets

Question 41

Financing includes ________________ ## Footnote Cash Flows

Answer 41

any transaction that involves obtaining cash from or repaying lenders or owners

Question 41

Operating includes ______________ ## Footnote Cash Flows

Answer 41

any transaction not categorized as financing or investing

Question 41

Noncash items adjusted for in the operating section include _______, ______ and _________ ## Footnote Cash Flows

Answer 41

depreciation, amortization, gains and losses

Question 42

When adjusting for depreciation expense you must ______ to the statement of cash flows ## Footnote Cash Flows

Answer 42

add it back

Question 42

Decreases in A/R should be __________ in the statement ## Footnote Cash Flows

Answer 42

added

Question 42

When adjusting for gains you must ________ to the statement of cash flows ## Footnote Cash Flows

Answer 42

subtract it within

Question 43

Decreases in A/P should be __________ in the statement ## Footnote Cash Flows

Answer 43

subtracted

Question 44

What kind of activity is - Repurchased common stock: ______________ ## Footnote Cash Flows

Answer 44

financing

Question 44

What kind of activity is - Sell equipment – think about the whole transaction: _____________ ## Footnote Cash Flows

Answer 44

investing (cash) operating (gain or loss)

Question 45

What kind of activity is - Accounts payable: _________________ ## Footnote Cash Flows

Answer 45

operating

Question 46

What kind of activity is - Loan money to an employee: ____________________ ## Footnote Cash Flows

Answer 46

investing

Question 47

What kind of activity is -Pay dividend to shareholders: ____ __________________ ## Footnote Cash Flows

Answer 47

financing

Question 48

What kind of activity is - Depreciation expense: ___________ ## Footnote Cash Flows

Answer 48

operating

Question 49

* Net Income is = $100 * Increase in A/R = $7 * Decrease in Acc Liab = $4 * Sold land for $20 with a $6 gain * Issued bonds – received $50 What is cash flow from operations? __________ ## Footnote Cash Flows

Answer 49

100 – 7 – 4 – 6 = 83

Question 49

What do each of these measure? 1. Gross margin % ______________ 2. EPS ______________ 3. Working Capital ________________ 4. Current Ratio ____________________ 5. Average days to collect _______________ 6. Average sale period (days in inventory) _________ 7. P/E ratio ___________ 8. DuPont Analysis-3 factor model ______________ 9. Common size income statements show all items as a percentage of _________ | 2Profitability|2Liquidity|2Market Performance|2Asset Management|1Sales ## Footnote Ratios / Financial Statement Analysis

Answer 49

1. profitability 2. market performance 3. liquidity 4. liquidity 5. ASSET MANAGEMENT 6. ASSET MANAGEMENT 7. market performance 8. profitability 9. sales

Question 49

The fraud triangle includes ________, __________ and _______ ## Footnote Internal controls

Answer 49

1. opportunity 2. pressure 3. rationalization

Question 49

Internal controls generally include ________, _______ and _______ ## Footnote Internal controls

Answer 49

segregation of duties, Account Analysis and Reconcilliation, and Reviews

Question 50

Duties that should be done by different employees include ________, _________ and _________________. ## Footnote Internal controls

Answer 50

authorization, custody, recording

Question 50

Standard Costs and Variances: analyzes the flexible budget variance (spending) from the _________ ## Footnote Standard Costs and Variances

Answer 50

flexible budget

Question 50

Direct Labor Efficiency Variance = _________ ## Footnote Standard Costs and Variances

Answer 50

standard rate * (Actual Hours - Standard Hours Allowed)

Question 50

Direct Labor Rate Variance = __________________ ## Footnote Standard Costs and Variances

Answer 50

Actual Hours * (Actual Rate - Standard Rate)

Question 50

Sustainability: 3 Pillars are ______________ ## Footnote Sustainability

Answer 50

Social, Environmental, Economic

Question 51

Triple bottom line is: ___________________ ## Footnote Sustainability

Answer 51

People, Planet, Profits