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Managerial accounting > Managerial accounting > Flashcards

Managerial accounting Flashcards

1
Q

What is the difference between financial and managerial accounting?

A

Managerial accounting produces financial positions to employees for them to adjust accordingly, and financial accounting does this to external parties

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2
Q

What is cost classification?

A

Categorising expenses for easy analysis

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3
Q

Where can direct cost be easily and conveniently traced to?

A

Unit of product or other cost object

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4
Q

Are indirect costs the opposite?

A

Yes

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5
Q

State an example of a direct and indirect cost?

A

Direct: direct material, and indirect: manufacturing overhead

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6
Q

What does the indirect cost of common cost do?

A

Supports a number of cost objects

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7
Q

What are the three categories of manufacturing costs?

A

Direct materials, direct labor, and manufacturing overhead

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8
Q

Do direct materials become an integral part of a product?

A

Yes

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9
Q

What are the two manufacturing costs that manufacturing overhead does not include?

A

Direct material and direct labor.

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10
Q

State two types of a manufacturing overhead?

A

Utility costs and property taxes

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11
Q

What does the summation of direct material and direct labor, and direct labor and manufacturing overhead make respectively?

A

Prime cost, and conversion cost

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12
Q

Can selling and administrative costs be either direct or indirect costs?

A

Yes

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13
Q

Define product costs?

A

Costs involved in acquiring or making a product

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14
Q

What is the difference between product and period costs?

A

Product costs: manufacturing costs, whereas period costs are non manufacturing costs

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15
Q

Where are period costs, and products costs found?

A

Products costs are found on balance sheet, then when sold are found on income statement. Period costs are found on the income statement

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16
Q

What does cost behaviour refer to?

A

How cost changes with the level of activity

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17
Q

What are the three main costs used to describe this?

A

Variable cost, fixed cost, mixed cost

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18
Q

Is a variable cost per unit constant?

A

Yes

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19
Q

State two things that can increase the differing of variable costs?

A

Labor hours and machine hours

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20
Q

Does a fixed cost per unit change inversely?

A

Yes

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21
Q

What are the two types of fixed costs?

A

Committed and discretionary

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22
Q

Which of committed and discretionary costs can be altered in short run?

A

Discretionary

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23
Q

Is a curvilinear variable cost one that increases at a non-constant rate as volume increases?

A

Yes

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24
Q

Does relative range of activity pertain to fixed cost as well as variable costs?

A

Yes

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25
Q

What is the relative range of activity for a fixed cost?

A

When the range of activity is flat for the cost

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26
Q

Do mixed costs contain both variable costs and fixed costs?

A

Yes

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27
Q

Is this the case for utility costs?

A

Yes

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28
Q

How can the total mixed cost line be expressed as an equation?

A

Y (total mixed cost) = a (total fixed cost) + b (variable cost per unit) X (the level of activity)

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29
Q

What concepts are necessary to have a grasp of to make a decision?

A

Differential costs and revenues, opportunity costs, sunk costs

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30
Q

Are differential costs the difference in cost between two alternatives?

A

Yes

31
Q

Can differential costs be either fixed or variable?

A

Yes

32
Q

Who primarily uses the traditional format income statement?

A

External reporting

33
Q

Who primarily uses the contribution format income statement?

A

Management

34
Q

What are two characteristics of job order costing?

A

Many different products are produced each period. Requires tracing or allocating to each job and maintains the cost on the records

35
Q

Is direct material and direct labor charged to each job as performed?

A

Yes

36
Q

Is manufacturing overhead traced to each product individually?

A

No

37
Q

What is an allocation base used for?

A

To assign manufacturing overhead to individual jobs

38
Q

State one reason why an allocation base is used?

A

As many types of manufacturing overhead costs are fixed even though output fluctuates

39
Q

Is the predetermined overhead rate determined before the period begins?

A

Yes

40
Q

How do you calculate POHR?

A

Estimated total manufacturing overhead cost for coming period / Estimated total units in the allocation base for coming period

41
Q

How is the predetermined overhead rate calculated?

A

By first calculating the estimated total manufacturing overhead cost: estimated total FMOC (fixed manufacturing overhead cost)+ (estimated VMOC per unit of allocation base*estimated total amount of allocation base). Then divide that figure by estimated total amount of allocation base

42
Q

How do you find the total cost when using a plant wide predetermined overhead rate?

A

You calculate the predetermined overhead rate. Then find the direct materials, total direct labor, and total manufacturing overhead, and sum them

43
Q

Which cost out of direct materials, direct labor, and manufacturing overhead does job-order costing normally fail to allocate?

A

Manufacturing overhead cost

44
Q

When can multiple pre determined overhead rates be used?

A

If more than one overhead cost driver can be identified

45
Q

What is it called when a company creates overhead rates based on activities performed?

A

Activity-based costing

46
Q

What do all of a company’s job cost sheets collectively form?

A

Subsidiary ledger

47
Q

Do job-cost sheets show the costs comprised from the amounts reported in work-in-process and finished goods on balance sheet?

A

Yes

48
Q

Is it the same for COGS on the income statement?

A

Yes

49
Q

When does an under applied overhead occur?

A

When a company applies less overhead to production than it actually incurs

50
Q

Must the COGS on an income statement be adjusted depending on whether there is under applied or over applied overhead?

A

Yes

51
Q

Job-order costing is also used in many services?

A

True

52
Q

What is absorption costing?

A

A costing method that includes all manufacturing costs in the cost of the product

53
Q

What formula should be used to assign overheads to jobs?

A

Predetermined overhead rate x Amount of allocation base incurred by the job

54
Q

What is normal costing?

A

When the overhead cost is applied to a job by multiplying pre determined overhead rate by actual amount of allocation base

55
Q

Describe the flow of costs?

A

Product costs: raw materials, direct labor, and manufacturing overheads go onto balance sheet as raw materials inventory. Eventually send the cost of goods sold to the income statement, and period cost: selling and administrative go straight to income statement

56
Q

Can you represent raw materials as a T-account?

A

Yes, material purchases would be debited and direct/indirect materials would be credited

57
Q

After showing the raw material T-account, would the indirect materials become debited in Mfg. overhead, and direct materials debited in work in process?

A

Yes

58
Q

When recording the actual manufacturing overhead costs does other overhead get debited in mfg. overhead t-account and nothing additionally debited in work in process t-account?

A

Yes

59
Q

To balance the mfg.overhead out does the overhead applied to work in process get put in debit for work in process and credit for mfg.overhead?

A

Yes

60
Q

What should be done if actual and applied manufacturing overhead are not equal?

A

A year-end adjustment is required

61
Q

How are non-manufacturing costs assigned?

A

In the period incurred rather than individual jobs

62
Q

What would be debited and credited if depreciation on office equipment was $7,000 during April?

A

Depreciation expense would be debited and accumulated depreciation credited

63
Q

How do you transfer completed jobs from work in process to finished goods?

A

Transfer cost of goods manufactured from credits of work in process to debit of finished goods

64
Q

What three types of costs do the schedules of cost of goods sold and cost of goods manufactured contain?

A

Direct materials, direct labor, and manufacturing overhead

65
Q

What do the schedules calculate?

A

Cost of raw material and direct labor used in production, and amount of manufacturing overhead applied to production.
Manufacturing costs applied with what was finished being made during the period

66
Q

How is total work in process (cost of goods available for sale) for the period calculated?

A

Beginning work in process inventory + Total manufacturing costs

67
Q

How is cost of goods manufactured calculated after finding total work in process (cost of goods available for sale)?

A

You minus ending work in process inventory

68
Q

How do you calculate the raw materials used in production?

A

Beg. raw material inventory + Raw materials purchased = Raw materials available for use in production. Ans - Ending raw materials inventory

69
Q

How do you calculate total manufacturing costs?

A

Direct materials + Direct labor + Mfg. overhead applied

70
Q

How do you calculate cost of goods sold?

A

Beg. finished goods inventory + Cost of goods manufactured = Cost of goods available for sale. Cost of goods available - Ending finished goods inventory

71
Q

What is the difference between overhead cost applied to work in process and actual overhead costs called?

A

Under applied or over applied overhead

72
Q

What is under applied overhead?

A

When the level of overhead from predetermined overhead rate is less than the actual

73
Q

Where can oversupplied overhead disposed?

A

Can be closed to COGS or can be closed proportionally to work in process, finished goods, and COGS

74
Q
A

Managerial accounting (4 decks)

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