Midterm

Question 1

ABC

Answer 1

method of allocating overhead based on each product’s use of activities in making the product using cost drivers

Question 2

Balanced Scorecard

Answer 2

performance-measurement approach to evaluate a company’s operations

Question 3

Controller

Answer 3

financial officer responsible for a company’s accounting records, internal control, fin statements and TR’s

Question 4

COGM

Answer 4

(total cost of WIP) - (Ending WIP inventory)

Question 5

Direct Labor

Answer 5

work directly related to converting raw materials to finished goods

Question 6

Enterprise Resource Planning

Answer 6

comprehensive software to manage all business processes

Question 7

JIT Inventory

Answer 7

goods are manufactured or purchased just in time for sale

Question 8

Line Positions

Answer 8

jobs directly involved in primary revenue-generating operating activities

Question 9

Manufacturing Overhead

Answer 9

costs indirectly associated with the manufacture of the finished product

Question 10

Period Costs

Answer 10

matched with revenue of specific time period and charged to expense as incurred

Question 11

SOX Act

Answer 11

intended to reduce unethical corporate behavior

Question 12

Staff Positions

Answer 12

jobs that support effort of line employees

Question 13

Total Cost of WIP

Answer 13

beginning WIP + total manufacturing costs of current period

Question 14

Total Manufacturing Costs

Answer 14

direct materials, direct labor, manufacturing overhead incurred in period

Question 15

Triple Bottom Line

Answer 15

evaluation of company’s social responsibility

Question 16

WIP Inventory

Answer 16

partially completed manufactured units

Question 17

Cost Accounting

Answer 17

measuring, recording, and reporting product/service costs

Question 18

Job Cost Sheet

Answer 18

used to record the costs chargeable to specific job and determine total/unit costs of the completed job

Question 19

Job Order Cost System

Answer 19

system where costs are are assigned to each job or batch

Question 20

Overapplied Overhead

Answer 20

overhead applied to WIP is greater than overhead incurred

Question 21

Predetermined Overhead Rate

Answer 21

rate based on relationship between estimated annual overhead and estimated annual operating activity, expressed by common base

Question 22

Process Cost System

Answer 22

used when company manufactures large amount of similar products

Question 23

Activity Cost Pool

Answer 23

overhead cost attributed to distinct type of activity

Question 24

Batch-Level Activities

Answer 24

performed for each batch of products rather than each unit

Question 25

Cost Driver

Answer 25

factor or activity that has a direct cause/effect relationship with resources consumed

Question 26

Facility-Level Activities

Answer 26

required to support entire production process

Question 27

Non-Value-Added Activity

Answer 27

if eliminated, would not reduce perceived value of product

Question 28

Product-Level Activities

Answer 28

support of an entire product line but not for every unit or batch

Question 29

Unit-Level Activities

Answer 29

performed for each unit of production

Question 30

Activity Index

Answer 30

activity that causes changes in the behavior of costs

Question 31

Break-Even Point

Answer 31

total revenue = total costs

Question 32

CM

Answer 32

revenue - variable costs

Question 33

CM Ratio

Answer 33

% of each dollar sales available to apply to fixed costs and contribute to net income; CM/Selling Price

Question 34

CVP Analysis

Answer 34

effects on changes in costs and volume on profits

Question 35

CVP Income Statement

Answer 35

for internal use (not GAAP) classifies costs as F or V, reports CM in body of statement

Question 36

High-Low Method

Answer 36

uses total costs incurred at high and low levels of activity to classify mixed costs into fixed and variable components

Question 37

Margin of Safety

Answer 37

difference between actual/expected sales and sales at break-even point

Question 38

Mixed Costs

Answer 38

contain both a variable and fixed element; do not change proportionately with activity level

Question 39

Regression Analysis

Answer 39

estimates cost equation by employing information from all data; minimizes sum of squared distances from the line to the data points

Question 40

Relevant Range

Answer 40

range of activity index over which the company expects to operate during the year

Question 41

Target Net Income

Answer 41

objective set by management

Question 42

Unit CM

Answer 42

revenue - VC

Question 43

Absorption Costing

Answer 43

all manufacturing costs are charged to the product

Question 44

Cost Structure

Answer 44

proportion of fixed versus variable costs that a company incurs

Question 45

Degree of Operating Leverage

Answer 45

measure of extent to which a company's net income reacts to a change in sales; CM/NI

Question 46

Theory of Constraints

Answer 46

used to identify and manage constraints in order to achieve goals

Question 47

Variable Costing

Answer 47

only variable manufacturing costs are product costs, and fixed manufacturing costs are period costs

Question 48

Participative budgeting

Answer 48

each level of management participates

Question 49

Budgetary slack

Answer 49

when managers intentionally underestimate revenues or overestimate expenses to achieve goals easier.

Question 50

Long-range planning is usually at least __ years.

Answer 50

5

Question 51

Master budget contains what two classes of budgets?

Answer 51

Operating and financial

Question 52

Operating budget

Answer 52

result in preparation of budgeted income statement. Sales and Production

Question 53

Financial budget

Answer 53

cash resources; capital expenditure budget, cash budget, budgeted balance sheet

Question 54

Sales budget

Answer 54

prepared first, from sales forecast

Question 55

Production budget

Answer 55

number of units to produce to meet sales demand

Question 56

Direct materials budget

Answer 56

quantity and cost of direct materials to be purchased

Question 57

Direct labor budget

Answer 57

quantity (hours) and cost of labor to meet production requirements

Question 58

Manufacturing overhead budget

Answer 58

distinguished between variable and fixed costs, per labor hours

Question 59

Selling & Admin expense budget

Answer 59

combines operating expenses. Variable separate from fixed

Question 60

Budgeted Income Statement

Answer 60

end-product. Expected profitability for time period.

Question 61

Cash budget

Answer 61

anticipated cash flows (receipts, disbursements, and financing)

Question 62

Budgeted balance sheet

Answer 62

Assets and Liabilities