1&2

Question 1

Strategy

Answer 1

a game plan that enables a company to attract customers y distinguishing itself from its competitors.

Question 2

Value propositions: (3)

& define

Answer 2

customer intimacy: we understand our customers needs
operational excellence: we deliver fast, conveniently, and lower prices
product leadership: we offer higher quality than competitors

Question 3

line positions vs staff

Answer 3

line: directly involved in achieving the basic objectives
(CEO, Board of Directors, COO)
staff: indirectly involved, provide assistance to line positions
(CFO, controller, treasurer)

Question 4

Decentralization

Answer 4

delegation of decision making authority by allowing managers to make decisions relating to their area of responsibility.

Question 5

Chief financial officer (CFO)

Answer 5

responsible for providing timely and relevant data to support planning and control activities and for preparing financial statements for external users.

Question 6

Controller

Answer 6

accountant under CFO

Question 7

business process

Answer 7

a series of steps that are followed in order to carry out tasks

Question 8

Value Chain

Answer 8

major business functions that add value to a company’s products and services

Question 9

Lean thinking model

Answer 9

pulls units through a 5 step process in response to customer orders.
-keep inventory low (JIT)

Question 10

Supply chain management

Answer 10

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

Question 11

Theory of constraint

Answer 11

effectively manage constraints

Question 12

Constraint

& examples

Answer 12

anything that prevents you from getting more of what you want
- time, machine capacity, labor

Question 13

Six Sigma

Answer 13

a process improvement method that relies on customer feedback and fact-based data gathering and analysis to drive process improvement.
*zero defects

Question 14

DMAIC

Answer 14

define, measure, analyze, improve, control

Question 15

Non Value Added Activities

Answer 15

add no value and customers not willing to pay for it

Question 16

Corporate Governance

Answer 16

should ensure stockholders that the business is being run in their best interest

Question 17

Sarbanes-Oxley Act

& 2 provisions

Answer 17

to protect the interest of those who invest in publicly traded companies

• whistler blower protection
• document retention

Question 18

Managing Risk

Answer 18

identify risks before they occur to prevent loss or minimize the effects of risk

Question 19

Corporate Social Responsibility

Answer 19

ensures that stakeholders (customers, employees, supplies, communities, environmental and human rights advocates) interest are considered when making decisions.

Question 20

Planning

Answer 20

involves establishing a basic strategy, selecting a course of action and specifying how the action will be implemented

Question 21

Directing and Motivating

Answer 21

mobilizing people to carry out plans and run routine operations

Question 22

Controlling

Answer 22

ensuring the plan is effectively carried out and appropriately modified if need be.

Question 23

Budget (budgeting)

Answer 23

plans of management

Budgets are usually prepared under the direction go the controller (the head of the accounting department)

Question 24

feedback

Answer 24

signals whether operations are on track

Question 25

planning and controlling cycle

Answer 25

the smooth flow of management activities from planning through directing and motivating, controlling and then back to planning again.

Question 26

Managerial accounting

Answer 26

concerned with providing information to managers, people inside the organization

Question 27

Financial accounting

Answer 27

providing info to stockholders, creditors, and others outside the organizations

Question 28

Segments

Answer 28

managerial accounting focuses on the “parts” of a company

Question 29

raw materials (may include both direct and indirect materials)

Answer 29

the materials that go into the final product

Question 30

Direct materials vs Indirect

Answer 30

• materials that become a part of the finished product and whose costs can be conveniently traced to the finished product
• minor items that are needed for the production of the finished product but are not put into the final product. ex. glue The cost of these items are not worth tracking. (included in overhead cost)

Question 31

Direct Labor vs indirect labor

Answer 31

• consists of labor costs that be traced to individual units product.
• labor costs that cannot be physically traced to the product or can only be traced at great cost and inconvenience.
  (manufacturing overhead cost)

Question 32

Manufacturing overhead

Answer 32

includes all manufacturing costs that have to do with the manufacturing warehouse except direct materials and direct labor.
EX. insurance, direct manufacturing warehouse, manufacturing facilities, light, property taxes, depreciation, repairs of production equipment, heat and light
*these same costs can be incurred with selling and administrative functions however, ONLY costs associated with operating the factory are included in overhead.

Question 33

Selling cost

non-manufacturing cost

Answer 33

all costs that are incurred to secure customer orders and get the finished product to the customer and get the product to the customer.
EX. advertising, shipping, sales and travel, sales commissions, COGs warehouses

Question 34

administrative costs

Answer 34

all costs associated with the general management of an organization rather than with manufacturing or selling.
EX. executive compensation, general accounting, secretarial, public relations

Question 35

product costs

inventoriable costs

Answer 35

all costs involved in acquiring or making a product.

• assigned to an inventory account on the Balance sheet, when sold it goes under COGS and matched as Sales revenue.
• *treated as an expense until the related products are sold

Question 36

Period Costs

Answer 36

all costs that are not product costs, non manufacturing costs. selling and administrative costs
EX. sales commision and rental costs of administrative
*expensed on the income statement in they period in which they are incurred

Question 37

Prime cost

Answer 37

Direct materials + direct labor

Question 37

Prime cost

Answer 37

Direct materials + direct labor

Question 38

Conversion cost

Answer 38

Sum of direct labor cost and manufacturing overhead cost

Question 39

Direct materials used equation

Answer 39

Beg.DM inventory 
\+ 
Purchased DM
- 
end.DM.inventory

Question 40

COGS Manufactured equation

Answer 40

Beg. W/P invent
\+ DM Used 
\+ Direct Labor
\+ Man O/H applied
- End. W/P invent

Question 41

COGS

Answer 41

Beg. F/G invent
+ cogs manufactured
- End F/G invent

Question 43

COGS manufactured

Answer 43

cost of goods that were finished during the period

includes DM DL and O/H manufacturing costs! but only when in the period

Question 44

Cost Behavior

Answer 44

how cost reacts to changes in the level of activity

Question 45

Variable Cost

Answer 45

a cost that varies in total, direct proportions to changes in level of activity
ex. electricity bill, DIRECT materials: DM’s used during any given period will vary, in direct proportion to the number of units produced
also, shipping costs and sales commissions, some elements of O/H costs such as lubricants

Question 46

Fixed cost

Answer 46

remains constant regardless of the changes in activity
ex. rent, salaries, advertising, straight-line depreciation
average fixed cost per unit increases and decreases inversely with changes in activity

Question 47

direct cost

Answer 47

a cost that can be easily and conveniently traced to a specified cost object.
ex. assigning costs to regional and national sale offices; the salary of a sales manager in the tokyo office would be a direct cost of that office.

Question 48

Indirect cost

Answer 48

a cost that cannot be easily and conveniently traced t a specified cost object.
ex. Campbell Soup factory; the sales managers salary is an indirect cost of a variety of soup, such as chicken noodle or cream of mushroom. The salary is a Common Cost

Question 49

common cost

Answer 49

a cost that is incurred to support a number of cost objects but cannot be traced back to one individually.
it is a type of Indirect Cost

Question 50

Net Operating Income

Answer 50

Sales Rev
- 
COGS
= (GDP)
- OP Expenses (over cost that aren't factory)