8/28 Chapter 2

Question 1

strategy

Answer 1

game plan, the focal point of a strategy should be its target customers
ex: differentiation,

Question 2

work of management

Answer 2

planning
directing and motivating
controlling

Question 3

Planning

Answer 3

1identify alternatives
2select alternative that does the best job of furthering organization’s objectives
3develop budget

Question 4

Directing and motivating

Answer 4

day to day activities

Question 5

Controlling

Answer 5

ensures that plans are being followed, compares actual to budget

Question 6

Financial VS Managerial

Answer 6

different

Question 7

Financial

Answer 7

External users
Historical perspective
Emphasis on verifiability
Emphasis on precisions

Question 8

Managerial

Answer 8

Emphasis on relevance regardless of if it complies with GAAP

Question 9

Decentralization

Answer 9

the delegation of decision making authority throughout an organization

Question 10

Line Position

Answer 10

directly related to achievement of the basic objectives of an organization

Question 11

staff position

Answer 11

supports the line positions

Question 12

CFO

Answer 12

top management team, provides info for users

Question 13

Chapter 2

Answer 13

learn well

Question 14

Direct Materials

Answer 14

plastic actual things made

Raw Materials-part of the product that can be conveniently traced directly to it

Question 15

Direct labor

Answer 15

work done by people

Question 16

Manufacturing Overhead

Answer 16

utilities, maintenance, things that are not on a specific product or object
Indirect labor - employees not directly involved in production and
indirect materials- used to support the production process
things that can’t be directly traced to

Question 17

Raw Materials

Answer 17

part of the product that can be conveniently traced directly to it

Question 18

Economically Feasible

Answer 18

pertaining to money or finances, reasonable to trace it to a job

Question 19

Selling Costs

Answer 19

costs necessary to get the order and deliver the product

Question 20

administrative costs

Answer 20

all executive, organizational, and clerical costs

Question 21

Product costs

Answer 21

include direct materials, direct labor, and manufacturing overhead

Question 22

Period Costs

Answer 22

include all selling costs and administrative costs

Question 23

Prime cost

Answer 23

direct materials and direct labor

Question 24

Conversion cost

Answer 24

Direct Labor and manufacturing overhead

Question 25

Merchandisers

Answer 25

by finished goods sell finished goods

Question 26

Manufacturers

Answer 26

buy raw materials produce and sell finished goods

Question 27

Merchandiser balance sheet

Answer 27

current assets cash receivables, prepaid expenses merchandise inventory

Question 28

Manufacturer

Answer 28

current assets cash, receivables, prepaid expenses, inventories raw materials - materials work in process - goods in process, finished goods - ready to sell

Question 29

Inventory Equation

Answer 29

Beginning Balance + Additions to inventory = Ending balance + withdrawals from inventory

Question 30

Variable Costs

Answer 30

change with the level of production | per unit cost is not changed

Question 31

Fixed Costs

Answer 31

do not change the amount of production | per unit cost is lower with more units

Question 32

Direct costs

Answer 32

Costs that can be easily traced to a unit of product

Question 33

indirect costs

Answer 33

costs that are not easy to trace

Question 34

Opportunity Cost

Answer 34

the potential benefit that you lose from doing one thing

Question 35

Sunk Costs

Answer 35

Costs that have already been incurred and cannot be changed, these are ignored when we make a decision

Question 36

Product Costs

Answer 36

Direct - only when it is directly related to production | Indirect - (Rent, Indirect Mat, Labor)manufacturing OH

Question 37

Period Cost

Answer 37

Selling, General, and Administrative