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Cost Accounting > Cost Exam 1 (Ch 1-4) > Flashcards

Cost Exam 1 (Ch 1-4) Flashcards

1
Q

Who is the audience in managerial accounting?

A

Internal management

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2
Q

What are the 3 purposes of managerial accounting?

A

Planning
Controlling
Decision Making

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3
Q

The control process of managerial accounting involves gathering, evaluating, and responding to ______.

A

feedback

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4
Q

What are 3 uses for managerial accounting reports?

A

planning for the future
making progress toward goals
making strategic decisions

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5
Q

Strategic management involves coming up with a _____ ______ ______ (a plan for satisfying customers)

A

customer value proposition

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6
Q

What are the 3 types of customer value propositions?

A

Customer intimacy
Operational excellence
Product leadership

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7
Q

What are the two goals of risk management?

A

Identify risks

Develop responses

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8
Q

Adding products that add value and removing products that don’t is known as ____ _______.

A

Process management

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9
Q

When products are produced in response to customer orders, this is known as Just-in-Time production, or ______ production.

A

Lean

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10
Q

The weakest link, or “constraint” is also known as the ______.

A

Bottleneck

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11
Q

6 traits of a good leader:

A 
Technically competent
Person of integrity
Effective in implementing organizational change
Strong communicator
Capable of motivating
Effective manager
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12
Q

What are the 4 principles in the Statement of Ethical Professional Practice?

A

Honesty
Fairness
Objectivity
Responsibility

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13
Q

What are the 4 standards in the Statement of Ethical Professional Practice?

A

Competence
Confidentiality
Integrity
Credibility

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14
Q

Corporate social responsibility considers the needs of all ________.

A

Stakeholders

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15
Q

The way the company is directed and controlled is known as _____ _______.

A

Corporate governance

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16
Q

Internal controls can be either _____ or ______.

A

preventative

detective

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17
Q

What is the difference between indirect materials and direct materials?

A

Direct materials can be traced to the product. Indirect materials are not cost effective to trace.

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18
Q

What is the difference between indirect labor and direct labor?

A

Direct labor is provided by the people who actually touch the product.

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19
Q

What are the 3 components of manufacturing overhead?

A

Indirect labor
Indirect materials
Other overhead

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20
Q

What are the two types of non manufacturing costs?

A

Selling costs

Administrative costs

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21
Q

What is another term for non manufacturing costs?

A

Period costs

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22
Q

What does Prime Cost consist of?

A

Direct materials and direct labor

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23
Q

What does Conversion Cost consist of?

A

Direct labor and overhead

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24
Q

The way a cost reacts to a change in activity level is known as ____ _____.

A

Cost behavior

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25
Q

What is another term for activity base?

A

Cost driver

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26
Q

How is total variable cost calculated?

A

Variable cost per unit times quantity

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27
Q

With fixed costs, when the activity level increases, what happens to the fixed cost per unit?

A

It decreases

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28
Q

A cost that cannot be avoided, even if the product is discontinued, is known as a _____ fixed cost.

A

Committed

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29
Q

A cost that can be controlled in the short-term is known as a _____ fixed cost.

A

Discretionary

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30
Q

Costs are only linear in the _____ ______.

A

Relevant range

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31
Q

What is a mixed cost?

A

A cost that contains both fixed and variable components

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32
Q

What is the formula for the high-low method of estimating variable costs?

A

(cost at high level - cost at low level) / (high level - low level)

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33
Q

What is the formula for the slope of a line?

A

Y = mx + b

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34
Q

In the formula Y = mx + b, what represents “total cost”?

A

Y

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35
Q

In the formula Y = mx + b, what represents “variable cost per unit”?

A

m

36
Q

In the formula Y = mx + b, what represents “quantity”?

A

x

37
Q

In the formula Y = mx + b, what represents “fixed costs”?

A

b

38
Q

In the formula Y = mx + b, what represents the independent variable?

A

x

39
Q

What is multicolinearity?

A

When variables are highly correlated with each other

40
Q

What are the components of a traditional format income statement?

A 
Sales
- COGS
--------
Gross margin
-Selling and administrative expenses
---------
Net income
41
Q

What are the components of a contribution format income statement?

A 
Sales 
- COGS & variable selling & administrative expenses
----------
Contribution margin
-Fixed selling & administrative expenses
----------
Net income
42
Q

The thing costs are connected with is known as the ____ _____.

A

cost object

43
Q

A difference in costs between any two alternatives is a _____ ______.

A

differential cost

44
Q

A difference in revenues between any two alternatives is a ____ _____.

A

differential revenue

45
Q

A differential cost is known as an _______ ______ when the cost increases from one alternative to another.

A

incremental cost

46
Q

A differential costs is known as a ____ ______ when the cost decreases from one alternative to another.

A

decremental cost

47
Q

The potential benefit given up when one alternative is selected over another is known as ____ ____.

A

opportunity cost

48
Q

A _____ cost should never be used in decision making.

A

sunk

49
Q

When should job order costing be used?

A

When each job is unique, high cost, and built-to-order

50
Q

When jobs are done one at a time or at a low volume, this is known as ___ ____ operations.

A

Job shop

51
Q

When jobs are done in batches of small quantities, this is known as ___ ____ operations.

A

Batch production

52
Q

What document tracks materials, labor, and overhead for a particular job?

A

A job cost sheet

53
Q

What document specifies the type and quantity of materials needed for a job?

A

A materials requisition form

54
Q

What document summarizes an employee’s activities by job?

A

A direct labor time ticket

55
Q

In the formula Y = mx + b, which is the allocation base?

A

x

56
Q

When should the predetermined overhead rate be determined?

A

At the beginning of the period

57
Q

What is the formula for calculating predetermined overhead rate?

A

budgeted overhead / budgeted allocation base

58
Q

What is an allocation base?

A

The cost driver (machine hours, etc.)

59
Q

What is the formula for applying predetermined overhead rate?

A

Predetermined overhead rate times the quantity/cost driver incurred by the job

60
Q

What are the stages in 2-stage allocation?

A
  1. Assign costs to departments

2. Apply costs to products using the predetermined overhead rate

61
Q

Why should actual overhead rates only be computed once per year?

A

To account for seasonal fluctuations

62
Q

What are the 3 components of work in process inventory?

A

Direct labor, direct materials, manufacturing overhead

63
Q

When is cost of goods manufactured calculated?

A

When the goods move from work in process inventory to finished good inventory

64
Q

When is cost of goods sold calculated?

A

When the goods in finished goods inventory are sold

65
Q

The manufacturing overhead account operates as a ____ account.

A

clearing

66
Q

When should the manufacturing overhead account be debited?

A

When actual overhead costs are incurred

67
Q

When should the manufacturing overhead account be credited?

A

When the overhead is applied to work in process using the predetermined overhead rate

68
Q

When overhead is over-applied, the manufacturing overhead account will have a credit/debit balance?

A

credit

69
Q

When overhead is over-applied, COGS will be overstated/understated?

A

overstated

70
Q

When overhead is over-applied, income will be overstated/understated?

A

understated

71
Q

If there is a small credit balance in the manufacturing overhead account at the end of the period, what should be done?

A

Manufacturing overhead should be debited and Cost of Goods Sold should be credited

72
Q

If there is a small debit balance in the manufacturing overhead account at the end of the period, what should be done?

A

Manufacturing overhead should be credited and Cost of Goods Sold should be debited

73
Q

If overhead is significantly over or under-applied, how should it be allocated?

A

Between work in process, finished goods, and cost of goods sold depending on the dollar amounts in each inventory

74
Q

When should the raw materials account be debited?

A

When materials are purchased

75
Q

When should the raw materials account be credited?

A

When direct materials are added to work in process or indirect materials are added to manufacturing overhead

76
Q

When should salaries and wages payable be credited?

A

When direct labor is added to work in process or indirect labor is added to manufacturing overhead

77
Q

When should work in process be debited?

A

When the cost of direct materials, direct labor, and manufacturing overhead are applied

78
Q

When should work in process be credited?

A

When the goods are finished

79
Q

When should finished goods be debited?

A

When the goods are finished

80
Q

When should finished goods be credited?

A

When the goods are sold

81
Q

When should COGS be debited?

A

When the goods are sold

82
Q

When should process costing be used?

A

For homogeneous, low-cost products that cannot be traced to individual units

83
Q

In _____ costing, costs are accumulated for each department and then transferred out

A

Process

84
Q

The number of complete units that could have been obtained from the materials and effort that went into the partially complete units are called _____ _____.

A

Equivalent units

85
Q

The ____ method of process costing considers only the costs of the work done during the current period.

A

FIFO

86
Q

The ____ method of process costing blends the costs of the work done during the current period with the costs of the work done in the prior period.

A

Weighted Average

Cost Accounting (6 decks)

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