Cost Shits (1)

Question 1

Differentiate Financial and Management Accountants

Answer 1

Financial meets external information needs
and has to comply with GAAP

Management has to meet internal information needs
and does not have to comply with GAAP

Question 2

These are deliberate accounting adjustments to “hit” profit targets
Often adjustments involve?

Answer 2

Earnings Management, Involves Cost accounting

Question 3

This act has CEOs and CFOs personally accountable for the accuracy of their organization’s financial reporting

Answer 3

Sarbanes-Oxley Act

Question 3

This act has whistle-blower protection and penalties for failure to blow the whistle (disclose known financial frauds)

Answer 3

False Claims Act

Question 3

What are the Standards of Ethical Conduct for Management Accountants

Answer 3

Competence
Confidentiality
Integrity
Credibility

Question 4

What are the Five Factors in Organizational Strategy?

Answer 4

Core competencies
Organizational structure
Management style and organizational culture
Organizational constraints
Environmental constraints

Question 5

This organizational strategy is a critical function or activity providing a competitive advantage

Answer 5

Core competency

Question 6

This organizational strategy undercuts competitor prices

Answer 6

Cost leadership strategy

Question 6

This organizational strategy has superior quality products or unique services sold at a premium

Answer 6

Product differentiation strategy

Question 7

This is the right to use resources to accomplish a task or achieve an objective

Answer 7

Authority

Question 7

This is the obligation to accomplish a task or achieve an objective

Answer 7

Responsibility

Question 8

This person works directly toward attaining organizational goals

Answer 8

Line manager

Question 8

These people give assistance and advice to line managers

Answer 8

Staff employees
(ex: Treasurer and Controller)

Question 9

A set of value-adding functions and processes that converts inputs into products or services

Answer 9

Value Chain

Question 10

This act prohibits bribes to obtain/retain business

Answer 10

Foreign Corrupt Practices Act

Question 11

This thing is crime to offer, promise, give bribes to obtain/retain internal business deals

Answer 11

Organization of Economic Cooperation and Development Convention

Question 12

What are the 3 cost categories?

Answer 12

Association with cost object
Reaction to changes in activity
Classification on the financial statements

Question 13

This is anything for which management wants to collect or accumulate costs

Answer 13

Cost Object

Question 14

What are the types of cost included in association with cost object?

Answer 14

Direct—traceable to a cost object
Indirect—not conveniently or practically traceable to a cost object

Treated as overhead
Allocated

Question 15

What are the Reactions to Changes in Activity

Answer 15

Variable (Fluctuates
Fixed (remains constant)
Mixed (Is part variable, part fixed)
Step (Increases at certain activity levels)

Question 15

Activity accompanied by consistent, observable changes in a cost item

Predicts but may not cause the cost to change

Answer 15

Cost Predictor

Question 16

What is a total variable cost

Answer 16

Varies in direct
proportion to
changes in activity

Question 16

What is a total fixed cost

Answer 16

Remains constant
throughout
the relevant range

Question 16

What is a unit fixed cost?

Answer 16

Varies inversely
with changes in
activity throughout
the relevant range

Question 16

This is an Activity that has a direct cause-effect relationship on cost

Directly causes the cost to change

Answer 16

Cost Driver

Question 17

What is a unit variable cost

Answer 17

Remains constant
throughout the
relevant range

Question 18

What are the Classifications on the following Financial Statements?

Unexpired
Expired

Product
Prime
Conversion
Overhead

Period

Answer 18

—balance sheet assets
—income statement expenses

—inventoriable costs
—direct material and direct labor
—direct labor and overhead
—Indirect production cost
Product costs are unexpired before sale
Product costs are expired when sold

—expensed in period incurred

Question 19

This process Change inputs into outputs

Answer 19

The Conversion Process

Question 20

What are examples of low, moderate, high levels of conversion?

Answer 20

Low:
Department stores
Gas stations

Moderate:
Florists
Meat markets

High:
Manufacturing
Construction
Agriculture
Architecture

Question 20

What are the three inventory accounts for a manufacturing company?

Answer 20

Raw Material Inventory,
Work in Process Inventory,
Finished Goods Inventory

Question 21

What are the three components of product cost?

Answer 21

Direct Labor
Direct Materials
Overhead