exam 1 (ch 1-4)

Question 1

what is the purpose of managerial accounting?

Answer 1

help management make informed business decisions

Question 2

what is the role of financial accounting?

Answer 2

reporting a company’s financial performance to external parties

Question 3

manufacturing firms

Answer 3

companies that convert materials into finished products

Question 4

merchandising firms

Answer 4

companies that purchase finished products from manufacturers for warehousing, display, and sale to customers

Question 5

service firms

Answer 5

companies that provide services to customers

Question 6

outsourcing

Answer 6

when a business hires or contracts with another business to provide a product or service that had previously been provided within the business

Question 7

stand-alone automation

Answer 7

incorporates a robot or a computer-controlled machine into an existing manufacturing process to perform a single function

Question 8

flexible-manufacturing-system automation

Answer 8

involves multiple cells of two or more automated machines

Question 9

manufacturing cell

Answer 9

the machines and processes that a product flows through that creates an automated flow

Question 10

safety stocks

Answer 10

a manufacturer keeping a supply of materials needed to produce a particular product in case a supplier is late

Question 11

just-in-time inventory system

Answer 11

materials are ordered so that only the materials needed for production each day would be received each morning

Question 12

lean manufacturing

Answer 12

making a production process more efficient with time and money

Question 13

product cost

Answer 13

accumulating and allocating the costs of all inputs in the manufacturing process to cost objects

Question 14

cost objects

Answer 14

anything for which managers want to determine the cost

Question 15

examples of cost objects

Answer 15

Individual units, departments, product lines, and marketing initiatives

Question 16

product costs

Answer 16

include all costs necessary to bring a product to completion

Question 17

period costs

Answer 17

include all other costs of operations other than product costs

Question 18

variable cost

Answer 18

varies by number of units produced but is fixed per unit

Question 19

fixed cost

Answer 19

is fixed in total but varies on a per-unit basis

Question 20

mixed cost

Answer 20

has both fixed and variable components

Question 21

direct costs

Answer 21

a cost that can be easily and cost-effectively traced to a specific cost object

Question 22

indirect costs

Answer 22

a cost that relates to a cost object but cannot be easily or cost-effectively traced to it

Question 23

cost control

Answer 23

involves the accumulation of information to measure management performance and evaluate operational efficiency

Question 24

direct materials

Answer 24

include all of the important materials and components that physically make up the product

Question 25

direct labor

Answer 25

includes the salary and wage cost of factory employees who work directly on the product

Question 26

manufacturing overhead

Answer 26

consists of all manufacturing costs including indirect material and indirect labor

Question 27

prime costs

Answer 27

direct materials and direct labor

Question 28

conversion costs

Answer 28

direct labor and manufacturing overhead

Question 29

selling costs

Answer 29

Costs necessary to secure the order and deliver the product(can be direct or indirect costs)

Question 30

administrative costs

Answer 30

All executive, organizational, and clerical costs(can be direct or indirect costs)

Question 31

what goes into work in process(WIP)

Answer 31

direct labor + direct materials + applied overhead

Question 32

job order costing

Answer 32

• Customized products and services

- Product and unit costs accumulated by job on the job cost sheet

Question 33

process costing

Answer 33

• Homogeneous products

- Product and unit costs accumulated by the production department

Question 34

predetermined manufacturing overhead rate =

Answer 34

= (estimated overhead cost) / (estimated application base)

Question 35

estimated application base

Answer 35

Direct labor hours, direct labor cost, or machine hours

Question 36

Applied manufacturing overhead =

Answer 36

= (predetermined rate) x (actual application base)

Question 37

Allocated service department cost =

Answer 37

= (allocation rate) x (actual allocation base used by the production department)

Question 38

Product cost report

Answer 38

accumulates costs by process or department

Question 39

Sequential product processing pattern

Answer 39

All goods follow a sole path through the manufacturing process to finished goods inventory

Question 40

parallel product processing

Answer 40

Similar products may begin with the same raw materials or processing in one department and then follow slightly different processes to arrive in finished goods inventory

Question 41

Average cost per unit =

Answer 41

= total costs incurred / # of equivalent units

Question 42

equivalent units

Answer 42

the equivalent number of whole units completed during the period

Question 43

journal entry to record materials purchased

Answer 43

• materials inventory

- ———-accounts payable

Question 44

journal entry to record materials used

Answer 44

• work-in-process

- ———-materials inventory

Question 45

journal entry to record labor(payroll)

Answer 45

• work-in-proces

- ———- wages payable

Question 46

journal entry to apply manufacturing overhead

Answer 46

• work-in-process

- ———-manufacturing overhead

Question 47

journal entry to record finished goods

Answer 47

• finished goods

- ———-work-in-process

Question 48

journal entry to record COGS

Answer 48

• COGS

- ———-finished goods inventory

Question 49

journal entry to record sales

Answer 49

• accounts receivable

- ———-sales revenue

Question 50

journal entry to dispose of underapplied overhead

Answer 50

• COGS

- ———-manufacturing overhead

Question 51

journal entry to dispose of overapplied overhead

Answer 51

• manufacturing overhead

- ———-COGS