Exam 2 (Ch 18, 19)

Question 1

Defn: The manufacturing costs of the goods that finished the production process in a given accounting period.

Answer 1

Cost of Goods Manufactured

Question 2

Defn: An inventory account for completed goods that have not yet been sold.

Answer 2

Finished Goods Inventory (FG)

Question 3

Defn: An inventory account of materials used to manufacture a product.

Answer 3

Raw Materials Inventory (RM)

Question 4

Defn: The cost of purchasing or making a product.

The cost is recorded as an asset and then expensed when the product is sold.

Answer 4

Product cost

Question 5

Defn: The labor cost of employees who convert raw materials into finished products.

Answer 5

Direct Labor (DL)

Question 6

Defn: An accounting system that accumulates costs by process;

Used by companies that manufacture identical units through a series of unitform production steps or processes.

Answer 6

Process costing system

Question 7

Formula: Predetermined Overhead Allocation Rate

Answer 7

= (Tot. Est. Overhead Cost) / (Tot. Est. Qty of Overhead Allocation Base)

Question 8

The purpose of the information generated by managerial accounting is used by a company’s management to _________ and ___________ operations.

Answer 8

Plan and control operations

Question 9

Defn: Labor costs for activities that support the production process but either cannot be conveniently traced directly to specific finished products or are not large enough to justify tracing to the specific product.

Answer 9

Indirect Labor

Question 10

Defn: Cost that can be easily and cost-effectively traced to a cost object.

Answer 10

Direct Cost

Question 11

Defn: The cost to convert raw materials into finished goods:

Direct Labor + MOH

Answer 11

Conversion Cost

Question 12

What is the flow of matierals (or formula) for calculating the Cost of Goods Manufactured?

Answer 12

Beginning WIP + DM Used + DL + MOH - Ending WIP

Question 13

Defn: A denominator that links indirect costs to cost objects;

Ideally it is the primary cost driver of the indirect costs.

Answer 13

Allocation base

Question 14

Defn: An inventory account for goods that have been started in the manufacturing process but are not yet complete.

Answer 14

Work-in-Process Inventory (WIP)

Question 15

Defn: Anything for which managers want a separate measurements of cost.

Answer 15

Cost object

Question 16

Defn: A company that uses labor, equipment, supplies, and facilities to convert raw materials into finished products.

Answer 16

Manufacturing company

Question 17

Who are the primary users of managerial accounting?

Answer 17

company managers and employees

Question 18

Formula: Allocated Mfg Overhead Cost

Answer 18

= (Predetermined Overhead Allocation Rate) x (Act. Qty of Allocation base used by ea. job)

Question 19

Defn: A document that shows the direct materials, direct labor, and manufacturing overhead costs for an individual job.

Answer 19

Job Cost Record

Question 20

Defn: Manufacturing costs that cannot be easily and cost-effectively traced to a cost object;

Includes all manufacturing costs except direct materials and direct labor

Answer 20

Manufacturing Overhead (MOH)

Question 21

Defn: Estimated overhead cost per unit of the allocation base, calculated at the beginning of the accounting period.

Total estimated overhead cost / total estimated quantity of the overhead allocation base

Answer 21

Predetermined Overhead Allocation Rate

Question 22

Defn: Direct Materials plus Direct Labor

Answer 22

Prime Cost

Question 23

Defn: When the actual maunfacturing overhead costs are more than allocated manufacturing overhead costs.

Answer 23

Underallocated Overhead

Question 24

Defn: An operating cost that is expensed in the accounting period in which it is incurred.

Answer 24

Period Cost

Question 25

Defn: Cost that cannot be easily or cost-effectively traced to a cost object

Answer 25

Indirect Cost

Question 26

Defn: Materials used in making a product but whose costs either cannot be conveniently traced directly to specific finished products or are not large enough to justify tracing to the specific product.

Answer 26

Indirect Materials

Question 27

Defn: When the actual MOH costs are less than allocated MOH.

Answer 27

Overallocated Overhead

Question 28

Defn: A company that resells products previously bought from suppliers.

Answer 28

Merchandising company

Question 29

Defn: Marterials that become a physical part of a finished product and whose costs are easily traced to the finished product.

Answer 29

Direct Materials (DM)