Exam 2 (Quiz 4) - Chapter 16

Question 1

Define:

Managerial Accounting

Answer 1

provides qualitative information to managers, and the quantitative information includes financial and non-financial data

Question 2

Define:

Non-financial data in managerial accounting

Answer 2

Important quantitative information not on financial statements such as customer satisfaction, employee satisfaction, employee performance metrics

Important in terms of predicting future performance of an organization

Question 3

Answer:

Managerial accounting provides information to ___(a)___ users and not ___(b)___ uses. You cannot ___(c)___ on managerial accounting information, that would be considered ___(d)___

Answer 3

a. inside
b. outside
c. trade
d. insider trading

Question 4

Answer:

Managerial accounting allows internal users to make important decisions about ___(a)__, particularly about ___(b)___ and ___(c)___

Answer 4

a. the operation
b. planning
c. controlling

Question 5

Answer:

With planning, you make ___(a)___ plans and ___(b)___ plans. A typical type of planning is ___(c)___

Answer 5

a. long term
b. short term
c. budgeting

Question 6

List:

Parts of Controlling

Answer 6

1. Actual Performance (measure of what happened)

2. Variance Analysis (comparison of budget and actual performance)

Question 7

Define:

Actual Performance

Answer 7

Measure of performance at the end of a period

measure of what actually happened

Question 8

Define:

Variance Analysis

Answer 8

Comparison of budget to actual performance

So it is a comparison of how we wanted to perform versus how we actually performed

Look at the reason for the variance, if it is favorable or non-favorable, and if it is controllable or non-controllable

Question 9

Answer:

In variance analysis, we look at the ___(a)___ for variance and whether this is ___(b)___ or ___(c)____. Is it ___(d)___ or ___(e)___

Answer 9

a. reason
b. favorable
c. unfavorable
d. controllable
e. non-controllable

Question 10

Answer:

Financial accounting is about ___(a)___, while managerial accounting is about ___(b)___ and ___(c)___

Answer 10

a. the past, what already occurred
b. retrospection (the past)
c. prospection (the future)

Question 11

Answer:

Budget is about ___(a)___

Answer 11

a. the future

Question 12

Answer:

The target audience for financial accounting is ___(a)___, while the target audience for managerial accounting is ___(b)___

Answer 12

a. outsiders

b. insiders

Question 13

Answer:

There is a lot of ___(a)___ information and ___(b)___ information on managerial accounting statements

Answer 13

a. proprietary

b. private

Question 14

Answer:

In managerial accounting, there are no rules about ___(a)___ or ___(b)___

Answer 14

a. the specific form

b. presentation format

Question 15

Answer:

One of the most important pieces of data extracted by both financial and managerial accounting is ___(a)___

Answer 15

a. cost

Question 16

Answer:

Cost is a/an ___(a)___ term. It is a measure of ___(b)___

Answer 16

a. economic

b. all of the economic resources given up to achieve a particular purpose

Question 17

Answer:

In financial accounting you have to specify if the cost is a/an ___(a)___ or ___(b)___

Answer 17

a. asset

b. expense

Question 18

Answer:

In financial accounting, if a cost is an asset, it is ___(a)___, but for the ___(b)___

Answer 18

a. money or economic resources given up to achieve something

b. future benefit

Question 19

Answer:

In financial accounting, cost expenses are incurred when ___(a)___ for the purpose of ___(b)___, so expenses are going to help you focus on ___(c)___

Answer 19

a. assets are used up or sold
b. generating revenue for the period
c. this period of benefits

Question 20

Answer:

For managerial accounting, you have to specify if cost is ___(a)___ or ___(b)___

Answer 20

a. product cost

b. period cost

Question 21

Answer:

In managerial accounting, product cost has to be related to ___(a)___ and you are specifically focusing on the ___(b)___

Answer 21

a. the inventory

b. physical inventory

Question 22

Answer:

In managerial accounting, for manufacturing firms, product cost is talking about either ___(a)___, or ___(b)___

Answer 22

a. cost of obtaining inventory

b. cost of producing inventory

Question 23

Answer:

In managerial accounting, period cost is related to ___(a)___, so all of the other ___(b)___ cost which are not ____(c)___

Answer 23

a. time
b. non-production
c. inventorized

Question 24

List:

Examples of Period Cost in Managerial Accounting

Answer 24

1. CEO compensation

2. CFO Compensation

Question 25

List:

Examples of Product Cost

Answer 25

1. direct materials used for production
2. direct labor used for production
3. Utility bills in the unit of production

Question 26

Answer:

In managerial accounting, all of the costs that occurred ___(a)___ are the ___(b)___ cost, and all of the cost that occurred ___(c)___ are the ___(d)___

Answer 26

a. during or in the production unit
b. production
c. outside of the production unit
d. period

Question 27

Answer:

For service companies, their costs are ___(a)___ because they don’t have ____(b)____ or ___(c)____

Answer 27

a. period costs
b. goods for sale
c. physical inventories

Question 28

Example:

Unit cost for service company

Costs: $3,900
Services Rendered: 1950

Answer 28

Cost / Services Rendered

$3,900 / 1950 = $2 per service rendered

Question 29

Answer:

The ___(a)___ of a service company will be available of financial statements, but ___(b)___ will not be on financial statements, and is only available in ___(c)___

Answer 29

a. period costs
b. unit costs
c. managerial accounting reports

Question 30

Answer:

The unit cost information on managerial accounting reports is important to ___(a)___ because it allows them to determine ___(b)___ and ___(c)___

Answer 30

a. insiders
b. pricing
c. cost controls

Question 31

Answer:

Managerial accounting looks at cost increases and determines if the increase is due to some the company ___(a)___ such as ___(b)___, or something the company ___(c)___ such as ___(d)___

Answer 31

a. cannot control
b. inflation in the labor market or raw materials
c. can control
d. decreased efficiency

Question 32

Answer:

Merchandising companies don’t ___(a)___, they just ___(b)___, so they do have ___(c)___

Answer 32

a. produce products
b. sell physical products
c. physical inventory

Question 33

Answer:

In terms of cost, merchandising companies do have ___(a)___ directly related to ___(b)___, and they also have ___(c)___ directly related with ___(d)___

Answer 33

a. product costs
b. physical products
c. period costs
d. time

Question 34

Answer:

Merchandising companies only have one ___(a)___ account, which is why product cost is the ___(b)___ of those ___(c)___

Answer 34

a. inventory
b. acquisition cost
c. products

Question 35

Answer:

For merchandising companies, the total acquisition cost is the ___(a)___ and ___(b)___

Answer 35

a. purchase price from vendors

b. freight/transport costs

Question 36

Answer:

What does a manufacturing company generally do?

Answer 36

They purchase, they produce and they sell

Question 37

List:

Items Manufacturing Companies Purchase

Answer 37

1. Raw materials
2. Supporting materials
3. Labor

Question 38

Answer:

Once manufacturing companies purchase raw materials, the ___(a)___ if the raw materials they purchase will be recorded in ___(b)___, and what they purchase is a/an ___(c)___.

Answer 38

a. acquisition cost
b. raw materials
c. asset

Question 39

Answer:

Once a manufacturing company uses raw materials in the process, the value of the unfinished goods are recorded in the ___(a)___

Answer 39

a. work in progress account

Question 40

Answer:

The work in progress account includes the ___(a)___, which include the ___(b)___ and the ___(c)___

Answer 40

a. value of the unfinished goods
b. cost of raw materials
c. labor

Question 41

Answer:

Once manufacturing companies have finished making the product, the cost of finished goods are transferred from the ___(a)___ to the ___(b)___

Answer 41

a. work in progress account

b. finished goods inventory

Question 42

List (in order):

Cost flow of a typical manufacturing company

Answer 42

1. Purchase of raw materials - values/acquisition cost –> recorded in raw materials
2. Use raw materials and labor to produce –> recorded in in progress account
3. Have final product for sale –> recorded in finished goods inventory

Question 43

Answer:

Service companies have ___(a)___ costs

Merchandising companies have ___(b)___ costs

Manufacturing companies have ___(c)___ costs

Answer 43

a. period
b. product and period
c. product and period

Question 44

Answer:

Merchandising companies don’t have ___(a)___ so their product cost is based on ___(b)___

Answer 44

a. production costs

b. cost of obtaining goods to sell

Question 45

List:

Production Cost Types for Manufacturing Firms

Answer 45

1. Direct Materials
2. Direct Labor
3. Manufacturing Overhead

Question 46

Define:

Direct Materials

Answer 46

Physical part of the finished product produced

Question 47

Define:

Direct Labor

Answer 47

Wages paid to those employees who actually work on the production line and convert materials into a company’s products

Question 48

Define:

Manufacturing Overhead

Answer 48

Costs that occurred during production that are not raw materials or raw labor so they are indirect materials and indirect labor

Question 49

Answer:

Once production is complete, the ___(a)___ will flow into the ___(b)___. Once the goods are sold, they will flow to the ___(c)___ account.

Answer 49

a. cost of those finished goods
b. finished goods inventory
c. goods sold

Question 50

Answer:

Finished goods number appears on the ___(a)___

Answer 50

a. income statement