Exam 3

Question 1

Managerial Accounting

Answer 1

internal
helps companies make internal decisions
- what should we price x product at?
- why is x department working so much overtime we have to pay?

used primarily for predicting the future

not bound by external rules, GAAP is not required

Question 2

Financial Accounting

Answer 2

reports a company’s performance to external parties

focuses on reporting the past

bound by GAAP

Question 3

Summary of cost of goods sold equation

Answer 3

cost of goods manufactured
+beginning finished goods inventory
=cost of goods available for sale
-ending finished goods inventory
=cost of goods sold

Question 4

where do indirect materials come from and where do they go

Answer 4

come from materials inventory and go to manufacturing overhead

Question 5

what is a variable cost

Answer 5

a cost that varies in total (based on how many units we make) but is fixed per unit

ie: stanley cup costs 10$ to make
if 30 are made that’s $300 production costs
if 50 are made that’s $500 production costs

ie: hourly wages, sheet metal in an automobile, ipad microprocessor chips

Question 6

fixed cost

Answer 6

fixed no matter how much we product in total but varies per unit basis

ie: 10 people on an assembly line @50k/year/person = 500k total fixed cost
if they make 5 cars, they get paid 100k/car but if they make 500 cars thats 1k per can, its fixed in total but can very by unit based on how many units are produced

ie: factory equipment depreciation
general liability insurance premiums
factor property taxes

Question 7

mixed cost

Answer 7

has both fixed and variable components

ie: a light bill has a base charge fixed cost of 10$/month, but how much energy you consume makes it go up by x amount. added together is the total light bill

Question 8

what is underapplied overhead

Answer 8

actual overhead>applied overhead

Question 9

what is overapplied overhead

Answer 9

actual overhead<applied overhead

Question 10

insignificant in terms of under/overapplied overhead

Answer 10

close to cost of goods sold

write the difference off and close it out to cost of goods sold

Question 11

significant in terms of under/overapplied overhead

Answer 11

close to work in process, finished goods, and cost of goods sold

split the cost out between WIP, finished goods, and COGS

Question 12

if total actual overhead is $300,000 and total applied overhead is $295,320, what is overhead and is it over or underapplied?

Answer 12

underapplied by $4,680

Question 13

predetermined overhead rates are…

Answer 13

calculated at the beginning of each accounting period
deal with production overhead
stated in terms of a rate

Question 13

predetermined manufacturing overhead rate equation

Answer 13

predetermined manufacturing overhead rate= estimated overhead cost (which is a dollar amount) / estimated application base (Which can be direct labor hours, direct labor cost, or machine hours)

Question 14

applied manufacturing overhead equation

Answer 14

applied manufacturing overhead=predetermined rate x actual application base

Question 15

Answer 15

Question 16

CFE

Answer 16

certified fraud examiner

Question 17

CFP

Answer 17

certified financial planner

Question 18

CIA

Answer 18

certified internal auditor

Question 19

EA

Answer 19

enrolled agent

Question 20

CFA

Answer 20

certified financial analyst

Question 21

CFF

Answer 21

certified in financial forensics

Question 22

CBA

Answer 22

certified bank auditor

Question 23

What is a CPA

What is a CMA

Answer 23

Certified Public Accountant

Certified Management Accountant

Question 24

what is a product cost

Answer 24

includes all costs necessary to bring a product to completion initially recorded in inventory accounts when incurred and expensed when related product is sold ie: sheet metal in an automobile lumber for furniture manufacturere factory worker hourly wages factory equipment depreciation factory utilities

Question 25

what is a period cost

Answer 25

Everything that isn't a product cost initially expensed (expensed immediately) when incurred and are not assigned to products Ie: sales force salaries general liability insurance premiums advertising expenses legal expenses CEO's salary and benefits

Question 26

what is the difference between product and period costs

Answer 26

product costs are initially recorded and expensed later when the product is sold. period costs are expensed immediately. product costs are the cost of materials, period is operations

Question 27

cost of goods sold equation

Answer 27

cost of goods manufacturing PLUS beginning finished goods inventory EQAUALS cost of goods available for sale MINUS ending finished goods inventory EQUALS cost of goods sold

Question 28

what is a direct cost vs indirect cost

Answer 28

direct cost- a cost that and be easily and cost-effectively traced to a specific cost object indirect cost- a cost that relates to a cost object but cannot be easily or cost effectively traced to it (like a supervisor's salary...can't be traced to just one thing)

Question 29

3 categories of business entities

Answer 29

manufacturing- convert materials to a finished product through the use of machinery and/or labor merchandising- purchase finished products from a manufacturer and then self the product to a customer service-neither make nor sell a tangible product some companies are dual

Question 30

Answer 30

Question 31

what percentage of accounting students begin their careers in public accounting and what percentage eventually leave for positions outside public accounting

Answer 31

40% begin in Public Accounting 90% leave public accounting

Question 32

Answer 32

Question 33

Answer 33

Question 34

Answer 34

Question 35

Answer 35

Question 36

Job order Costing

Answer 36

-customized products and services -product costs accumulated by jobs -ie: construction company

Question 37

process costing

Answer 37

-homogeneous products -product costs accumulated by production department ie: paint manufacturer

Question 38

job/order cost sheet

Answer 38

direct materials direct labor manufacturing overhead total packaging costs total cost units unit cost finished goods inventory work in process inventory

Question 39

Answer 39