Final Exam 2.0

Question 1

Used when products are produced in a continuous manufacturing environment; determining the cost of a single unit; production has no distinct beginning and end.

Answer 1

Process costing

Question 2

Key document in organizing and accounting for costs in a process costing environment.

Answer 2

Cost of production report

Question 3

Refers to the number of completed units that is equal, in terms of production effort, to a given number of partially completed units.

Answer 3

Equivalent Completed Units

Question 4

Weighted average, first in/first out

Answer 4

2 methods of process costing

Question 5

An approach to product costing that treats both variable and fixed manufacturing costs as product costs.

Answer 5

Absorption costing

Question 6

An approach to product costing that treats variable manufacturing costs as product costs and fixed manufacturing costs as period costs.

Answer 6

Variable costing

Question 7

Those costs that change in proportion to changes in sales volume.

Answer 7

Variable cost

Question 8

Used to develop cost information by determining the cost of activities and tracing their costs to cost objectives on the basis of cost objective’s utilization of units of activity.

Answer 8

Activity-based costing (ABC)

Question 9

The identification and selection of activities to maximize the value of the activities while minimizing their cost from the perspective of the final consumer.

Answer 9

Activity-based management

Question 10

The maximum possible activity, allowing for normal repairs and maintenance.

Answer 10

Practical capacity

Question 11

A unit of work

Answer 11

Activity

Question 12

A systematic approach to identifying the best practices to help an organization take action to improve performance.

Answer 12

Benchmarking

Question 13

Bringing in suppliers as part of the coordination process to attain a competitively priced product that is delivered to the customer in a timely manner.

Answer 13

Chained target costing

Question 14

An approach to budgeting that incorporates a targeted improvement (reduction) in costs; management requests that a given process will be improved during the budgeting process.

Answer 14

Continuous improvement costing (Kaizen)

Question 15

Explicitly considering the costs of manufacturing and servicing a product while it is being designed.

Answer 15

Design for manufacture

Question 16

All costs associated with a product or service ranging from those incurred with initial conception through design, preproduction, production, and after-production support.

Answer 16

Life cycle costs

Question 17

The varying increment in total cost required to produce and sell an additional unit of product.

Answer 17

Marginal cost

Question 18

The varying increment in total revenue derived from the sale of an additional unit.

Answer 18

Marginal revenue

Question 19

Collections of related activities intended to achieve a common purpose

Answer 19

Processes

Question 20

Establishes the allowable cost of a product or service by starting with determining what customers are willing to pay for the product or service and then subtracting a desired profit on sales.

Answer 20

Target costing

Question 21

The set of value-producing activities stretching from basic raw materials to the final consumer.

Answer 21

Value chain

Question 22

The use of information technology and partnership concepts to allow to or more entities along a value chain to act as if they were a single economic entity.

Answer 22

Virtual integration

Question 23

Business entities, processes, activities

Answer 23

Three levels of value chain

Question 24

Economic approaches, cost-based approaches

Answer 24

Two pricing theories

Question 25

Provide a useful framework for thinking about pricing decisions; based on cost and revenue functions (marginal revenue and cost).

Answer 25

Economic Approaches to Pricing

Question 26

Traditionally been the most important consideration in pricing because cost data is available, cost-based prices are defensible and revenues must exceed costs if the firm is to remain in business.

Answer 26

Cost-based Approaches to Pricing

Question 27

A budget where managers at all levels - and in some cases even non-managers - become involved in the budget preparation.

Answer 27

Bottom-up (participation budget)

Question 28

A formal plan of action expressed in monetary terms.

Answer 28

Budget

Question 29

Occurs when managers intentionally understate revenues or overstate expenses in order to produce favorable variances of the department.

Answer 29

Budgetary slack

Question 30

Hypothetical statements that reflect the “as if” effects of the budgeted activities on the actual financial position of the organization. They reflect what the results of operations will be if all the predictions in the budget are correct.

Answer 30

Budgeted financial statements