Final Prep Flashcards
In labor-intensive industries where more overhead is incurred by the more highly skilled and paid employees, which activity based is most likely to be appropriate for applying overhead?
Direct labor cost
According to the COSO Internal Control - Integrated Framework, what term refers to the determination that all internal control components collectively reduce the risk of not achieving an objective to an acceptable level?
Operating together
What is a correct statement regarding phased conversion?
One function at a time of the new system is placed in operation.
What does cost of good manufactured equal?
Total manufacturing costs plus beginning WIP minus ending wIP
What are true statements about responsibility accounting
- Stresses that managers are responsible only for factors under their control
- Operations of the business are organizing into responsibility centers
- Costs are classified as controllable on uncontrollable
- Some revenues and costs can be changed through effective management
- Management may focus on deviations for either reinforcement or correction
What is the formula for overhead efficiency varaince?
Standard price x [(actual hours x actual output) - (standard hours x actual output)]
In cost terminology, conversion costs consist of:
direct labor and factory overhead
These are the costs of converting raw materials into a finished product
What is the numerator in the sum of years digits applied to the original cost - salvage value?
The number of years remaining useful life of the asset
What is the denominator in the sum of years digits applied to the original cost - salvage value?
The sum of the digits of the total years of the expected useful life
What happens during the growth stage of a product’s life cycle?
- sales and profit increase rapidly
- cost per customer decreases
- customers are early adopters
- new competitors enter an expanding market
- new product models and features are introduced
- Promotion spending declines are remains stable
What are examples of financing activities on a statement of cash flows?
The cash effects of transactions and other events that relate to the issuance, settlement, or reacquisition of the entity’s debt and equity instruments
How is the cumulative total time calculated in learning curve analysis?
Cumulative average batch time multiplied by the number of batches
How is the right-of-use asset calculated for a lease?
The present value of the lease payments
Subsequently amortized using the straight-line method over the estimated useful life for a finance lease
How is warranty expense recognized as an expense in the year of sale?
By the total expense per unit multiplied by the total units sold
What does the Foreign Corrupt practices act require for companies whose securities are publicly traded in the U.S.?
To devise and maintain a system of internal accounting controls sufficient to provide reasonable assurance that transactions are executed in accordance with management’s authorization
What is total O/H variance
The difference between applied overhead and actual overhead
Applied OH = Std rate x actual equivalent units x std hours allowed
What are primary activities in a value chain?
- Inbound logistics
- operations
- outbound logistics
- marketing and sales
- service
What are examples of inherent limitations of internal control?
- faulty judgment in decision making
- simple error or mistake
- the possibility of collussion
- Management override
