Quiz 1

Question 1

7 value chain components

Answer 1

R&D, Design, Purchasing, Production, Marketing, Distribution, Customer Service

Question 2

Financial Accounting & Reporting

Answer 2

External users,
Investors and creditors,
GAAP/IFRS,
Financial position of Co.,
Accuracy and compliance

Question 3

Cost Accounting & Reporting

Answer 3

Internal users
Management decision making
Non-GAAP or GAAP
Information on costs/customers
Efficiency and effectiveness, usefulness & timely

Question 4

Cost Drivers

Answer 4

factor that causes or “drives” costs; e.g., increase number of cookies made, must increase labor

Question 5

Differential revenues

Answer 5

revenues that change in response to a particular course of action

Question 6

Differential costs

Answer 6

costs that change in response to a particular course of actions

Question 7

Responsibility center

Answer 7

specific unit of an organization assigned to a manager who is held accountable for its operations and resources

Question 8

Budget

Answer 8

Financial plan of the revenues and the resources (expenses) needed to carry out activities and meet financial goals

Question 9

Key Financial players in an organization

Answer 9

CFO
Treasurer
Controller
Internal Auditor
Cost Accountant

Question 10

Sarbanes/Oxley

Answer 10

CEO/CFO sign off on financials - “do not omit material information”

CEO/CFO sign off on evaluation of internal controls… are they operating effectively?

Question 11

Cost

Answer 11

a sacrifice of resources

Question 12

Expense

Answer 12

cost that is charged against revenue in an accounting period (hits the Income Statement)

Charged to P&L in period it’s incurred

Question 13

Outlay

Answer 13

past, present, or future cash outflow

Question 14

Opportunity

Answer 14

foregone benefit from the best alternative course of action

Question 15

Product Cost

Answer 15

“Manufacturing”/”Inventory” - expense as COGS when product is sold

Direct Materials (includes freight-in)
Direct Labor
Factory Overload
- Indirect material
- Indirect labor
- Other Indirect costs (factory depreciation, lights, heat, etc.)

Question 16

Period Cost

Answer 16

“Non-Manufacturing” - expense when incurred (regardless of product sales)

Selling, General & Administrative - includes freight-out
Abnormal spoilage

Question 17

Prime Cost

Answer 17

direct material + direct labor

Question 18

Conversion Cost

Answer 18

direct labor + manufacturing overhead (costs to convert raw materials)

Question 19

Allocating non-manufacturing costs to Cost Accounting reporting

Answer 19

Cost pool
Cost allocation
Cost objects

Question 20

Product Costs allocated to one of 3 Inventory Accountant

Answer 20

Raw material inventory (ready to go into the production cycle)
Work in process (WIP) inventory (in the production cycle)
Finished goods inventory (out of the production and available for sale)

Question 21

Cost Behavior

Answer 21

Fixed costs = fixed in total/variable per unit
Variable costs = fixed per unit/variable in total

Question 22

Full cost

Answer 22

all manufacturing and selling costs

Question 23

Full Absorption Cost

Answer 23

all fixed and variable manufacturing costs (GAAP) - “gross margin”

Question 24

Variable Cost

Answer 24

all variable manufacturing and selling costs (Cost Acct) - “contribution margin”