Test One

Question 1

Management Accounting definition

Answer 1

is the process of measuring,
analyzing, and reporting financial and non-financial
information that helps managers make decisions

Question 2

Financial accounting

Answer 2

External
Past-Oriented
GAAP
Quarterly/Annual

Question 3

Cost accounting

Answer 3

Internal
Future-Oriented
Whatever
Whenever

Question 4

Cost Accounting definition

Answer 4

is the process of measuring,
analyzing, and reporting financial and non-financial
information related to the costs of acquiring or using
resources

Question 5

Cost Management definition

Answer 5

is the activities managers take to
use resources in a way that increases a product’s value
to customers and achieves an organization’s goals

Question 6

Strategy definition

Answer 6

is how the organization matches its own
capabilities with the opportunities in the marketplace

Question 7

Value Chain

Answer 7

1. R&D
2. Design
3. Production
4. Marketing
5. Distribution
6. Customer Service

Question 8

Success Factors

Answer 8

Cost & Efficiency
Quality
Time
Innovation
Sustainability

Question 9

Five-Step Decision Making Process

Answer 9

1. Identify Problem & Uncertainties
2. Obtain Info
3. Predict the Future
4. Choose among alternatives
5. Implement, Evaluate, Learn

Question 10

Management Accounting Guidelines

Answer 10

Cost-Benefit Approach
Behavioral and Technical Considerations
Different Costs/Different Purposes

Question 11

Behavioral and Technical Considerations

Answer 11

Technical:
Desired Info
Desired Format
Desired Frequency

Behavioral:
Motivation
Rewards
Improvement

Question 12

Different Costs for Different Purposes

Answer 12

Concept that cost concept for external
reporting purposes is not appropriate for
internal purposes

Question 13

Line Management

Answer 13

Directly responsible for achieving goals of the organization

Question 14

Staff Management

Answer 14

Provides advice, support, and assistance to line management

Question 15

Cost Objects

Answer 15

Point between budgeted costs and actual costs

Question 16

Direct Costs:

Answer 16

Costs directly related to cost object and can be clearly traced to object

Question 17

Indirect Costs:

Answer 17

Costs related to object but cannot be easily traced to object

Question 18

Fixed Costs

Answer 18

costs that are unchanged regardless of production

Question 18

Variable costs

Answer 18

costs that vary based on amount produced

Question 19

Mixed costs

Answer 19

combination of both fixed and variable costs

Question 20

Cost drivers

Answer 20

metric that helps allocate costs

Question 21

Relevant range

Answer 21

costs that might be fixed or variable within some range but different outside

Question 22

Inventory types

Answer 22

Service, merchandising, manufacturing

Question 23

Product costs

Answer 23

appear on balance sheet as inventory, expensed as sold

Question 24

Period costs

Answer 24

every other cost experienced during the period, on income statement not included in COGS

Question 25

Cost of Goods Sold for a Merchandiser

Answer 25

Merchandise Inventory is sold and costs are recorded in Cost of Goods Sold

Question 26

Manufacturing inventory types

Answer 26

Raw materials, Work in process, finished goods

Question 27

Manufacturing costs

Answer 27

Direct materials, direct labor, indirect

Question 28

Cost of Goods Sold for a Manufacturer

Answer 28

Raw Materials -> Work in Process -> Finished Goods -> [Sale]-> Cost of Goods Sold On balance sheet until sold

Question 29

Cost of Goods Sold =

Answer 29

Beginning Finished Goods + Cost of Goods Manufactured - Ending Finished Goods

Question 30

Cost of Goods Manufactured =

Answer 30

Beginning work in process + Total Manufacturing Costs - Ending work in process

Question 31

Total Manufacturing Costs =

Answer 31

Direct Materials + Direct Labor + Manufacturing Overhead

Question 32

Cost Estimation Methods

Answer 32

Industrial Engineering Account Analysis Conference Quantitative Analysis

Question 33

Quantitative Analysis

Answer 33

1.￿Choose￿Dependent￿Variable 2.￿Identify￿Independent￿Variable￿(Cost￿Driver) 3.￿Collect￿Data￿on￿Variables￿ 4.￿Plot￿Data 5.￿Estimate￿Cost￿Function 6.￿Evaluate￿Cost￿Driver

Question 34

High/Low Method =

Answer 34

Change in total cost at High vs Low level / High - Low Activity level

Question 35

Direct Material costs =

Answer 35

Beginning raw materials + purchases - ending raw materials

Question 36

Mixed cost formula

Answer 36

y=a+bx y=total costs a=fixed costs b=variable costs x=quantity

Question 37

CVP is

Answer 37

Cost Volume Profit

Question 38

Regular income Statement

Answer 38

Sales Cost of Sales Gross Profit SG&A Operating Profit Other income/expense Net Income

Question 39

CVP income statement

Answer 39

Sales Variable Costs Contribution Margin Fixed Costs Net Income

Question 40

Contribution Margin definition

Answer 40

is the difference between Total Revenues and Variable Costs that goes toward covering remaining fixed expenses

Question 41

Breakeven Point definition

Answer 41

is the quantity sold where total revenues = total expenses Profit = $0 set income equal to 0

Question 42

CVP Equation

Answer 42

[(𝑆𝑎𝑙𝑒𝑠 𝑃𝑟𝑖𝑐𝑒 𝑥 𝑄𝑢𝑎𝑛𝑡𝑖𝑡𝑦) − (𝑉𝐶 𝑥 𝑄𝑢𝑎𝑛𝑡𝑖𝑡𝑦) − 𝐹𝑖𝑥𝑒𝑑 𝐶𝑜𝑠𝑡 = 𝐼𝑛𝑐𝑜𝑚𝑒 (𝑆𝑎𝑙𝑒𝑠 𝑃𝑟𝑖𝑐𝑒 − 𝑉𝐶) 𝑥 𝑄𝑢𝑎𝑛𝑡𝑖𝑡𝑦 − 𝐹𝑖𝑥𝑒𝑑 𝐶𝑜𝑠𝑡 = 𝐼𝑛𝑐𝑜𝑚𝑒

Question 43

Target Operating Income definition

Answer 43

is the operating income a company wants to generate during a given time frame

Question 44

Difference between Net Operating Income and Net Income

Answer 44

NI includes taxes and interest

Question 45

Sales mix definition

Answer 45

the proportion of sales a single product accounts for in a company's total sales

Question 46

Weighted Average Contribution Margin Formula

Answer 46

(Unit 1 CM∗ 𝑼𝒏𝒊𝒕 𝟏 𝑺𝒂𝒍𝒆𝒔 𝑴𝒊𝒙)+ (𝑼𝒏𝒊𝒕 𝟐 𝑪𝑴 ∗ 𝑼𝒏𝒊𝒕 𝟐 𝑺𝒂𝒍𝒆𝒔 𝑴𝒊𝒙) = 𝑾𝑨𝑪𝑴

Question 47

Sales mix with limited resources

Answer 47

Choose the option that has the highest contribution margin per limited resource

Question 48

The Margin of Safety definition

Answer 48

represents how far revenues can fall below current level (or budget) before the breakeven point is reached

Question 49

Margin of safety formula

Answer 49

𝑀𝑎𝑟𝑔𝑖𝑛 𝑜𝑓 𝑆𝑎𝑓𝑒𝑡𝑦 = 𝐴𝑐𝑡𝑢𝑎𝑙 𝐵𝑢𝑑𝑔𝑒𝑡𝑒𝑑 𝑅𝑒𝑣𝑒𝑛𝑢𝑒 − 𝐵𝑟𝑒𝑎𝑘𝑒𝑣𝑒𝑛 𝑅𝑒𝑣𝑒𝑛𝑢𝑒

Question 50

Margin of safety in units formula

Answer 50

𝑀𝑎𝑟𝑔𝑖𝑛 𝑜𝑓 𝑆𝑎𝑓𝑒𝑡𝑦 𝑖𝑛 𝑢𝑛𝑖𝑡𝑠 = 𝐴𝑐𝑡𝑢𝑎𝑙 𝐵𝑢𝑑𝑔𝑒𝑡𝑒𝑑 𝑄𝑢𝑎𝑛𝑡𝑖𝑡𝑦 − 𝐵𝑟𝑒𝑎𝑘𝑒𝑣𝑒𝑛 𝑄𝑢𝑎𝑛𝑡𝑖𝑡𝑦

Question 51

Operating Leverage definition

Answer 51

is the effect fixed costs have on changes in operating income as sales or contribution margin change HIGH Fixed Costs → HIGH Operating Leverage

Question 52

Margin of safety % formula

Answer 52

𝑀𝑎𝑟𝑔𝑖𝑛 𝑜𝑓 𝑆𝑎𝑓𝑒𝑡𝑦 % = 𝑀𝑎𝑟𝑔𝑖𝑛 𝑜𝑓 𝑆𝑎𝑓𝑒𝑡𝑦 $ / 𝐴𝑐𝑡𝑢𝑎𝑙 𝐵𝑢𝑑𝑔𝑒𝑡𝑒𝑑 𝑅𝑒𝑣𝑒𝑛𝑢𝑒𝑠

Question 53

Operating Leverage formula

Answer 53

𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝐿𝑒𝑣𝑒𝑟𝑎𝑔𝑒 = 𝐶𝑜𝑛𝑡𝑟𝑖𝑏𝑢𝑡𝑖𝑜𝑛 𝑀𝑎𝑟𝑔𝑖𝑛/𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝐼𝑛𝑐𝑜𝑚𝑒

Question 54

Change in income formula

Answer 54

𝐶ℎ𝑎𝑛𝑔𝑒 𝑖𝑛 𝐼𝑛𝑐𝑜𝑚𝑒 = 𝑂𝑝𝑒𝑟𝑎𝑡𝑖𝑛𝑔 𝐿𝑒𝑣𝑒𝑟𝑎𝑔𝑒 𝑥 % 𝐶ℎ𝑎𝑛𝑔𝑒 𝑖𝑛 𝑆𝑎𝑙𝑒𝑠