Managerial Accounting
When management reviews product sales reports to set goals and objectives and then evaluates the results of sales operations against the plan and performance results, which of management's three primary responsibilities is fulfilled?
Directing, controlling, and planning
Which type of company has three categories of inventory?
A manufacturing company
product level
Activities that relate to specific products that must be carried out regardless of how many units are produced and sold or batches run.
Which of the following systems focuses on activities as the fundamental cost objects and uses the costs of those activities as building blocks for compiling the indirect costs of products and other cost objects?
Activity-based costing
Indications that a product cost system needs revision include
All ( the company uses a single-allocation-base system developed long ago. managers lose bids they expected to win and win bids they expected to lose. employees do not believe the cost numbers are accurate.)
A lean company aims to eliminate which of the following wastes of the traditional operating company?
All (Movement, Overproduction, Excess Transportation)
job order costing would most likely be used in which of the following companies?
All(airplane manufacturer, doctor's office, homebuilder)
Manufacturers follow four steps to implement a manufacturing overhead allocation system. Which step is not performed before the year begins?
Allocate some manufacturing overhead to each individual job.
Which of the following condition(s) favors using departmental overhead rates in place of a plantwide overhead rate?
Different jobs or products use the departments to a different extent. Different departments incur different amounts and types of manufacturing overhead.Both of the above.
Prime Cost(direct cost)
Direct Materials + Direct Labor
Which statement describes direct materials in a manufacturing setting?
Direct materials are used to determine total inventoriable product costs.
In addition to cost of goods manufactured, which of the following is needed to compute the cost of goods sold for a manufacturer?
Beginning finished goods inventory less ending finished goods inventory
If a job consists of a batch of identical units, how can managers find the unit cost
By dividing the total job cost by the number of units in the job
Which of the following persons or groups would be least likely to receive detailed managerial accounting reports?
Current Shareholders
Which of the following is true about lean thinking?
Customer orders drive the production process.
Which of the following is not a way in which management can use job cost information?
Determining the balance in raw materials inventory
Which of the following condition(s) favors using departmental overhead rates in place of a plantwide overhead rate?
Different departments incur different amounts and types of manufacturing overhead. Different jobs or products use the departments to a different extent.
Manufacturers follow four steps to implement a manufacturing overhead allocation system. What is the first step?
Estimate total manufacturing overhead costs for the coming year.
How do fixed costs react in total and on a per unit basis?
Fixed costs remain constant in total and decrease per unit as production increases.
A system in which companies purchase raw materials only when needed is called
JIT production.
Which of the following is a sign that a product cost system is not working properly?
Managers don't understand costs and profits.
Which of these documents informs the storeroom to send specific materials to the factory floor?
Materials requisitio
Which of these documents informs the storeroom to send specific materials to the factory floor?
Materials requisition
On a Cost of Quality report, which of the following cost items should be classified as an internal failure cost?
Net cost of scrap
A manufacturer of plywood would use what type of product costing system?
Process costing
Which of the following is an example of a cost item that should be classified as an internal failure cost?
Rework costs
Which of the following is a characteristic of a service company?
Service companies generally have no tangible products to sell.
In ABC, how is the activity allocation rate computed?
The total estimated activity cost pool is divided by the total estimated activity allocation base.
When job costing is used at a service firm, the bill to the client shows
When job costing is used at a service firm, the bill to the client shows
which of the following statements is true of a peanut -butter costing system?
a peanut-butter costing system broadly averages or spreads the cost of resources uniformly to cost objects
It only makes sense to implement an ABC system when ________
it benefits exceed its implementation cost
Which of the following statements is true of ABC systems?
abc employs multiple activity-cost drivers
Which of the following statements is true of costing systems?
abc systems classify some indirect cost as direct costs helping to improve processes
batch-level
activity performed on each batch produced
facility level
activity required in order for the production process to occur
When job costing is used at a service firm, the bill to the client shows
actual direct cost of providing the service
All of the following relate to part of the value chain for a clothing company except
administrative costs.
The primary goal of financial accounting is to provide information to
all of these (government regulators. creditors.potential investors)
Period costs are
always recorded as an expense.
The cost of inspection at various stages of production is an example of a(n)
appraisal cost
Non-value-added activities include all of the following EXCEPT
assembling the products.
________ is considered while choosing a cost allocation base for activity costs in ABC costing.
availability of reliable data and measures
Which of the following is an example of an industry that would use a process costing-rather than a job costing-system?
coca-cola
Demand for refinements to the costing system has accelerated due to ________.
competition in product markets
A merchandisers purchases are equivalent to a manufacturers
cost of goods manufactured
Net Purchases
cost of purchase+freight in+sales tax +insurance during transit-(purchase returns+discount+allowances)
A product support hotline would be considered
customer service
Most companies adopt ABC in order to
cut costs. get a more accurate price of products. help make product mix decisions.
The goal of a properly constructed ABC system is to ________
developed the best cost system for economically reasonable cost
conversation cost
direct labor + indirect manufacturing costs
total product cost
direct materials + direct labor + manufacturing overhead
Allocating manufacturing overhead costs is done
during the period
For a company which produce its products in batches, the CEO's salary is a(n) ________ cost
facility sustaining
QUESTION 19 The first step in developing an ABC system is
identify the primary activities and estimate a total cost pool for each.
Which of the following statements is true of implementing an ABC system?
identifying the cost allocation bases defines the number of activity pools into which costs must be grouped in an abc system
The unique feature of an ABC system is the emphasis on ________.
individual activities
A ________ is used to accumulate all of the direct materials and direct labor used on the job, as well as the manufacturing overhead allocated to the job
job cost record
Which product costing system would better account for a unique product?
job costing
ABC costing system
limit cost drivers to unit of output
Overcosting a particular product may result in
loss of market share
A manufacturing firm produces multiple families of products requiring various combinations of different types of parts. Of the following, the most appropriate cost driver for assigning materials handling costs to the various products is ________.
number of parts used
Allocating Manufacturing Overhead to a Job
overhead cost/ machine hours
unit level
performed each time a unit is produced
When management analyzes whether to move production to another country or to keep the production located where it currently is, which of the following management responsibilities is being performed?
planning
The cost of testing incoming raw materials from a supplier would be classified as a(n) ________ cost.
prevention cost
active based costing information can be used for
pricing decisions
Lavender Company is a logistics company and has recently implemented ABC system. Using activity-based information, it decides to reduce the bulkiness of the packages delivered, thereby reducing costs. This suggests that ABC system helps managers in ________ decisions.
process inprovment
________ are the costs of activities undertaken to support individual products or services regardless of the number of units or batches in which the units are produced
product sustaining cost
The ________ substantiates the total of the raw materials inventory account shown on the company's balance sheet.
raw materials records
Controllable costs include all the following except
real estate taxes of the corporate headquarters building
All of the following would be considered a direct material for a kitchen cabinet except
sandpaper
ABC and traditional systems are quite similar in _______
the treatment of direct cost
The homogeneous cost pools and the choice of cost-allocation bases give managers greater confidence in the activity and product cost numbers from ABC systems.
true
Molding and sanding each unit of product would most likely be classified as a ________ cost.
unit level
The eight wastes of traditional operations includes all of the following except
utilising people to their full potential
Job Order Costing
very different products
product costing
very similar products
Activity-based costing is most likely to yield benefits for companies
with complex product design
