Unit 6: Managerial Accounting

What is work-in-process inventory?

All material on the factory floor that is not yet completed

Lucas works for a professional consulting firm. He has been asked to compare his firm's financial performance to the performance of another firm. Which company should Lucas use as a benchmark for his company's performance

A consulting firm

What costs are included in manufacturing overhead?

All manufacturing costs that are not classified as direct materials or direct labor

Which types of costs does a manufacturer have?

Both product and period costs

Which types of costs does a merchandiser have?

Both product and period costs

Maria just started a cosmetics company. She purchases makeup and nail polish from a wholesale distributor and sells these products on social media. Which costs will Maria's new company have?

Both product costs and period costs

Which activity involves the process of tracking the actual performance of a company?

Controlling

Which statement correctly distinguishes the uses of financial accounting information from the uses of managerial accounting information?

Financial accounting information is prepared according to a generally accepted set of rules.

Which characteristic is a unique feature of management accounting information?

Management accounting information is composed of both financial and nonfinancial data.

Which statement about managerial accounting data is true?

Managerial accounting data are created based on competitive needs that are unique to the organization.

Which statement identifies a difference between managerial and financial accounting?

Managerial accounting has substantial competitive value, while financial accounting is not a competitive tool.

What is a characteristic of managerial accounting systems that is not also a characteristic of financial accounting systems?

Managerial accounting includes budget and forecast data.

Which group represents the primary users of managerial accounting information?

Managers

What type of cost are the wages paid to a factory supervisor?

Manufacturing overhead includes all manufacturing costs that are not classified as direct materials or direct labor. This includes miscellaneous materials used in production, such as glue or nails; wages for the factory supervisor, controller, and custodians who work in the factory but not directly on products; and other manufacturing costs such as utilities, depreciation of manufacturing facilities, insurance, and property taxes.

Which type of business purchases finished goods for resale?

Merchandising

Which type of business is a typical retailer?

Merchandising business

Company managers are important users of managerial accounting information. What are the three primary functions of company managers?

Planning, controlling, and evaluating

What is the sequence of the flow of costs through a manufacturing operation?

Purchase raw materials, transfer raw materials to production, add direct labor and manufacturing overhead costs, transfer the cost of completed goods to finished goods inventory, sell goods and transfer cost to cost of goods sold.

Jack just started a business that develops websites for other businesses. Which type of organization is Jack's new business?

Service organization

What does long-run planning include?

Strategic planning and capital budgeting