ACG 2071 Exam 1

Direct Costs

Costs connected to a specific product.

Role of managerial accounting in a company

Decision Making Planning Directing Operational Activities Controlling

Period Costs

non-product related costs such as sales and marketing

Tyson Company has an operating leverage factor of 5. Which of the following statements is true? An 8% change in variable costs should result in a 40% change in contribution margin An 8% change in income should result in a 40% change in sales revenue An 8% change in fixed costs should result in a 40% change in income An 8% change in sales revenue should result in a 40% change in income An 8% change in variable costs should result in a 40% change in break-even sales

An 8% change in sales revenue should result in a 40% change in income

When determining the cost of a manufactured product, a factory janitor's wages would be classified as: A Direct Material Cost A Period Cost An Indirect Cost A Direct Cost

An Indirect Cost

Treasurer

An accountant in a staff position who is responsible for managing an organization's relationships with investors and creditors and maintaining custody of the organization's cash, investments, and other assets.

Which of the following would occur if a company increased its variable cost per unit? Contribution margin increases, break-even point decreases Contribution margin decreases, break-even point increases Contribution margin increases, no effect on break-even point Contribution margin decreases, break-even point decreases Contribution margin increases, break-even point increases

Contribution margin decreases, break-even point increases

Fixed Costs

Costs independent of volume, such as rent or insurance

Indirect Cost

Costs involved with maintaining and running a business.

Direct Labor

Labor (people's time and talent) in creating the product

Opportunity Cost

Loss of potential gain from other alternatives when one alternative is chosen.

Ethical Responsivities and Standards in Managerial Accounting

Managerial Accountants are expected to display a commitment to ethical professional practice characterized by the overarching principles of competence, confidentiality, integrity, and credibility. These principles can be applied to all managerial accounting concepts and practices and indeed, management decision making generally.

Direct Materials

Materials used to create a product

Manufacturing Overhead

Other costs incurred in creating a product that is not direct material or direct labor. Includes: Indirect Material and Labor, supplies, depreciation on factory equipment, machine maintenance

Line Positions

Positions held by managers who are directly involved in providing the goods or services that constitute an organization's primary goals.

Margin of Safety

The difference between your sales and your break-even point. A larger margin of safety indicates that the business has a greater buffer before becoming unprofitable.

Cheif Financial Officer (CFO)

The executive responsible for all accounting and finance functions in an organization.

Relevant Range

The level of production that the business expects and which maintains its current fixed costs.

Controller/ comptroller

The top managerial and financial accountant in an organization. Supervises the accounting department and assists management at all levels in interpreting and using managerial-accounting information.

Cost structures differ widely among industries and among firms within an industry. True False

True

Which of the following is an example of overhead in a factory? Wages of machine operators Salaries of salespersons Wages of factory maintenance personnel Wages of administrators in the corporate office

Wages of factory maintenance personnel

Internal Auditor

an accountant who reviews the accounting procedures, records, and reports in both the controller's and treasurer's areas of responsibility.

A manager who wants to determine the percentage impact on income of a given percentage change in sales would multiply the percentage increase/decrease in sales revenue by the: safety margin. contribution-margin ratio. gross margin. operating leverage factor. contribution margin.

operating leverage factor.

The salary that is sacrificed by a college student who pursues a degree full time is a(n): differential cost. opportunity cost. sunk cost. marginal cost. out-of-pocket cost.

opportunity cost.

Which of the following would produce the largest increase in the contribution margin per unit? A 22% increase in the number of units sold A 16% decrease in fixed cost A 8% increase in selling price A 14% decrease in selling price A 13% increase in variable cost

A 8% increase in selling price

When determining the cost of a manufactured product, a salesperson's salary would be classified as: A Dimension Cost A Direct Cost An Indirect Cost A Period Cost

A Period Cost

When determining the cost of a manufactured product, a salesperson's salary would be classified as: A Dimension Cost A Period Cost A Direct Cost An Indirect Cost

A Period Cost

Weighted-average contribution margin

A measure used to assess the profitability of a business by considering the contribution margin of individual products and the proportion of total sales that each product represents.

When manufacturing products, which of the following is an example of a period cost? Property taxes on the plant Indirect materials used in the factory Advertising expense Depreciation expense on factory equipment

Advertising expense

Product Costs

Costs involved in creating a product. This includes Direct Material Direct Labor Manufacuring Overhead

Variable Costs

Costs that change as volume changes, such as raw materials, packaging costs, commissions, or delivery costs

Sunk Costs

Costs that were incurred in the past and cannot be altered by any current or future decision.

Which of the following is not an ethical standard of managerial accounting? Credibility Efficiency Integrity Competence Confidentiality

Efficiency

Which of the following does not typically appear on a contribution income statement? Total variable costs Gross margin Total fixed costs Net income Contribution margin

Gross margin

Staff Positions

Positions held by managers who are only indirectly involved in producing an organization's product or service.

5 Roles on managerial accounting

Providing information for decision making and planning. Assisting managers in directing and controlling operational activities. Motivating managers and other employees towards the company's goals. Measuring the performance of activities, subunits, managers, and other employees within the organization. Assessing the organization's competitive position and working with other managers to ensure the organization's long run competitiveness in its industry.

A University's parking department purchased a system for ten tablets computers and software to support the campus ticketing process. After the one-year warranty expired, the tablets became unreliable. The tablets are an example of a(n): differential cost. opportunity cost. sunk cost. marginal cost. out-of-pocket cost.

Sunk Costs

If a company experiences an increase in its fixed costs, which of the following would occur? The contribution margin would increase The break-even point would increase The contribution margin would decrease Net income would increase More than one of the answers would occur

The break-even point would increase

When sales price decreases and all other variables are held constant, the break-even point will ________. remain unchanged increase produce a higher contribution margin decrease

increase

If the sales mix in a multi-product environment shifts to a higher volume in low contribution margin products, the break-even point will ________. decrease because the per composite unit contribution margin will increase remain unchanged because all products are included in the calculation of break-even increase because the low contribution margin products have little effect on break-even increase because the per composite unit contribution margin will decrease

increase because the per composite unit contribution margin will decrease

When manufacturing products, direct labor and direct materials are classified as: period costs, and expensed when the goods are sold period costs, and expensed when incurred product costs, and expensed when the goods are sold. product costs, and expensed when incurred.

product costs, and expensed when the goods are sold.

Operating leverage predicts the effects fixed costs have on changes in operating income when: variable costs change. production is discontinued. none of these answer choices is correct. sales volume changes. there are no sales returns.

sales volume changes.