ACTY 2110

Direct Materials

Prime Cost - Direct Labor

Direct Labor

Prime Cost - Direct Materials

Which of the following statements is true? Every firm can be identified as one type of organization: manufacturer, merchandiser or service company. Some firms operate as more than one type of organization: manufacturer, merchandiser and/or service company.

Some firms operate as more than one type of organization: manufacturer, merchandiser and/or service company.

Which of the following statements are true? Multiple select question. When materials are purchased they are recorded in the Raw materials inventory account. Raw materials inventory represents the cost of materials not yet used in production. Raw materials inventory only includes the cost of direct materials. Direct labor costs flow through the Raw materials inventory account.

When materials are purchased they are recorded in the Raw materials inventory account. Raw materials inventory represents the cost of materials not yet used in production.

On the job cost sheet and work in process accounts, the ______ manufacturing overhead is recorded.

applied

Indirect costs ______. Multiple choice question. are only related to manufacturing activities must be assigned using volume-based cost systems are not easily traced to products or services are also called activity costs

are not easily traced to products or services

Activities that occur regardless of how many products are produced or how many batches are run or units made are ________-________ activities.

company wide

Managers keep track of how they are doing and determine if adjustments are needed during the _______________ phase.

control

Manufacturing costs include ______. direct materials direct labor administrative costs manufacturing overhead selling costs

direct materials direct labor manufacturing overhead

Categories of manufacturing costs include ______. direct materials direct labor manufacturing overhead administrative expenses selling expenses

direct materials direct labor manufacturing overhead

The Sarbanes-Oxley (SOX) Act ______. has many implications for managers was primarily aimed at renewing investor confidence puts more responsibility on accountants and less on managers is focused on the managerial accounting system

has many implications for managers was primarily aimed at renewing investor confidence

If cost data will be used for decision making, it is important to consider ______.

how costs will behave or change

Decisions made during the ______________ phase are sometimes called operational decisions.

implementation

Decisions such as deciding how many employees to hire, salary schedules, and training policies are made during the ______ phase of the management process.

implementation

A(n) ______ cost will not influence a decision.

irrelevant

Companies that use job-order costing ______.

make unique products

Levi Strauss and Ford Motors are examples of _________________ firms.

manufacturing

Which type of firm converts materials into finished products?

manufacturing

Actual manufacturing overhead consists of all ______.

manufacturing costs other than direct labor and direct materials

An allocation base is a(n) ______.

measure of activity used to assign overhead costs to products and services

A department store is part of the ______ companies category of business.

merchandising

Wholesalers and retailers are both ____________ types of companies.

merchandising

There are two broad classifications of costs: manufacturing costs and __________ costs.

nonmanufacturing

The distinction between manufacturing and nonmanufacturing costs applies ______.

only to companies that make a physical product

The Sarbanes-Oxley (SOX) Act focuses on three factors that affect the accounting reporting environment: __________, _____________, and _____________

opportunity, incentives, and character

The difference between ________ costs and _________ costs determines how and when the cost will be matched up against revenue on the income statement.

period; product

Costs are transferred out of Finished Goods inventory ______.

when goods are sold

Costs of partially completed units are accounted for in ______.

work in process

When a job is completed, its costs are transferred into ______.

Finished Goods

All materials that will be used in future production are first recorded in the Inventory account.

Raw Materials

When a job is completed, its costs are transferred out of ______.

Work in Process

A method that attempts to assign overhead costs based on what is required to produce products is ______ costing. Multiple choice question. volume-based activity-based target traditional

activity based

Finished goods ______.

consists of completed, unsold goods

When making a decision, ______.

cost control is a critical concern for most organizations

Any item a manager wants to know the cost of is called a(n) ________ _________.

cost object

In an automobile manufacturing plant, assembly-line workers' wages are __________ __________ costs.

direct labor

Companies with strong ethical cultures ______.

have higher productivity than those without such cultures have higher levels of customer satisfaction

Controlling involves ______.

measuring actual results

Indirect costs are also referred to as _______ costs.

overhead

A relevant cost ______. will not influence a decision pertains to the future differs between alternatives is always an opportunity cost

pertains to the future differs between alternatives

The first step in ___________ is to establish goals or objectives and tactics to achieve them.

planning

The future-oriented part of the management cycle is ______________.

planning

Variable costs ______.

remain constant per unit and vary in total

Hotels and airlines are examples of _______________ companies.

service

The balance of work in process inventory may be calculated by ______.

summing the costs of all jobs in process

In a job-order costing system costs flow first to ______.

the inventory accounts and then to cost of goods sold

When actual manufacturing overhead costs are incurred, ______.

the manufacturing overhead cost is debited

True or false: Cost control is a critical concern for most organizations.

true

Which type of cost changes in total, in direct proportion to changes in activity level?

variable

Direct labor hours and machine hours are both examples of _________-based cost drivers.

volume

When is the predetermined overhead rate calculated?

Before the period begins

Which of the following people would be more interested in managerial accounting data than in financial accounting data?

Business Owners Employees

Which of the following statements are true? Classifying a cost a product or period can impact reported profitability. Inventoriable costs are expensed in the period in which they are incurred. The distinction between product and period costs has more to do with financial accounting than managerial accounting. All costs in a merchandising company are considered to be period costs.

Classifying a cost a product or period can impact reported profitability. The distinction between product and period costs has more to do with financial accounting than managerial accounting.

Manufacturing Overhead

Conversion Cost - Direct Labor

Which of the following statements are true? When making decisions regarding costs, GAAP rules must be followed. Costs are treated differently in different situations. There are many different ways to categorize costs.

Costs are treated differently in different situations. There are many different ways to categorize costs.

Conversion Cost

Direct Labor + Manufacturing Overhead

Prime Cost

Direct Materials + Direct Labor

The most common method for disposing of the balance in Manufacturing Overhead is ______.

adjusting Cost of Goods Sold

Predetermined overhead rates are ______.

based on some secondary allocation measure

To calculate a predetermined overhead rate, divide estimated total manufacturing overhead by the ______.

estimated total cost driver

The formula for a predetermined overhead rate is ______.

estimated total manufacturing overhead cost / estimated total cost driver

A predetermined overhead rate is calculated by dividing the ______ total manufacturing overhead by the ______ total cost driver.

estimated,estimated

The standards of conduct for judging right from wrong is referred to as:

ethics

Ideally an allocation base should ______.

explain or influence the amount of overhead incurred

The Sarbanes Oxley Act ______.

includes rules that should help employees make ethical decisions

A company's total expected overhead for the year is $500,000. Two activity cost pools have been identified: Customer Service with a total cost of $200,000 and a total activity of 25,000 customer service calls; and Product Development with a total cost of $300,000 and total activity of 20,000 development hours. The activity rates are ______.

$8 per customer call and $15 per development hour Reason: $200,000/25,000 = $8 per customer call and $300,000/20,000 = $15 per development hour.

Total Manufacturing Costs

Direct Materials + Direct Labor + Manufacturing Overhead

The cost of jobs that have been completed but not yet sold are contained in Inventory.

Finished Goods

Which of the following are assumptions of cost volume profit analysis?

In multi-product companies, the sales mix is constant. Production volume is equal to sales volume. All costs can be classified as either fixed or variable.

What is the most common method for disposing of the balance in Manufacturing Overhead?

Making a direct adjustment to Cost of Goods Sold

What is the primary difference between managerial and financial accounting?

Managerial accounting provides information for internal use and financial accounting provides information to external users.

Any item a manager wants to know the cost of is called a(n) ____________ _____________.

cost object

Cost objects include ______. customers activities anything for which revenue data is desired anything for which cost data is desired

customers activities anything for which cost data is desired

The first step in assigning manufacturing overhead costs using a predetermined overhead rate is to ______.

determine the cost driver

Underapplied or overapplied overhead is the ______.

difference between overhead applied to jobs and actual overhead

Labor costs that can be easily and conveniently traced to specific products are ______ costs. Multiple choice question.

direct labor

The document used to record the time workers spend on each job and task is a ______.

direct labor time ticket

When materials are requisitioned into production, ______. Multiple select question. indirect materials are recorded as a separate line item on the job cost sheet indirect materials are recorded in Work in Process direct materials are recorded on the job cost sheet direct materials are recorded in Work in Process

direct materials are recorded on the job cost sheet direct materials are recorded in Work in Process

Manufacturing costs can be divided into three categories: direct materials, direct ___________ and _____________ _____________.

direct materials, direct labor, and manufacturing overhead.

True or false: Virtually all accounting and business problems have clear right or wrong answers.

false