Chapter 1
Developing short-term actions for managing the day-to-day operations of a company.
operational planning
Selling and administrative expenses incurred in marketing the product, delivering the product, or managing the company and not directly related to manufacturing the product.
period costs
A phase of the management process whereby objectives are outlined and courses of action determined.
planning
The direct materials costs, the direct labor costs, and the applied factory overhead costs that have entered into the manufacturing process but are associated with products that have not been finished.
work in process inventory
Monitoring the operating results of implemented plans and comparing the actual results with expected results
Controlling
Departments within a company that do not develop products but provide services to the various verticals and other horizontals.
Horizontals
The branch of accounting that uses both historical and estimated data in providing information that management uses in conducting daily operations, in planning future operations, and in developing overall business strategies.
Managerial accounting
Which of the following best describes the difference between financial and managerial accounting?
Managerial accounting is not restricted to generally accepted accounting principles, while financial accounting is restricted to GAAP.
For the month of May, Latter Company has beginning finished goods inventory of $50,000, ending finished goods inventory of $35,000, and cost of goods manufactured of $125,000. What is the cost of goods sold for May?
$140,000
Identify the following costs as a prime cost (P), conversion cost (C), or both (B) for an automobile manufacturer: Wages of employees that operate painting equipment
B
Identify the following costs as a prime cost (P), conversion cost (C), or both (B) for an automobile manufacturer: Oil used for assembly line machinery
C
Identify the following costs as a prime cost (P), conversion cost (C), or both (B) for an automobile manufacturer: Wages of the plant manager
C
Direct Labor + Factory Overhead Cost
Conversion Costs Calculation
Beginning FG Inventory + COGM - Ending FG Inventory
Cost of Goods Sold Calculation
Total Manu. + Beginning Work In Prog - Ending Work In Prog
Cost of goods manufactured Calculation
Identify the following costs as direct materials (DM), direct labor (DL), or factory overhead (FO) for an automobile manufacturer: Wages of employees that operate painting equipment
DL
Identify the following costs as direct materials (DM), direct labor (DL), or factory overhead (FO) for an automobile manufacturer: Steel
DM
Inherent in planning, directing, controlling, and improving
Decision making
Which of the following costs would be included as part of the factory overhead costs of a microcomputer manufacturer?
Depreciation of testing equipment
Beginning DM Inventory + Purchases - Ending DM Inventory
Direct Materials Used Calculation
Identify the following costs as direct materials (DM), direct labor (DL), or factory overhead (FO) for an automobile manufacturer: Oil used for assembly line machinery
FO
Identify the following costs as direct materials (DM), direct labor (DL), or factory overhead (FO) for an automobile manufacturer: Wages of the plant manager
FO
The branch of accounting that is concerned with recording transactions using generally accepted accounting principles (GAAP) for a business or other economic unit and with a periodic preparation of various statements from such records.
Financial accounting
Which of the following is not one of the five basic phases of the management process?
Operating
Identify the following costs as a prime cost (P), conversion cost (C), or both (B) for an automobile manufacturer: Steel
P
Identify the following costs as a product cost or a period cost for an automobile manufacturer: Rent on office building
Period cost
Identify the following costs as a product cost or a period cost for an automobile manufacturer: Sales staff salaries
Period cost
Long-range courses of action
Planning
Direct Materials + Direct Labor Cost
Prime Cost Calculation
Identify the following costs as a product cost or a period cost for an automobile manufacturer: Steel
Product cost
Identify the following costs as a product cost or a period cost for an automobile manufacturer: Wages of employees that operate painting equipment
Product cost
Which of the following is not considered a cost of manufacturing a product?
Sales salaries
Direct Materials used + Direct Labor + Manu. OH Costs
Total Manufacturing Cost Calculation
Business units often structured as separate businesses within a parent company that develop products sold directly to consumers.
Verticals
Developed in the planning stage, these reflect the direction and desired outcomes of certain courses of action.
objectives (goals)
The philosophy of continually improving employees, business processes, and products with the objective of eliminating the source of problems and delivering the right products (services) in the right quantities at the right time.
continuous process improvement
The manager of the accounting function of a vertical (business unit).
controller
A phase in the management process that consists of monitoring the operating results of implemented plans and comparing the actual results with the expected results.
controlling
The combination of direct labor and factory overhead costs; in lean accounting, the account in which is accumulated the costs of direct labor and factory overhead.
conversion costs
A sacrifice made to obtain some benefit.
cost
A product, sales territory, department, or activity to which costs are assigned, depending on the decision-making needs of management.
cost object
The total cost of making and finishing a product.
cost of goods manufactured
The cost of merchandise sold recognized as an expense; the cost of finished goods available for sale minus the ending finished goods inventory.
cost of goods sold
Choosing among alternative actions; a component inherent in the other management processes of planning, directing, controlling, and improving.
decision making
Costs that are identified with and traced to a cost object.
direct costs
The wages of factory workers who are directly involved in converting materials into a finished product.
direct labor cost
The cost of materials that are an integral part of the finished product.
direct materials cost
The process by which managers, given their assigned level of responsibilities, run day-to-day operations.
directing
Another term for manufacturing overhead or factory overhead.
factory burden
All of the costs of producing a product except for direct materials and direct labor.
factory overhead cost
Measures provided to operational employees or managers on the performance of subunits of the organization. These measures are used by employees to adjust a process or a behavior to achieve goals.
feedback
The direct materials costs, direct labor costs, and factory overhead costs of finished products that have not been sold.
finished goods inventory
Costs that are not identified with or traced to a cost object.
indirect costs
The philosophy of controlling by comparing actual and expected results and isolating areas for further investigation and possible remedial action.
management by exception
Planning Directing Controlling Improving Decision making
management process
Costs, other than direct materials and direct labor costs, that are incurred in the manufacturing process.
manufacturing overhead
The cost of materials that have not yet entered into the manufacturing process.
materials inventory
The combination of direct materials and direct labor costs.
prime costs
The three components of manufacturing cost: direct materials, direct labor, and factory overhead costs.
product costs
A statement prepared by manufacturing companies that summarizes the cost of goods manufactured during the period.
statement of cost of goods manufactured
Developing long-term actions to achieve a company's objectives.
strategic planning
Planned long-term actions by which business goals and objectives will be achieved.
strategies
A measure of the use of a fixed asset in serving customers relative to the asset's capacity.
utilization rate