MBUS 300: Chapter 10 Review

If a company incurs $4,000 in manufacturing costs to produce 200 units, the average cost per unit is ______.

$20

If a company incurs $8,000 in manufacturing costs to produce 100 units, the average cost per unit is ______.

$80

At what level is information aggregated in financial accounting?

Global on the company as a whole

What accounts are affected when a company pays cash for a manufacturing cost?

Inventory Cash

Identify the costs that are included in manufacturing a product.

Labor Materials Overhead

At what level is information aggregated in managerial accounting?

Local on subunits of the organization

Which of the following statements is correct?

Production wages are recorded as inventory and salaries to selling and administrative employees are expensed as incurred.

What are the three categories of inventory for a manufacturing company?

Raw materials Work in process Finished goods

Product costs are first recorded as ______.

assets

Indirect costs ______.

cannot be cost-effectively traced to products and services

Recording a cash payment for product costs decreases ______

cash and increases inventory

IMA members must communicate information fairly and objectively under the standard of_______________-- .

credibility

Financial accounting provides information used primarily by ______.

creditors investors

Purchasing materials with cash ______.

decreases cash does not affect liabilities decreases operating cash flow increases inventory

Managerial accounting information is ______.

delivered on a continuous basis

Labor costs that can be easily and conveniently traced to products are called_____________ labor.

direct

Managerial accounting provides information used primarily by ______.

employees executives

According to the Statement of Ethical Professional Practice, members must keep information confidential ______.

except when disclosure is authorized or legally required

The primary difference between how manufacturing and service companies handle product costs is that service companies ______.

expense product costs because services are consumed immediately

True or false: Costs incurred in the process of making products, including direct materials, direct labor and manufacturing overhead are upstream costs.

false

Costs that cannot be traced to a product or service in a cost-effective manner are called ___________ costs.

indirect

Management accounting information gathering and reporting ______.

is only restricted by the value-added principle

Reduced inventory holding costs and increased customer satisfaction can occur as a result of implementing ______.

just in time

Direct labor is ______.

labor cost that can be easily and conveniently traced to products

The three costs recognized by GAAP that are incurred in the process of making products are_____________ , _____________ and _______________.

labor, materials, overhead

Costs incurred in the process of making products, including direct materials, direct labor and manufacturing overhead are ______ costs.

midstream

Just-in-time inventory ______.

minimizes inventory holding costs by making products just in time for customer consumption

When compared to financial accounting, managerial accounting uses ______.

more estimates and fewer facts

Purchasing materials with cash affects ______.

operating activities on the cash flow statement

Materials used to make products are usually called ______ materials.

raw

Materials used to make products are usually called ____________materials.

raw

Lumber, metals, paints, and chemicals that will be used to make the company's products are all part of _____________ _________________ inventory.

raw materials

Characteristics of financial accounting information include ______.

reliability consistency objectivity

Product costs are expensed when products are ________.

sold

Service companies typically do not have inventory accounts, since their services are consumed immediately.

true

True or false: Salaries paid to selling and administrative employees are accounted for differently than wages paid to production workers.

true

The only reporting restriction for managerial accounting is the _________________ - _________________ principle.

value - added