Midterm Management Accounting PART 2 (CH. 13)

Which of the following manufacturing environments would use a job order costing system?

Textbook printing, ship building, aircraft manufacturing

Equivalent Units =

Units Transferred Out + (Units in Process * Percentage of Completion)

Which inventory account is close to zero at the end of an accounting period for firms with very short production processes?

Work in Process

cost pooling

a method of combining or aggregating similar costs into a single cost pool for accounting and cost allocation purposes.

manufacturing overhead definition:

all manufacturing costs except direct materials and direct labor

A predetermined overhead rate is used to:

assign indirect costs to units produced.

Which of the following manufacturing environments would use a process costing system?

coal mining

The collecting and recording of organizational transactions in the accounting information system is the process of _____

cost accumulation

absorption costing and direct costing relate to

cost behavior of products produced

The process of using cost information to assess and manage the activities of an organization is known as ____ _____

cost management

The total amount of cost accumulated by the accounting information system is logically categorized in different ways, such as by production jobs, which is referred to as ______.

cost pooling

A cost that is not clearly traceable to a product or activity under consideration such that the cost would continue to be incurred if the product or activity were discontinued is known as a(n) ____ cost

indirect

A firm ___ ___to use absorption costing for both financial reporting and income tax purposes.

is required

A system that focuses on product or process cost accumulation by element of the value chain is known as ____.

lean accounting

The machine support and other manufacturing costs, except raw materials and direct labor, incurred as part of a product's costs is known as ____ ____.

manufacturing overhead

Cost Distortion

overcosting some products while undercosting other products

Costs accounted for initially as inventory when produced and later as expense when sold are:

product costs

Cost accounting _____.

relates primarily to the accumulation and determination of product, process, or services costs

On the Statement of Cost of Goods Manufactured, the sum of raw materials used + direct labor incurred + manufacturing overhead applied is known as:

total manufacturing costs

process costing relates to

type of products produced

Which of the following process steps occurs first for managers to observe costs for different organizational reference points? Multiple choice question.

cost accumulation

The organizational process of attributing an appropriate amount of cost incurred to each cost object is known as _____.

cost assignment

When a manufactured item is sold, where is its cost transferred in accounting terms?

from the balance sheet to the income statement

A debit balance in the Manufacturing Overhead account at the end of a period indicates that:

manufacturing overhead is underapplied

In absorption costing, fixed manufacturing overhead is a _____ (product/period) cost. In direct (or variable) costing, fixed manufacturing overhead is _____(product/period) cost.

product;period

Product Cost per Unit=

total product cost/# of units produced

An organization's _____ _____is the sequence of functions and related activities that adds value for the customer over the life of a product or service.

value chain

job order costing system

The job order costing system provides detailed information about the cost of each job, allowing businesses to determine the profitability of individual projects or products

Period costs

-costs that are taken directly to the income statement as expenses in the period in which they are incurred or accrued -Period costs include items like selling and administrative expenses, rent, utilities, salaries of non-production employees, marketing expenses, and other operating costs.

Overapplied overhead represents a _____(debit/credit) balance in the Manufacturing overhead account that results from applied overhead in excess of actual overhead costs.

Credit

Identify the following examples of product cost that would be classified as manufacturing overhead.

Electricity for factory machines Production manager's salary Factory maintenance Depreciation expense for factory building

Cost accounting systems that mix elements of job order and process costing systems to accomplish the objective of assigning manufacturing costs to units produced are known as _____.

hybrid cost accounting system

Period costs are expensed when

they are incurred

t or f: The use of activity-based costing information to support the decision-making process of an organization is known as activity-based management (ABM).

true

Using the following information, calculate the cost of goods sold. Beginning finished goods inventory = $124,000, Ending finished goods inventory = $132,000, Cost of goods manufactured = $366,000. Cost of goods sold =

358,000 (beginning+net+ending)

Given the following information, calculate the product cost per unit. Direct materials = $28,000 Direct labor = $42,000. Overhead application rate = $15 per direct labor hour. Direct labor hours = 5,200. Units products = 7,400. Product cost per unit =______ . Round your answer to a whole dollar.

=$20 *** First, find overhead costs (Overhead Application Rate×Direct Labor Hours) ****Second, find total product costs (Direct Materials Cost+Direct Labor Cost+Manufacturing Overhead Cost) ****Third, find product cost per unit (Total product costs# OF units produced)

Using the following information, calculate the cost of raw materials used. Beginning raw materials inventory = $20,000, Ending raw materials inventory = $22,000, Raw materials purchased = $84,000. Cost of raw materials used $_____

=82,000

Which of the following costs would be classified as a period cost?

Advertising expense for the product

COGS=

Beginning Inventory+Net Purchases−Ending Inventory

What is the primary focus of cost accounting?

Cost accumulation and assignment

The inventory account applicable to goods available for sale to customers is known as:

Finished goods inventory

Which is a true statement representing the difference between product costs and period costs?

Products costs are manufacturing costs, whereas period costs are nonmanufacturing costs.

Cost of Raw Materials Used=

Beginning Raw Materials Inventory+Raw Materials Purchased−Ending Raw Materials Inventory

Total Product Cost=

Direct Materials Cost+Direct Labor Cost+Manufacturing Overhead Cost

Overhead Cost=

Overhead Application Rate×Direct Labor Hours

Direct cost is a classification used to relate a cost to

a product of activity.

To achieve a more refined cost application for the assignment of overhead costs to products manufactured, the use of a single predetermined overhead rate is being replaced by: Multiple choice question.

activity based costing

Which of the following are associated with the cost behavior classification?

Mixed cost Variable cost

When a single cost driver application rate for manufacturing overhead is used instead of activity-based costing rates for a mix of different products, cost ___ is likely to occur because different products require different amounts of individual driver activity.

distortion