Chapter 1

The Sarbanes-Oxley (SOX) Act ______.

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

When faced with an ethical dilemma ______.

-identify who will be affected by the situation -identify and evaluate the alternative courses of action

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

-opportunity -incentive -character

Decision making ______.

-uses feedback from other managerial processes -requires up-to-date information

The Sarbanes-Oxley Act increased the maximum jail sentence for fraudulent reporting to - years

20

Differential cost is ______.

A difference in cost between two alternatives. Also known as incremental cost

Which of the following is not an activity that managers perform on a regular, routine basis?

Budgeting

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

Business owners Employees

True or false: Monitoring metrics that are important to various areas of operations is part of implementing the plan.

False

True or false: Preparing a budget is part of the controlling process.

False

True or false: Taking actions that carry out the company's plan is a key part of the control process.

False

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

False

True or false: When faced with an ethical dilemma, it is only important to identify those who may be harmed by the decision.

False

Which of the following expenses are associated with running the overall business?

General & administrative

Which of the following is NOT one of the three common types of analytics?

Informative

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.

Which of the following statements is true?

Managers need more detailed information than financial reports can capture.

Which of the following statements is true?

Nonmanufacturing firms are increasing as a proportion of the marketplace.

Which of the following is NOT one of the three categories of businesses?

Nonprofit organization

Which of the following statements are true?

Occupancy costs can be either direct or indirect. A regional sales manager's salary would be a direct cost of the regional office in which the sales manager works.

Which of the following statements are true?

Product costs "attach" to units of product as they are purchased for resale or produced. GAAP requires all manufacturing costs be treated as product costs.

Which of the following are most likely fixed costs?

Rent Administrative salaries Property taxes

Which of the following apply to managerial accounting?

Reports are prepared as needed Emphasizes the future Reports at the decision making level

Which of the following are marketing or selling expenses?

Sales commissions Advertising Sales salaries

Which of the following statements is true?

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

Select the correct statements.

The U.S. economy is moving more towards the service industry. The number of employees working in manufacturing has remained relatively constant over the past 40 years.

Which of the following statements are true?

The triple bottom line is a component of sustainability accounting. Most public companies now issue corporate social responsibility (CSR) reports. Most managers today are driven primarily by economic results.

Which of the following statements are true?

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

Which of the following is NOT one of the V's of big data?

Validity

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

Variable

The process of discovering and communicating meaningful patterns and insights from data to find more intelligent ways of operating a business is known as -

analytics

Cost objects include ______.

anything for which cost data is desired activities customers

Opportunity costs ______.

are the costs of not doing something. should be considered in decision making

In an attempt to reduce the opportunities for error and fraud, SOX places additional responsibilities on ______.

boards of directors external auditors all managers

A cost is treated as a direct cost when is it ______.

both possible and reasonable to trace it to a cost object

In order for managers to determine the resources needed to achieve their objectives, a(n) - lays out plans in financial terms.

budget

Plans are laid out in in monetary or financial terms in a(n)

budget

Cost objects ______.

can be products, customers, or jobs

Identifying a problem and taking corrective action is part of the ______ process.

control

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

controlling

Direct labor and manufacturing overhead are referred to as - costs

conversion

Direct labor and manufacturing overhead costs are known as ______ costs.

conversion

When making a decision, ______.

cost control is a critical concern for most organizations

Stiff fines and penalties are imposed by SOX in an effort to ______.

counteract the incentive to commit fraud

ALL managerial functions involve ______.

decision making

The difference in costs between two alternatives is called a(n) ______ cost.

differential

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

direct labor

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

direct labor

Manufacturing costs include ______.

direct labor manufacturing overhead direct materials

The components of prime costs are ______.

direct materials and direct labor

A cost that can be easily traced to a specific cost object is a(n) - cost, whereas costs that cannot be traced or are not worth the effort to trace are - costs

direct, indirect

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

ethics

A(n) - cost does not change in total and a(n) - cost does not change per unit.

fixed , variable

General and administrative expenses include ______.

general management salaries and legal department

Companies with strong ethical cultures ______.

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

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

how costs will behave or change

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

implementation

Hiring workers, dealing with suppliers and serving customers are all part of ______.

implementation

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

implementing

The Sarbanes Oxley Act ______.

includes rules that should help employees make ethical decisions

Salaries of managers and maintenance personnel are examples of ______ labor costs.

indirect

When it is not worth the cost or effort to trace them to specific products, materials are considered - materials

indirect

A cost that will not influence a decision is a(n) - cost

irrelevant or sunk

Managerial accounting information ______.

is important for both profit making and nonprofit organizations

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

labor, manufacturing overhead

Levi Strauss and Ford Motors are examples of - firms

manufacturing

Product costs are also called

manufacturing costs

Factory costs such as cleaning supplies, taxes, insurance, and janitor wages are classified as ______.

manufacturing overhead

Indirect materials and indirect labor are classified as ______.

manufacturing overhead

Controlling involves ______.

measuring actual results

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

merchandising

Wholesalers and retailers are both types of - companies

merchandising

Nonprofit organizations ______.

must make decisions that use managerial accounting information

There are two broad classifications of costs: manufacturing costs and - costs

non manufactoring

The distinction between manufacturing and nonmanufacturing costs applies ______.

only to companies that make a physical product

A foregone benefit from choosing one path over another is a(n) - -

opportunity costs

Costs associated with running a business and selling the product as opposed to making it are called - costs

period

A relevant cost ______.

pertains to the future differs between alternatives

Determining tactics that management will use to achieve objectives is part of ______.

planning

Determining the key factors that are important to a company's success is a major component of the - function

planning

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

planning

The future-oriented aspect of the management process is ______.

planning

Which of the following is NOT a component of the triple bottom line?

planning

The continuous, ongoing cycle of management functions include ______.

planning, implementing, and controlling

Direct materials and direct labor together are referred to as - costs

prime

Direct materials, direct labor, and manufacturing overhead are all ______ costs.

product

Inventoriable costs is another term for - costs

product

Inventoriable costs is another term for - costs.

product

The difference between - costs and - costs determines how and when the cost will be matched up against revenue

product, period

Managers must conduct a review of the company's internal control system and issue a report of their effectiveness. This was enacted as part of SOX in an attempt to ______.

reduce the opportunity for error and fraud

Fixed costs ______.

remain constant in total. become progressively smaller per unit as the level of activity increases

Variable costs ______.

remain constant per unit vary in total

Examples of indirect labor costs include ______.

restaurant kitchen managers factory security guards factory supervisors

Nonmanufacturing costs include ______.

sales commissions company president's salary

Indirect materials include ______.

salt and pepper

Hotels and airlines are examples of - companies

service

Today most public companies issue corporate - - reports that provide sustainability-related information.

social responsibility

What type of cost is irrelevant and should be disregarded when making decisions?

sunk

Providing managers with a broader set of information to meet the needs of multiple stakeholders, with the goal of ensuring the company's long-term survival in an uncertain and resource-constrained world is the goal of - accounting

sustainable

Period costs are expensed in the period in which ____.

they occur

In deciding whether a cost is fixed or variable, think about whether the ______ cost will change.

total

True or false: A particular cost may be direct or indirect depending on the cost object.

true

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

true

The three V's that make data big are __,__,__

volume, velocity, variety