Chapter 15-

Why are factory overhead costs greater for defense contractors than they are for computer manufacturers?

Building large products (airplanes, ships, military equipment) that defense contractors supply requires a significant investment in facilities and tools

__________ is the philosophy of enhancing employees, business processes, and products on a regular basis.

Continuous process improvement

__________ are identified with and can be traced to a cost object.

Direct costs

Which of the following positions would have a salary or wage that is classified as a factory overhead cost by a baking company? a.Factory supervisor b.President of the company c.Salesperson d.Baker

Factory supervisor

(ToF) Managerial accounting information is designed primarily to meet the needs of external users such as shareholders, creditors, and the general public.

False

___________ is reported at fixed intervals (monthly, quarterly, yearly) in general-purpose financial statements.

Financial accounting information

This inventory consists of completed (or finished) products that have not been sold.

Finished goods inventory

Which of the following would not be considered a conversion cost by a baking company? a.Electric costs b.Flour c.Depreciation on oven d.Baker

Flour

What is GAAP?

Generally Accepted Accounting Principles, are the measurement rules used to develop the information in financial statements.

__________ cannot be identified with or traced to a cost object.

Indirect cost

What is controlling?

Isolating significant departures from plans for further investigation and possible remedial action; may lead to a revision of future plans

(OBJ.1) Describe managerial accounting, including its differences with financial accounting, its place in the organization, and its uses.

Managerial- focuses on future decisions. Financial - focuses on historical transactions.

Monitoring operating results and comparing actual results with the expected results.

controlling

consist of direct labor and factory overhead costs

conversion cost

can be anything to which costs are assigned and will vary depending upon the decision-making needs of management.

cost object

The total cost of making products that are available for sale during the period is called ________.

cost of goods manufactured

Verticals are sometimes referred to as ________ and why?

business units, because they are often structured as separate businesses within the parent company.

Inherent in each of the preceding management processes is

decision making

What is strategic planning?

developing long-term actions to achieve the company's objectives. (These long-term actions are called strategies, which often involve periods of 5 to 10 years)

What is operational planning?

developing short-term actions for managing the day-to-day operations of the company.

Costs associated with hospital caregivers providing care is similar to

direct labor costs.

The process by which managers run day-to-day operations is called ________.

directing

All of the following are considered phases of the management process except ________. planning directing controlling executing

executing

(ToF) Managerial accounting reports must be prepared for the business as a whole.

false

Rejects solving problems with temporary solutions that fail to address the root cause of the problem

improving

what is the the primary focus and design of managerial accounting information?

to meet the specific needs of a company's management.

Horizontals provide services

to the various verticals and other horizontals.

Most large companies are organized in terms of

verticals and horizontals.

Horizontals are departments

within the company that are not responsible for developing products.

Inventory that consists of the direct materials, direct labor, and factory overhead costs for products that have entered the manufacturing process but are not yet completed is known as ________.

work in process inventory

consist of manufacturing costs: direct materials, direct labor, and factory overhead.

product costs

Verticals develop

products that are sold directly to customers.

Most management reports are prepared for

products, projects, sales territories, or other segments of the company.

To be classified as a direct materials cost, the cost must be both of the following:

1. An integral part of the finished product 2. A significant portion of the total cost of the product

Ultimate Luxury Hotel is a single hotel with 300 rooms. During the month of October, the hotel had 5,000 guests, who each stayed one night. What is the occupancy rate for October (rounded to the nearest whole percent)? a.54% b.100% c.6% d.3%

54%

Direct material cost (car Examples)

Automobile engine Brake pads Glass for front and rear windshields Steering wheel Tires

Which of the following positions would have a salary or wage that is classified as a direct labor cost by a baking company? a.Factory supervisor b.President of the company c.Salesperson d.Baker

Baker

Which is not a factory overhead cost?

Materials costs for the finished product.

This inventory consists of the costs of the direct and indirect materials that have not entered the manufacturing process. (sometimes called raw materials inventory)

Materials inventory

__________ consist of selling and administrative costs.

Period costs

Which of the following would be classified as an indirect cost by a baking company? a.Flour b.Frosting c.Salaries of bakers d.Salaries of production supervisors

Salaries of production supervisors

Which of the following statements regarding the differences between managerial accounting applications for manufacturing and service companies is true? a.Service companies incur both product costs and period costs. b.Service companies have larger materials, work in process, and finished goods inventories than manufacturing companies. c.Service companies may use cost of services on the income statement rather than cost of goods sold. d.Service companies require a physical production site.

Service companies may use cost of services on the income statement rather than cost of goods sold.

How are manufacturing companies and service companies alike?

They both have labor, material, and overhead costs.

Which of the following is not an example of a service provided within a service industry? a.Healthcare—inpatient care b.Financial—banking c.Information—social media d.Transportation—building diesel engines for locomotives

Transportation—building diesel engines for locomotives

(ToF) Operational planning develops short-term actions for managing the day-to-day operations of the company.

True

This inventory consists of the direct materials, direct labor, and factory overhead costs for products that have entered the manufacturing process, but are not yet completed

Work in process inventory.

Which of the following are ways by which managerial accounting provides information and reports for managers to use in operating the business?

[answer is under class prep (TMM.15.01) #4]

Managerial accounting provides performance reports to internal users. Which of the following is considered an advantage of performance reports?

[answer is under class prep (TMM.15.01) #5]

consist of direct materials and direct labor costs

prime cost

Inventory that consists of the costs of the direct and indirect materials that have not yet entered the manufacturing process is known as ________.

materials inventory

Used by management to develop the company's objectives. Developing long-range courses of action to achieve goals

planning

Managerial accounting reports do not have to be

prepared for the business as a whole.