ACCT ch14

Which would be characteristic of managerial accounting reports?

Designed to provide the decision maker with the appropriate information.

T/F Managerial accountants have a single role within an organization: collecting and reporting costs to management.

False. Managerial accountants determine product costs. In addition, managerial accountants are now held responsible for evaluating how well the company employs its resources. As a result, when the company makes critical strategic decisions, managerial accountants serve as team members alongside personnel from production, marketing, and engineering.

Managerial accounting reports must now comply with generally accepted accounting principles (GAAP).

False. Managerial accounting reports are for internal use and thus do not have to comply with GAAP.

Managers' activities and responsibilities can be classified into three broad functions: cost accounting, budgeting, and internal control.

False. Managers' activities are classified into three broad functions: planning, directing, and controlling. Planning requires managers to look ahead to establish objectives. Directing involves coordinating a company's diverse activities and human resources to produce a smooth-running operation. Controlling keeps the company's activities on track.

not correctly matched

Limited to double-entry accounting; special-purpose reporting for specific decisions

what i the difference between manufacturing activities and merchandising ?

Manufacturing consists of activities and processes that convert raw materials into finished goods. Contrast this type of operation with merchandising, which sells products in the form in which they are purchased.

explain the difference between manufacturing activities and merchandising

Manufacturing consists of activities and processes that convert raw materials into finished goods. merchandising, sells products in the form in which they are purchased.

how do Companies account for indirect materials

as part of manufacturing overhead.

Managerial accounting reports are special-purpose and issued as frequently as needed.

TRUE

T/F Both managerial accounting and financial accounting deal with many of the same economic events. explain why.

TRUE

T/F Financial accounting reports are general-purpose and intended for external users.

TRUE

T/F Financial accounting reports are general-purpose reports. explain why.

TRUE

T/F Managerial accounting reports pertain to subunits of the business. explain why

TRUE

what is manufacturing overhead

consists of costs that are indirectly associated with the manufacture of the finished product. Overhead costs also include manufacturing costs that cannot be classified as direct materials or direct labor. Manufacturing overhead includes indirect materials, indirect labor, depreciation on factory buildings and machines, and insurance, taxes, and maintenance on factory facilities.

Alex Coady is responsible for ensuring that the company's products meet all customer specifications. Which activity does Alex perform?

controlling

Minimizing the impact on the environment while acting in the best interests of employees and the community is known as

corporate social responsibility.

what are product costs

costs that are a necessary and integral part of producing the finished product.

what are period costs

costs that are matched with the revenue of a specific time period rather than included as part of the cost of a salable product. These are nonmanufacturing cost

how do manufacturers compute cost of goods sold

beginning finished goods inventory + cost of goods manufactured - ending finished goods inventory = cost of goods sold

Manufacturing overhead differs from direct costs because

direct costs, such as labor and material, are identifiable with the product, whereas manufacturing overhead is not specific to a product and cannot be identified with a product

Wages paid to assembly line workers

direct labor

Salaries for assembly line inspectors

direct labor or manufacturing overhead

Upholstery used in manufacturing furniture

direct materials

Wood used in manufacturing furniture

direct materials

what are manufacturing costs

direct materials, direct labor, and manufacturing overhead.

When a company selects executives and appoints managers and supervisors this is an example of

directing

The United States Congress passed the Sarbanes-Oxley Act in 2002 to

discourage unethical practices in public corporations

examples of direct materials

flour in the baking of bread, syrup in the bottling of soft drinks, and steel in the making of automobiles

what does manufacturing overhead include

indirect materials, indirect labor, depreciation on factory buildings and machines, and insurance, taxes, and maintenance on factory facilities.

what are the type s and frequency of reports in managerial accounting?

internal reports and as frequently as needed

who are the primary users of reports in managerial accounting?

internal users: officers and managers

Which of the following describes a system where goods are produced to customer order and put into production as soon as the order arrives?

just-in-time inventory management

what is the purpose of reports in managerial accounting ?

special purpose for specific decisions

In an analogous sense, as frequently as needed is to quarterly statements as internal user is to

stockholders

When the information being presented is limited to double-entry accounting and pertains to the business as a whole, it has most likely been prepared for

stockholders

Select all the examples of primary users of financial accounting information.

stockholders and creditors

what are raw materials

the basic materials and parts used in the manufacturing process.

total cost of work in process for the year.

the cost of the beginning work in process plus the total manufacturing costs for the current period

Indirect labor

the work of employees that has no physical association with the finished product or for which it is impractical to trace costs to the goods produced. Examples include wages of factory maintenance people, factory time-keepers, and factory supervisors.

cost of goods manufactured

total cost of work in process - ending inventory work in process

Which of the following terms are correctly matched?

very detailed reports not audited

Line positions are overseen by the

vice president of operations

examples of indirect labor

wages of factory maintenance people, factory time-keepers, and factory supervisors.

when and where do companies record product costs

when incurred, as inventory. These costs do not become expenses until the company sells the finished goods inventory. At that point, the company records the expense as cost of goods sold.

is Direct labor product costs or period costs

product costs

is Manufacturing overhead product cost or period costs

product costs

is direct materials product costs or period costs

product costs

Tim's Toys, a maker of high-end collectible teddy bears, had a beginning balance of $71,200 in its Raw Materials Inventory account. At the end of the period, the ending balance in this account was $75,000. During the period, Tim purchased $150,700 of materials. What was the cost of raw materials used during the period?

$146,900

Sandhill Mining Company mines and extracts iron ore to produce iron sheets. Its total manufacturing costs are $724,000. Its manufacturing overhead is $244,000, period costs are $140,000, and direct labor costs are $236,000. How much are Sandhill's direct materials costs?

$244,000

Xavier is a manager at BuiltMore Industries, and is responsible for several controlling activities. Which of the following activities would you expect Xavier to participate in?

Evaluating why the assembly line is making only 14 dozen boxes of cake mix each hour rather than the expected 18 dozen boxes.

T/F Managerial accounting reports must comply with generally accepted accounting principles. explain why

FALSE Financial accounting reports must comply with generally accepted accounting principles

T/F Managerial accounting reports are prepared only quarterly and annually. explain why.

FALSE Managerial accounting reports are prepared as frequently as needed.

T/F The company treasurer reports directly to the vice president of operations. explain why

FALSE The company treasurer reports directly to the vice president of finance/chief financial officer.

T/F Financial accounting focuses on providing information to internal users. explain why.

FALSE. Financial accounting focuses on providing information to external users

T/F Staff positions are directly involved in the company's primary revenue-generating activities. explain why.

FALSE. Line positions are directly involved in the company's primary revenue-generating operating activities.

T/F Managerial accounting applies only to merchandising and manufacturing companies. explain why.

FALSE. Managerial accounting applies to service, merchandising and manufacturing companies.

T/F Preparation of budgets is part of financial accounting. explain why.

FALSE. Preparation of budgets is part of managerial accounting.

What is the difference between planning and controlling?

Planning looks forward to create goals, whereas controlling looks back to determine if goals were met.

Managers' activities and responsibilities can be classified into three broad functions........

Planning. Directing. Controlling.

Direct materials

Raw materials that can be physically and directly associated with manufacturing the finished product.

Indirect materials

Raw materials that do not physically become part of the finished product or for which it is impractical to trace to the finished product because their physical association with the finished product is too small.

Michelle is a manager who is responsible for several directing activities. Which of the following activities is Michelle responsible for?

Setting up an integrated computer system to efficiently communicate information between production and sales.

direct labor.

The work of factory employees that can be physically and directly associated with converting raw materials into finished goods

A bicycle company has these costs: tires, salaries of employees who put tires on the wheels, factory building depreciation, advertising expenditures, lubricants, spokes, salary of factory manager, salary of accountant, handlebars, and salaries of factory maintenance employees. Classify each cost as direct materials, direct labor, overhead, or a period cost.

Tires, spokes, and handlebars are direct materials. Salaries of employees who put tires on the wheels are direct labor. Factory building depreciation, lubricants, salary of factory manager, and salary of factory maintenance employees are manufacturing overhead. Advertising expenditures and salary of accountant are period costs.

Why would managers want to use a balanced scorecard?

To effectively evaluate all aspects of a company's performance.

Ekram oversees the sales and marketing team for regional, national, and international sales and marketing. Ekram's job would be considered a(n) ________ position.

line position

Which of the following would be considered an indirect material in the manufacture of rubber tires for automobiles?

lubricants used in the molding machine to keep it working smoothly

beginning work in process inventory. The costs the company assigns to beginning work in process inventory are based on the _______________

manufacturing costs incurred in the prior period.

Factory machinery depreciation

manufacturing overhead

Factory repairs

manufacturing overhead

Factory supervisors' salaries

manufacturing overhead

Glue, nails, paint, and other small parts used in production

manufacturing overhead

Insurance on factory machines

manufacturing overhead

Property taxes on the factory building

manufacturing overhead

how do companies classify indirect labor

manufacturing overhead

what is the verification process of managerial accounting

no idenpendent audits

Managerial accounting reports provide information

on the subunits of the company

The triple bottom line is used to evaluate a company's performance with regard to

people, planet, and profit.

________ would be reported on the income statement as expenses when they are incurred.

period costs

is Administrative expenses product costs or period costs

period costs

is Advertising expenses product costs or period costs

period costs

is Selling expenses product costs or period costs

period costs

what is the content of reports in managerial accounting ?

pertains to the subunits of the business, very detailed. extends beyond double entry accounting to any relevant data. standard is relevance to decisions

Beth Brown is the production manager at a commercial bakery that produces buns for fast food restaurants. Beth performs tasks every day to add value to the business. Beth is

planning

Hassedah is studying the 5-year profits for several product lines to determine if any product lines should be added or discontinued. This is an example of

planning