Chapter 10

At what level is information aggregated in managerial accounting?

Local on subunits of the organization

Match the type of accounting to the time horizon.

Managerial Accounting Past, present, and future Financial Accounting Choice, Past only, historically based

Identify the costs that are included in manufacturing a product.

Overhead Labor Materials

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

$20 Reason: $4,000 ÷ 200 units = $20

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

$80 Reason: $8,000 ÷ 100 units = $80

The practice of identifying the best practices used by competitors is ______.

benchmarking

Recording a cash payment for product costs decreases ______

cash and increases inventory

A key component of TQM is an ongoing process through which employees strive to eliminate waste, reduce response time, minimize defects and simplify processes that is known as _____ _____.

continuous improvement

IMA members must communicate information fairly and objectively under the standard of _____.

credibility

IMA standards include ______.

credibility confidentiality integrity competence

Managerial accounting information is ______.

delivered on a continuous basis

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

except when disclosure is authorized or legally required

Managerial accounting provides information used primarily by ______.

executives employees

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

expense product costs because services are consumed immediately

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

Cash Inventory

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

False

At what level is information aggregated in financial accounting?

Global on the company as a whole

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

True Reason: Service companies typically expense all product costs, instead of adding them to inventory.

Inventory accounts for manufacturers are ______.

finished goods work in process raw materials

General operating costs and selling and administrative costs are generally expensed when ______.

incurred

IMA members must abstain from engaging in any activity that might discredit the profession under the standard of _____.

integrity

Financial accounting provides information used primarily by ______.

investors creditors

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

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

Characteristics of financial accounting information include ______.

objectivity reliability consistency

Materials used to make products are usually called _____ materials.

raw

Materials used to make products are usually called ______ materials.

raw

Product costs are expensed when products are ______.

sold

A management practice that involves a systematic problem-solving philosophy that encourages frontline workers to achieve zero defects and an organizational commitment to achieve customer satisfaction is ______.

total quality management

The sequence of activities used to provide products is called a(n) _____ _____.

value chain

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

value-added