D074 Principals of Accounting

Actual Manufacturing Overhead

Manufacturing costs other than direct materials and direct labor.

Which statement below is true with regard to fixed costs?

Total fixed cost do not change in total within a relevant range of activity

How is a cost variance computed for a corporate budget?

A cost variance is the difference between the actual cost and the budgeted cost.

Which statement is true with respect to fixed and variable costs?

A fixed cost is fixed in total and decreases per unit as the number of units increases

The master budgeting process begins with which forecast?

A forecast of sales

What is the concept behind responsibility accounting in management accounting?

A manager should be evaluated only on factors he or she can directly control.

Cost of Goods Sold Statement

A statement that sums the cost of goods sold for an accounting period based on the cost of goods sold formula.

The sales and administrative expense budget includes which expenses?

All expenses besides production-related expenses

Cost Accountant

An accountant who is specially trained to prepare and analyze accounting information for internal decision-making.

Front Cost of Goods Manufactured Statement

Back A schedule supporting the income statement that summarizes the total cost of goods manufactured and transferred out of the work-inprocess inventory account during a period. These costs include direct materials, direct labor, and applied manufacturing overhead.

Cost-volume-profit (C-V-P) Analysis

Back Techniques for determining how changes in revenues, costs, and level of activity affect the profitability of an organization.

the manufacturing overhead cost budget includes which manufacturing costs?

Both fixed and variable manufacturing overhead costs

Which types of costs does a manufacturer have

Both product and period costs

Which types of costs does a merchandiser have?

Both product and period costs

Which activity involves the process of tracking the actual performance of a company? Controlling Evaluating Long-run planning Short-run planning

Controlling

Which items does a manager have control over in a profit center?

Costs and revenues

Which items does a manager have control over in a cost center?

Costs only

The production budget supplies the information required for which other budget in the master budgeting process?

Direct materials budget

Which statement correctly distinguishes the uses of financial accounting information from the uses of managerial accounting information? Financial accounting information is used as a competitive tool and is not shared with outsiders. Managerial accounting information is used by outsiders, such as creditors and investors. Managerial accounting information is prepared by outsiders to assess the performance of a company. Financial accounting information is prepared according to a generally accepted set of rules.

Financial accounting information is prepared according to a generally accepted set of rules.

Differential Costs

Future costs that change as a result of a decision; also called incremental or relevant costs.

Which type of business purchases finished goods for resale?

Merchandising

Which type of business is a typical retailer? Service business Manufacturing business Nonprofit business Merchandising business

Merchandising business

Segment managers should be evaluated on which items included in a budget?

Only the items they can control or influence

Company managers are important users of managerial accounting information. What are the three primary functions of company managers?

Planning, controlling, and evaluating

What is the first thing an accountant should do to develop a master budget?

Prepare a sales budget

Two of the three factors to be considered in preparing a production budget include the desired amount of ending inventory and the amount of inventory already on hand in the beginning inventory. What is the third factor required to prepare a production budget?

Projected sales volume

How is a cost variance computed for a corporate budget?

Projected sales, desired ending inventory, and amount of beginning inventory

The production supervisor for Hannah Company is preparing for her quarterly meeting with the chief financial officer (CFO). The main topic of discussion will be production worker hiring needs for the upcoming months. Past experience has taught the production supervisor that the CFO will always insist on seeing a detailed production budget before even considering spending money to hire new workers. The production supervisor is assembling her numbers. What factors should the production supervisor consider in assembling her production budget?

Projected sales, desired ending inventory, and amount of beginning inventory

Dennis Rodman is the manager of Segment C in Chicago Company. Jeannie Train, company CFO, is developing a measure to evaluate Dennis's quarterly performance. What should Jeannie keep in mind as she develops a measure to evaluate his performance? She should include only noncontrollable costs in the measure. She should include both controllable and noncontrollable costs in the measure. She should include only controllable costs in the measure. She should not include any costs in the measure. Next

She should include only controllable costs in the measure.

Which activity involves the process of tracking the actual performance of a company?

Strategic planning and capital budgeting

Capital Budgeting

Systematic planning for long-term investments in operating assets.

Break-even Point

The amount of sales at which total costs of the number of units sold equal total revenues; the point at which there is no profit or loss.

Applied Manufacturing Overhead

The amount of the manufacturing overhead that is assigned to the goods produced. This is usually done by using a predetermined annual overhead rate.

What is the segment margin?

The difference between segment revenue and direct segment costs

Contribution Margin

The difference between total sales and variable costs; the portion of sales revenue available to cover fixed costs and provide a profit.

Securities and Exchange Commission (SEC)

The government body responsible for regulating the financial reporting practices of most publicly owned corporations in connection with the buying and selling of stocks and bonds.

Contribution Margin Ratio

The percentage of net sales revenue left after variable costs are deducted; the contribution margin divided by net sales revenue.

What is the relevant range?

The range of volume over which the variable cost per unit is expected to remain the same

Cost Behavior

The way a cost is affected by changes in activity levels.

Break Even

To make just enough income to cover costs without any profit or loss.

Which statement below is true with regard to variable costs? Total variable costs change in relationship to the volume of activity. Total variable costs never change, regardless of the volume of activity. Total variable costs change in a manner similar to fixed costs in every situation. Total variable costs do not change in total in relationship to the volume of activity.

Total variable costs change in relationship to the volume of activity

Controlling

Tracking the actual performance of a company.