ACC 212- CHAPTER 1

net income

Revenues - Expenses

Salaries of managers and maintenance personnel are examples of ______ labor costs. a) indirect b) direct

a) indirect

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

a) total

Examples of indirect labor costs include ______. a) factory security guards b) factory supervisors c) restaurant kitchen managers d) restaurant cooks

a, b, c (not D b/c- The wages of cooks can be traced to a specific product or service and are considered direct labor)

ex of internal users

business owners, employees, managers

opportunity cost

cost of not doing something

When classifying costs, ___________ costs relate to making a product and ____________ relate to delivering and selling a product

manufacturing, nonmanufacturing

manufacturing costs

All costs associated with the production of goods

while sustainability accounting is an emerging area in accounting, the reality is that most of today's businesses are driven by...

economic results

period costs

expenses

financial accounting is for __________ users

external

analytics helps companies find more intelligent ways to:

operate a business manage resources enhance customer service reduce operating costs pursue other business opportunities

3 P's

people, profit, planet

financial accounting is reported

periodically

sustainability accounting

providing managers with a broader set of info to meet the needs of multiple stakeholders helps ensure the company's long-term survival

A cost that has already been incurred is called a(n) __________ cost

sunk

total variable cost=

the cost of the firm's variable factor of production - the cost of labor

Predictive Analytics

forecasting what is likely to happen ex: UPS predicts future repairs by analyzing idling time & miles driven

Costs that differ between decision alternatives are called differential or _____________ costs.

incremental

managerial accounting is for _____________ users

internal

sunk cost

irrelevant cost- have already been incurred

Sustainability

meet the needs of today w/o sacrificing the ability of future generations to meet their own needs

retailers

merchandisers that sell to the general public ex: walmart. macys

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

nonmanufacturing

The difference between ____________ costs and ____________ costs determines how and when the cost will be matched up against revenue on the income statement.

product, period

Service Companies

provide services to customers of clients ex: hilton hotels, southwest

Corporate Social Responsibility (CSR)

reports that provided sustainability-related info (measures of social & environmental impact)

Merchandising Companies

sell products that someone else has manufactured

fixed costs

stay the same regardless of how much sold

Period costs are expensed in the period in which ____. they are paid for they occur the related goods are sold

they occur

3 pillars of sustainability

triple bottom line & is represented by the 3 P's

big data analytics

use of analytical techniques to gain valuable insights from data data is so large/complex it cant be analyzed on traditional data bases/spreadsheets

Costs that remain constant on a per unit basis are called ____________ costs

variable

Which type of cost changes in total, in direct proportion to changes in activity level? Variable Opportunity Fixed Differential

variable

Prescriptive Analytics

recommending a course of action ex: UPS users customer location & GPS to provide the most efficient routes

descriptive analytics

showing what has happened ex: USP describes the operating efficiency of their delivery trucks by monitoring gas mileage

why is managerial accounting used for a manufacturing setting? (2)

1. easier to visualize a physical product & think about the costs required to produce it 2. accounting in manufacturing firms is complex because products go through multiple states of the completion process

3 step process to an ethical dilemma:

1. identify who will be affected 2. identify & evaluate the alternative choice 3. choose the most ethical decision

prime costs=

Direct Materials + Direct Labor

conversion cost=

Direct Labor + Manufacturing Overhead

Return on Equity

Net Income / Average Stockholders' Equity

Which of the following statements are true? a) Inventoriable costs are expensed in the period in which they are incurred. b) All costs in a merchandising company are considered to be period costs. c) Classifying a cost a product or period can impact reported profitability. d) The distinction between product and period costs has more to do with financial accounting than managerial accounting.

c & d

indirect costs

costs that could be traced but arent worth tracing to the item you wanna know the cost of

The distinction between manufacturing and nonmanufacturing costs applies ______. a) only to service companies b) to all companies that make or sell products c) only to merchandisers d) only to companies that make a physical product

d

managerial accounting is reported

day-to-day

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

direct labor

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

fixed, variable

Which of the following expenses are associated with running the overall business? Manufacturing General & administrative Marketing & selling

general & administrative

manufacturing firms

purchase raw materials from suppliers and convert them into finished products ex: apple, levis

what makes data "big"?

volume- can exceed the capacity of a company's serves velocity- data arrives too quickly variety- data comes in many different formats

3 types of analytics

1. Descriptive 2. Predictive 3. Prescriptive

Sarbanes-Oxley Act focuses on 3 factors that affect the accounting reporting environment:

1. opportunity: reduce error & fraud 2. incentives: you dont wanna go to jail or be fined 3. character: good character/decision making

product costs (inventoriable costs)

COGS

Cost objects include ______. a) activities b) anything for which revenue data is desired c) customers d) anything for which cost data is desired

a, c, d

direct costs

costs that can directly/easily be traced to the item you wanna know the cost of

wholesalers

merchandisers that sell exclusively to other businesses ex: costco

managers job is to (3 things)

planning: establish goals/objectives implementing: lead, direct, motivate employees controlling: keep track of actions & adjust

relevant cost

potential to influence a decision must occur in the future & differ between the various alternatives the manager is considering

Direct materials and direct labor together are referred to as ___________ costs.

prime

analytics

process of discovering & communicating meaningful patterns & insights from data

Sarbanes-Oxley Act of 2002

provides sweeping new legal protection for employees who report corporate misconduct

Security and Exchange Commission (SEC)

requires publicly traded companies to file quarterly & annual reports (IS, BS, Statement Cash Flow, disclosures about acc methods)

3 categories of manufacturing costs:

1. Direct Materials 2. Direct Labor 3. Manufacturing Overhead (everything else that isnt labor/materials)

Fixed costs ______. a) remain constant on a per unit basis b) remain constant in total c) become progressively smaller per unit as the level of activity increases d) become progressively larger per unit as the level of activity increases

b & c

Which of the following are marketing or selling expenses? a) Administrative salaries b) Sales commissions c) Advertising d) Sales salaries

b, c, d

ex of external users

investors, creditors, regulators

2 categories of nonmanufacturing costs:

1. marketing/selling expenses (ex: ads, distribution, sales personnel) 2. general & administrative expenses (ex: salaries, rent, utilities, corporate services)

Gross Domestic Product (GDP)

A measurement of the total goods and services produced within a country.

T/F: Cost control is a critical concern for most organizations.

True Reason: It is true that other things besides costs should be considered in decisions, but cost control remains a critical concern for most organizations.

If cost data will be used for decision making, it is important to consider ______. a) how costs will behave or change b) what costs are under the decision maker's direct control c) whether or not the rules of GAAP are being followed

a

Which of the following statements are true? a) Nonmanufacturing costs are period costs. b) Period costs are expensed in the same period in which they are incurred. c) Period costs are also called inventoriable costs. d) The wages of assembly-line workers are period costs.

a & b

Which of the following statements are true? a) Product costs "attach" to units of product as they are purchased for resale or produced. b) GAAP requires all manufacturing costs be treated as product costs. c) Product costs include all costs involved in making and selling a product. d) Product costs are always expensed in the same period in which the related products are produced.

a & b

Which of the following statements are true? a) There are many different ways to categorize costs. b) Costs are treated differently in different situations. c) When making decisions regarding costs, GAAP rules must be followed.

a & b (c- is only true when financial reporting)

Nonmanufacturing costs include ______. a) sales commissions b) assembly-line worker wages c) company president's salary d) insurance on plant equipment

a & c

A relevant cost ______. a) differs between alternatives b) will not influence a decision c) is always an opportunity cost d) pertains to the future

a & d

Which of the following are most likely fixed costs? a) Administrative salaries b) Utilities c) Rent d) Property taxes

a, c, d

cost object

any item you want to know the cost of

General and administrative expenses include ______. a) factory maintenance workers' wages and factory supervisors' salaries b) general management salaries and legal department c) sales commissions and factory supervisors' salaries d) shipping costs and sales commissions

b

Indirect materials include ______. a) factory rent and insurance b) salt and pepper c) supervisor salaries d) laptop computer keyboards

b

Manufacturing overhead costs include ______. a) direct materials, administrative taxes and insurance, and sales commissions b) administrative taxes and insurance, sales commissions, and factory assembly workers' wages c) indirect materials, factory supervisors' salaries, and factory depreciation d) direct materials, sales commissions, and factory assembly workers' wages

c

nonmanufacturing costs

costs associated with running the business & selling the product

variable costs

costs that vary with the # of units sold

Indirect materials and indirect labor are classified as ______. a) period costs b) nonspecific labor c) nonspecific materials d) manufacturing overhead

d