ACCT 338

Manufactured products tend to have the following characteristics

tangible , Durable, Homogeneous, Seprarable.

Common costs are best described as

Cost from one resource used to produce utple services products.

Which of the following statements are true

Refining cost systems will typically increase measurement costcheck Refining cost systems will typically reduce error cost

Do you think that a Human Resources manager would be considered a line position, or a staff position?ou thin

Staff Position

What is the defining feature of a traditional cost accounting system?

The Overhead is assigned using unit-level drivers

The Cause and effect Guidline in cost allocation emphasizes

the relationship between department activity and the cost incurred.

Which of the following will result in the lowest pre-determied overhead rate?

theoretical capacity - everything was used at its perfect capacity.

Barnhouse Skateboards, a company manufacturing skateboards, uses a predetermined overhead rate to allocate overhead costs to its products. The predetermined overhead rate for the fiscal year is $25 per direct labor hour. The company had expected to use 10,000 direct labor hours during the year, but actually used 12,000 direct labor hours. How much overhead did Barnhouse Skateboards apply to its products during the fiscal year?

300,000

Which of the following describe an Activty base costing system?

A broad focust ( beyond the financial statements Directs managers to focus on activities, as apposed to focusing soley on cost.

When all costs are assumed to be variable, what typel of charge rate is used?

A single charging rate assumes all costs are variable and doesn't differentiate between fixed and variable costs.

The Fixed Overhead Variance is made up of ________________

A spending variance and volume variance

Which of the following statements best describes the difference between a static budget and a flexible budget

A static budget is prepared for a single level of activity, while a flexible budget can be adjusted to reflect any level of activity within a given range. The main difference between a static budget and a flexible budget lies in their adaptability to changing activity levels.A static budget is prepared for a specific, anticipated level of activity. Once set, it does not change, even if the actual level of activity differs from what was originally anticipated. For instance, if a company prepares a static budget expecting to sell 10,000 units of a product, that budget remains the same even if the company ends up selling 8,000 or 12,000 units.

Financial vs non financial

Financial vs. Non-financial: Financial measures, such as ROI or net profit, focus on monetary outcomes. In contrast, non-financial measures, like customer satisfaction or employee skill development, offer insights beyond just monetary metrics.

What are the two resource categories identified y the activity resource model?

Flexible Resources & Committed Resources.

Lumpy Resouces

Lumpy resources are those that involve significant investment and are not easily adjustable in the short term. Industrial manufacturing equipment, long-term leases, and company-owned vehicles fit this description as they require substantial upfront investment and cannot be scaled up or down quickly or cost-effectively. In contrast, office stationery supplies and hourly wages for temporary staff are more flexible and can be adjusted based on immediate needs.

Which of the following cost accoutnin systems is typically used in companies that manufacure/ provide products and services with uniqure costs?

Job order costing?

Which Statement best differentiates Joint products from by-products in a production process?

Joint products are the main products produced, white by products are secondary products that are much less valuable than the main products.

Barnhouse Skateboards, a company manufacturing custom skateboards, uses a predetermined overhead rate to allocate overhead costs to its products. The predetermined overhead rate for the fiscal year is $25 per direct labor hour. The company had expected to use 10,000 direct labor hours during the year, but actually used 12,000 direct labor hours. How much overhead did Barnhouse Skateboards expect to apply to its products during the fiscal year?

LEss than 300000

Lead Vs Lag

Lead measures predict future outcomes, like the number of customer inquiries (which might lead to future sales). Lag measures, on the other hand, look at past performance, like quarterly sales figures.

Barnhouse Skateboards, a company manufacturing custom skateboards, uses a normal costing system. During the fiscal year, the company applied $300,000 of overhead to jobs. At the end of the fiscal year, they determined the actual overhead costs were $320,000. What is the variance?

20,000 Under applied

A company has the following Variances related to overhead: variable overhead spending variance = $500 Unfavorable; variable overhead efficiency variance = $300 Favorable; fixed overhead spending variance = $100 Favorable; fixed overhead volume variance =$2,200 Unfavorable

2200 Unfavorable The fixed overhead volume variance measures the difference between applied fixed overhead and budgeted fixed overhead. A large unfavorable variance, as given in this scenario ($2,200 Unfavorable), indicates that the company applied less overhead than it budgeted for based on its actual production levels. This discrepancy can be interpreted in several ways, most notably:Idle Capacity: A significant unfavorable fixed overhead volume variance often implies that the company had a significant amount of idle capacity. This means that the company's facilities, machinery, and workforce were not utilized to their full potential. For example, if a factory designed to produce 10,000 units monthly only produced 7,000 units, it operated at 70% capacity, leaving 30% or 3,000 units' worth of production capacity idle.Higher Unit Costs: Fixed overhead costs remain constant regardless of the production level. So, if production is lower than anticipated, these costs are spread over fewer units, resulting in a higher cost per unit. This can make each product more expensive to produce and potentially reduce the company's competitiveness in the market if these costs are passed on to consumers.Budgeting or Forecasting Errors: An unfavorable fixed overhead volume variance can also indicate that there were errors in budgeting or forecasting. It's possible that the company overestimated the demand for its products or overallocated resources in anticipation of a production level that didn't materialize.Operational Inefficiencies: Beyond just idle capacity, there might be operational issues that prevented the company from reaching its anticipated production levels. This could be due to machine breakdowns, supply chain disruptions, labor disputes, or other unforeseen challenges.As a manager, the primary concern with the large un

Inventoriable Costs

Are reported as assets before the products are sold

What is the first stem in allocating support department costs?

Departentalize the organization.

Which of the following equations will result in the direct materials price variance?

(Standard Price - Actual Price) x Actual Quantity Used The direct materials price variance is calculated by comparing the difference between the standard price and the actual price of the materials. This difference is then multiplied by the actual quantity of materials used (or purchased, if the variance is determined when materials are acquired). The equation represents the discrepancy between what the company expected to pay for the materials (based on the standard price) and what it actually paid (based on the actual price).

Flexible Resources

**Flexible Resources**: These are resources that can be acquired and used as needed. They are variable in nature, meaning their usage and the costs associated with them can fluctuate based on the level of activity or production. Examples of flexible resources include raw materials, direct labor hours, or utility costs in a manufacturing process. The costs of flexible resources are directly relevant to decision-making, particularly in short-term contexts, as they change with the volume of output or the scale of operations.

Assume the FIFo Method is being used and direct materials are added evenly thorught the period. Also asume that the 1000 units are 30% complete with regard to DM at the begining of the period ( BWIP 30% Complete DM) What are the equivalent units of DM tranffered out from DWIp?

1000 * ( 100%-30%) 700 units

Comminted Resources:

. **Committed Resources**: Committed resources are those that are acquired in advance and usually in large, indivisible (or "lumpy") quantities. They often represent fixed costs such as machinery, buildings, or long-term staff contracts. These resources involve significant upfront investments and are not as easily adjustable to changes in the level of activity in the short term. While the initial cost of acquiring committed resources is a sunk cost and thus irrelevant for future decision-making, the ongoing costs (like maintenance, insurance, or depreciation) can be relevant, especially if a decision can significantly alter the need for these resources.

Which of the following are techniques to reduce the measurement costs associated with ABC

Approximatley relevant ABS Equally Accurate ABC TIME DRIVEN ABC Duration based costing

which of the following correctly complete the following sentence? Normal cost accounting systems ______?

Assign the cost of overhead using pre-determined overhead rates. Directly trace the cost of direct materials to products.

The Activity Resource Usage Model identifies two main categories of resources: flexible resources and committed resources.

Commited Resources and Flexible resources

Committed Resources

Committed resources are those that are acquired in advance and usually in large, indivisible (or "lumpy") quantities. They often represent fixed costs such as machinery, buildings, or long-term staff contracts. These resources involve significant upfront investments and are not as easily adjustable to changes in the level of activity in the short term. While the initial cost of acquiring committed resources is a sunk cost and thus irrelevant for future decision-making, the ongoing costs (like maintenance, insurance, or depreciation) can be relevant, especially if a decision can significantly alter the need for these resources.

Core Objectives

Core Objectives: These are objectives that most, if not all, businesses in a particular industry or sector aim to achieve. They're fundamental to the operation and success of any enterprise in that domain. For example, objectives related to increasing market share, enhancing customer satisfaction, or retaining customers would be considered core objectives. Essentially, these are goals that any business, regardless of its specific strategy, would want to achieve to be competitive and viable.

Barnhouse Skateboards, a company manufacturing custom skateboards, uses a normal costing system. During the fiscal year, the company applied $300,000 of overhead to jobs. At the end of the fiscal year, they determined the actual overhead costs were $320,000. Barnhouse Skateboards considers any variance over $15,000 to be material. Which of the following account balances will increase with journal entry to dispose of the overhead variance?

Cost of goods sold WIP Inventory Finished Goods Inventory

what are the 3 functions of the management accounting information systems?

Costing out products and services, Planning and control, decision making.

WHich of the Following perspectives divides objectives into core vs. non-core objectives?

Customer: Within the "Customer" perspective of the balanced scorecard, objectives are often categorized as core or non-core based on their universality and strategic specificity.

What is the Journal entry to record a materials requisition for a specific job in a job order costing system?

Debit work in process, Credit Raw materials Inventory.

The Journal entry used to apply overhead to products credits manufacuting overhead or overhead contral and debits _____?

Debits Work in process. The Work in Process Inventory account is debited because the application of overhead increases the costs associated with the goods that are in production (Work In Process Inventory).

Under a Standard costing system which of the following categories of cost is assigned using a standard?

Direct materials, Direct labor , Overhead

Which method completely ignore services provided between supportin departments?

Direct method

Which two process-costing Complications were discussed?

Ending work in process, Non-uniform Application of product costs.

External Vs. Internal

External vs. Internal: External measures focus on outcomes outside of organizational control, like market share, while internal measures, like process efficiency, look at organizational operations.

True or False? External financial reporting is often aimed at comparing the cost efficiency of different departments within an organization.

False, external financial reporting focuses on communicating the financial performance of companies as a whole.

True or False? Financial statements are designed to directly influence the actions of managers.

False, financial statements are more concerned with informing investors, creditors, and other stakeholders in a standardized format, which allows comparisons with other companies.

Which of the following are fundamental principles outlined in the IMA Statement of Ethical Professional Practice?

Honesty, Fairness, Objectivity and responsibility

Which of the following are probably considered Lumpy resources?

Industrial Manufacturing equipment Long term Lease on a warehouse Company owned delivery vehicles

Lumpy resources

Industrial Manufacturing equipment Long term lease on warehouse Company owned delviery vehichles

Which of the Following is of a typical balanced scorecard perspective?

Internal Measurement - the balanced scorecard typically encompases four key perspectives to provide a comprehensive view of an organizations performance: Financial: This perspective looks at financial performance metrics, like ROI, revenue growth, and profitability.Customer: This perspective focuses on customer satisfaction, retention, and acquisition metrics, emphasizing the importance of meeting customer needs.Internal Processes: Rather than "internal measurement", the correct term is "Internal Processes". This perspective evaluates the efficiency and effectiveness of the company's core operations and processes.Learning and Growth: This perspective examines the organization's capacity for growth and improvement, often looking at metrics related to employee training, organizational culture, and knowledge management.Given the choices, "internal measurement" is not a standard perspective of the balanced scorecard. Instead, the correct term within the balanced scorecard framework is "Internal Processes".

Lumy Resources are

Lumpy resources are those that involve significant investment and are not easily adjustable in the short term. Industrial manufacturing equipment, long-term leases, and company-owned vehicles fit this description as they require substantial upfront investment and cannot be scaled up or down quickly or cost-effectively. In contrast, office stationery supplies and hourly wages for temporary staff are more flexible and can be adjusted based on immediate needs.

What are examples of unit based drivers?

Machine hours, Direct labor hours

Non-core objectives.

Non-Core Objectives: These objectives are more tailored to a company's unique strategy or market position. If a company positions itself as a cost leader, its non-core objectives might involve streamlining operations or sourcing cost-effective materials to maintain low prices for customers. Conversely, a company that differentiates itself based on product quality or functionality might have non-core objectives centered on innovation, product enhancements, or premium customer service experiences.

Which of the following best completes the sentence. The balanced scorecard uses metrics that strike a balance between ___________ measures and ______________ measures.

Objective Measures and Subjective measures : The balanced scorecard is meticulously crafted to provide a well-rounded view of an organization's performance by balancing various types of measures:Objective vs. Subjective: While objective measures are quantifiable and derive from factual data, subjective measures are based on opinions, feelings, and perceptions. For instance, revenue growth is an objective measure, while employee satisfaction might be considered a subjective measure.External vs. Internal: External measures focus on outcomes outside of organizational control, like market share, while internal measures, like process efficiency, look at organizational operations.

Intagible servicess

Perishable, Cannot be tored, Heterogenic, they vary. Inseprarable , perishable,

Quiz 1 of 1 Assume that a food processing company has a joint process to produce two different types of canned peaches (LS Peaches and J Peaches). During a particular production cycle, the company produced 5,000 cans of LS Peaches that can be sold at the split-off point for $3 each and have a final sales price of $4.50 after further processing. They also produced 10,000 cans of J Peaches which have a potential sales value of $2.50 each at the split-off point and a final sales price of $3.75 after additional processing. If the company incurred a total of $35,000 in joint costs and decides to allocate $11,667 to LS Peaches and $23,333 to J Peaches, which joint costing method is most likely being used?

Physical Units Method Weighted Avg. Method Sales Value at Split-off Method Net Realizable Value Method Constant Gross Margin % Method

Which costing Techniqu is more likely to be used when you mass produce a produce?

Process costing

Which if the following methods allocates support department cost in a specific order without looping back?

Sequintial step method

when activity estimates are based on the capacity to perform the activity, the estimate may be more useful for gauging the cost of idle capacity.

TRUE

In the Bars Boards / Awd Example which of the following costs are sunk and irrelevant to the make/ buy decision?

The Cost of Training employees on using the truck making machinery. The purchase price of the truck-making machinery.

The ________ Is the professional Organization that administers the CMA Designation?

The IMA (Institute of Management Accountants) is the professional organization that administers the CMA (Certified Management Accountant) designation.

Double Loop Feedback Allows for Feedback on

The Quality of the Implementation the Quality of of the strategy

Which one of the following scenarios would result in an unfavorable direct materials usage variance?

The actual quantity of materials used exceeded the standard quantity for the actual production. An unfavorable direct materials usage variance occurs when the actual quantity of materials used is greater than the standard quantity expected for the actual level of production. This means that more materials were consumed than anticipated, potentially leading to increased costs.

Which of the following best completes the following sentence? The Balanced Scorecard is a strategy-based ____________

The balanced scorecard is a strategy-based responsibility accounting system. It is designed to provide a comprehensive framework that translates a company's strategic objectives into a set of performance metrics that can be measured and managed. While it does encompass financial metrics (similar to traditional accounting systems), it also emphasizes other perspectives such as customer, internal processes, and learning & growth. This broader view ensures that the organization's strategy is balanced across various aspects, rather than focusing solely on financial outcomes. The other options, "Accounting software" and "standard costing system," do not capture the full essence and purpose of the balanced scorecard.

The Balance scorecard

The balanced scorecard uniquely combines all these diverse measures to ensure a multi-faceted view of organizational health. In the options provided, the other choices mismatch these balanced counterparts. For instance, "objective" naturally balances with "subjective," not "financial" or "external." Similarly, "financial" doesn't naturally counter "subjective." The balanced scorecard's essence is to strike an equilibrium between these different but complementary metrics, ensuring that organizations don't overfocus on one at the expense of the others.

In the Barnes Board/ AWDt example which of the following cost are sunk and irrelevant to the make/ buy decision?

The cost of training employees the purchase price of the truck- making machinery

Which of the following factors should be considered when calculating a fixed rate for support departments

The extent a support department exists because of a producing department.

What is the correct definition for equivilant units?

The full units that could have been completed given the material and effort expended

In a joint product Costing Scenario, what is the split off point?

The point at which the joint products are first separable and an be identified as individual products

The Predetermined Overhead Rate (POR )

The predetermined overhead rate is calculated using expected (or estimated) costs, not actual costs. It's calculated by dividing the total estimated manufacturing overhead cost for the period by the estimated total units in the allocation base.

Which of the following is an example of a manufacture overhead cost

The rent on the production facility.

Which of the following best describes the variable overhead spending variance?

The variable overhead spending variance is affected by both (1) the price of variable overhead items (e.g., electricity), and (2) the efficiency with which variable overhead items are used.

Which of the following Joint cost allocation methods is the simplest

Weighted average method

In this class we have prepare production reports using two different methods, what are they?

Weighted average method, FIFO method.

Which of the following best describes the variable overhead spending variance?

The variable overhead spending variance is affected by both (1) the price of variable overhead items (e.g., electricity), and (2) the efficiency with which variable overhead items are used. The Variable Overhead Spending (or Rate) Variance is indeed affected by both:The price differences (the rate differences) of the variable overhead items.The efficiency with which those variable overhead items themselves are used.The Variable Overhead Efficiency Variance, on the other hand, deals with how efficiently the allocation base (like direct labor hours or machine hours) was used compared to the standard or expected usage.Thus, the correct answer to the question is:The variable overhead spending variance is affected by both (1) the price of variable overhead items (e.g., electricity), and (2) the efficiency with which variable overhead items are used.

flexible resources

These are resources that can be acquired and used as needed. They are variable in nature, meaning their usage and the costs associated with them can fluctuate based on the level of activity or production. Examples of flexible resources include raw materials, direct labor hours, or utility costs in a manufacturing process. The costs of flexible resources are directly relevant to decision-making, particularly in short-term contexts, as they change with the volume of output or the scale of operations.

Activity Resources

Understanding the nature of these resource categories is crucial for effective cost management and decision-making. It helps in determining which costs are relevant for specific decisions, particularly in scenarios like make-or-buy decisions, budgeting, or capacity planning.

Understanding the nature of these resource categories is crucial for effective cost management and decision-making. It helps in determining which costs are relevant for specific decisions, particularly in scenarios like make-or-buy decisions, budgeting, or capacity planning.

Understanding the nature of these resource categories is crucial for effective cost management and decision-making. It helps in determining which costs are relevant for specific decisions, particularly in scenarios like make-or-buy decisions, budgeting, or capacity planning.

Objective vs. Subjective:

While objective measures are quantifiable and derive from factual data, subjective measures are based on opinions, feelings, and perceptions. For instance, revenue growth is an objective measure, while employee satisfaction might be considered a subjective measure.

The Fixed Overhead Variance is made up of:

a spending variance and a volume variance. The Fixed Overhead Variance is the difference between the actual fixed overhead and the standard fixed overhead. It can be split into two main components:Fixed Overhead Spending Variance: This variance measures the difference between the actual fixed overhead costs incurred and the budgeted (or expected) fixed overhead costs. It essentially focuses on how well the costs were controlled, without regard to production levels.Fixed Overhead Volume Variance: This variance measures the difference between the budgeted fixed overhead based on actual production and the budgeted fixed overhead based on expected production. It captures the effects of producing more or less than was anticipated.

What does the ability to bear guidline suggest?

departments with more resources or larger budgets should bear a larger share of the costs.