ACCT 2521CDFR 3002: Final Exam
130 Cards in this Set
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Manager's Responsibilities in one general term, then three specific terms:
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Decision Making-Planning, Directing, Controlling.
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Planning:
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Setting goals and objectives.
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Directing:
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Overseeing day-to-day responsibilities.
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Controlling:
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Evaluating results of operations.
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Examples of Planning:
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Generate more sales by opening new stores, Reduce labor costs by reducing store hours, Budgets.
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Examples of Directing:
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Using daily/weekly sales reports to adjust marketing strategies, Using product cost reports to adjust raw material usage.
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Examples of Controlling:
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Comparing budgeted sales with actual sales to take corrective actions, Comparing budgeted product costs against actual product costs to take corrective actions.
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Primary Users for Managerial Accounting:
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Internal Users.
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Rules that Must be Followed for Managerial Accounting:
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Does not have to follow GAAP.
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Underlying Basis of Information for Managerial Accounting:
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Focus on the future.
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Primary Users for Financial Accounting:
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External Users.
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Rules that Must be Followed for Financial Accounting:
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Must follow GAAP.
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Underlying Basis of Information for Financial Accounting:
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Focus on historical transactions.
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Three Types of Companies:
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Service, Merchandisers, Manufacturers.
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Service Companies:
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Provide a service ONLY, NO inventory.
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Examples of Service Companies:
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Accountants, Banks, Doctors, Lawyers.
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Merchandising Companies:
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Resell products PURCHASED from suppliers, ONE inventory account.
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Examples of Merchandising Companies:
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Amazon.com, J.C.Penny, The Gap.
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Manufacturing Companies:
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Use labor and other inputs to CONVERT raw materials into finished products, THREE inventory accounts.
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Examples of Manufacturing Companies:
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Crayola Crayons, Dell Computers, Craftsman Tools.
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3 Manufacturing Inventory Accounts:
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Raw Materials, Work In Process, Finished Goods.
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Raw Materials Inventory:
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Materials waiting to be used.
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Work In Process Inventory:
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Units partially complete.
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Finished Goods Inventory:
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Units complete, waiting for sale.
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Cost Object:
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Anything for which managers want a separate measurement of cost.
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Direct Cost:
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Traceable to a product.
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Indirect Cost:
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Not traceable to product (ALLOCATED).
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Two Definitions of Product Costs:
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Total Costs, and Inventoriable Product Costs.
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Total Costs:
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Used internally only.
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Inventoriable Product Costs:
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Used for external reporting.
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Inventoriable Product Costs-Merchandiser:
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+Purchase price from suppliers, +Cost to get ready for sale, +Freight-In, +Import duties or tariffs.
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Inventoriable Product Costs-Manufacturer:
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Direct Costs-DM, DL. Indirect Costs-MOH.
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Indirect Costs Related to MOH that are not DM or DL:
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Indirect Materials, Indirect Labor, Other Indirect MOH.
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Indirect Materials:
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Not easily traced, ex: Misc supplies, glue, nails.
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Indirect Labor:
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Other than DL, ex: custodial, maintenance, plant manager.
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Other Indirect MOH:
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ex: Factory Insurance, Depreciation, Rent, Utilities.
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Direct and Indirect Labor Costs Include:
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Salaries and Wages, Fringe Benefits, Payroll Taxes.
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Income Statement-Service Company:
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Simplest Income Statement, All Costs are Period Costs, No Inventory.
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Income Statement Calculation:
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Service Revenues-Operating Expenses=Operating Income.
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Cost of Goods Sold Calculation-Merchandiser:
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+Beginning Inventory, +Purchases, +Import Duties or Tariffs, +Freight-in=Cost of Goods Available for Sale,-Ending Inventory=Cost of Goods Sold.
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Income Statement-Merchandiser:
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+Sales-Cost of Goods Sold=Gross Profit, -Operating Expenses=Operating Income.
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Direct Materials Used Calculation-Manufacturer:
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+Beginning Raw Materials Inventory, +Purchases of Raw Materials, +Freight-in= Materials Available for Use,-Ending Raw Materials Inventory=Direct Materials Used.
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Cost of Goods Manufactured Calculation-Manufacturer:
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+Beginning Work In Process Inventory, +Direct Materials Used, +Direct Labor, +Manufacturing Overhead=Total Manufacturing Costs to account for,-Ending Work In Process Inventory=Cost of Goods Manufactured.
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Cost of Goods Sold Calculation-Manufacturer:
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+Beginning Finished Goods Inventory, +Cost of Goods Manufactured= Cost of Goods Available for Sale, -Ending Finished Goods Inventory= Cost of Goods Sold.
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Income Statement-Manufacturer:
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+Sales, -Cost of Goods Sold=Gross Profit, -Operating Expenses=Operating Income.
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Service Company Inventoriable Product Costs:
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None.
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Merchandising Company Inventoriable Product Costs:
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Purchases plus cost of freight, import duties, etc.
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Manufacturing Company Inventoriable Product Costs:
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DM, DL, MOH.
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Accounting Treatment Inventoriable Product Costs:
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Inventory on balance sheet until sold.
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Service Company Period Costs:
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All costs along the value chain.
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Merchandising Company Period Costs:
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All costs except total purchases.
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Manufacturing Company Period Costs:
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All cost except DM, DL, MOH.
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Accounting Treatment Period Costs:
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Immediately Expenses.
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Balance Sheet Differences for Inventory Accounts- Service Company:
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None.
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Balance Sheet Differences for Inventory Accounts- Merchandising Company:
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Merchandise Inventory.
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Balance Sheet Differences for Inventory Accounts- Manufacturing Company:
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Raw Materials, Work In Process, and Finished Goods Inventory.
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Which of the following is a Period Cost?
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Salary for the VP of Finance.
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The cost of all work not yet completed is?
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Work in Process.
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The cost of all work completed but not yet sold is?
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Finished Goods.
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The cost of lubricants used to grease machine used in the production process of a manufacturing company is an example of?
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An Indirect Material Cost.
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The depreciation on equipment in a manufacturer's headquarters can be classified as a(n)?
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Non manufacturing Cost.
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Product costs appear on the balance...?
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Only if goods are partially completed, are unsold at the end of a period, or both.
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Which of the following statements is more descriptive of managerial accounting than of financial accounting?
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Emphasis is on planning and controlling operations.
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Manufacturing overhead costs include...?
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Depreciation on machinery in the factory.
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The cost for electricity for a manufacturing factory is included in...?
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Product costs, Manufacturing Overhead, NOT Prime Costs
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The salary of the president/CEO of a manufacturing company would be classified as which of the following?
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Period cost.
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Which of the following manufacturing costs is an indirect cost of producing a product?
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Oil lubricants used for factory machinery.
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Manufacturing costs consist of...?
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Production and shipping costs.
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Selling and administrative costs are...?
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non manufacturing costs (period costs).
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Property taxes on the factory building for a manufacturer would be an example of...?
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Conversion costs, product costs, NOT Prime Costs.
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Prime Costs:
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DM+DL.
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Conversion Costs:
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DL+MOH.
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Selling Costs:
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All costs associated with marketing the finished products and getting the product to the customer.
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Administrative Costs:
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Costs incurred for the general administration of the organization.
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PROCESS Costing-Production:
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Mass Production.
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PROCESS Costing-Items:
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Similar Items.
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PROCESS Costing-Costs:
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Total Costs are AVERAGED over all units.
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Examples of PROCESS Costing:
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Paint Manufacturing, Oil Refineries, Cereal Manufactures.
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JOB Costing-Production:
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Unique, Custom Products or Small Batches.
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JOB Costing-Items:
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Different Items.
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JOB Costing-Costs:
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Total Costs are Accumulated by Job.
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Examples of JOB Costing:
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Hospitals, Custom Home Builders, Advertising Agencies.
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Predetermined MOH Rate Calculation:
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Total Est. MOH Costs/Total Est. Allocation Base (Allocation base-DL hours OR Machine Hours)
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1. A Manufacturer of Fiberglass Insulation is ____ Costing.:
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Process.
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2. A Residential Plumbing Contractor is ____ Costing.:
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Job..
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3. A Manufacturer of Fiberoptic Cable is ____ Costing.:
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Process...
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4. A Custom Home Builder is ____ Costing.:
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Job....
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5. A Hospital is ____ Costing.:
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Job.....
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Allocating MOH to Individual Jobs:
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Allocated MOH.
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Allocated MOH Calculation:
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POHR x Amount of Cost Allocation Activity Used.
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Purpose of Cost Accounting Systems:
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Track, Assign, Accumulate Costs of each product.
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Job Order Costing DM and DL:
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Traced directly to each job.
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Job Order Costing MOH:
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Allocated.
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ABC Costing:
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Activity Based Costing.
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Which of the following is NOT one of the three primary responsibilities of management?
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-costing.
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1. Management uses information on product costs to determine sales prices:
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Directing.
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2. To lower product costs, management moves production to Mexico:
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Controlling..
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3. Management conducts variance analysis by comparing budget to annual:
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Controlling...
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4. Management reviews hourly sales reports to determine the level of staffing needed to service customers:
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Directing....
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Which of the following about managerial accounting is true?
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Internal decision makers use managerial accounting.
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Walmart is a...?
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Retailer.
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Direct Materials are stored in ____ Inventory:
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RM.
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Kmart is a ____ company:
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Merchandising.
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Manufacturers sell from their stock of ____ Inventory:
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FG.
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Labor costs usually account for the highest % of ____ companies' cost:
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service.
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Intel (Computer Chips) is a ____ Company:
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Manufacturing.
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H and R Block (Tax Prep) is a ____ Company:
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service.
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Two types of ____ Companies include _____ and ____:
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Merchandising, Retailers&Wholesalers
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For Toyota, which is a Direct Cost with respect to a Prius:
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Cost of vehicle Engine.
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Which one of the following costs would be considered a direct cost of serving a particular customer @ McDonald's:
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Cost of the Patty the customer ordered.
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1. Manager of Juniors Department:
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Direct Labor.
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2. Cost of Juniors Clothing:
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Direct Labor..
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1. Cost of Radio Advertising for Store:
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Indirect Labor.
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2. Cost of Bags to Put clothes in:
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Indirect Labor..
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3. Junior Dept. Sales Clerk:
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Direct Labor...
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3. Electricity for the Building:
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Indirect Labor...
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4. Depreciation on the Building:
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Indirect Labor... .
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5. Cost of hangers used for Displays:
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Indirect Labor... ..
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6. Store Manager's Salary:
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Indirect Labor... ...
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7. Junior Clothing Buyer's Salary:
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Indirect Labor... ... .
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4. Cost of Costume Jewelry on Mannequins:
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Direct Labor... .
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8. Cost of Security Staff @ Medina Store:
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Indirect Labor... ... ..
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Which of the following is NOT part of Toyota's MOH:
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Depreciation on it's North America Headquarters.
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More Examples of Inventoriable Product Costs:
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Cost of a new software to track inventory during production, Cost of electricity @ on of Georgia Pacific's Power Mills, Cost of Chemical Applied to Lumber, Depreciation on the Gypsum Board Plant, Purchase of Lumber to be cut.
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More Examples of Period Costs:
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Salaries of Georgia Pacific's Top Executives, Cost of TV Advertising, Life Insurance on CEO, Salaries of Scientists Studying ways to speed forest growth.
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Wages paid to factory maintenance workers of a manufacturing plant are an element of IL and/or MOH:
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IL-Yes, MOH-Yes.
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Which of the following types of accounting information would be most useful for internal users?:
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Product costs.
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Costs that are treated as assets until the product is sold are called:
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product costs.
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Which of the following would be most likely to use process costing (not job order costing)?:
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A lawn fertilizer manufacturer.
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The purpose of an overhead allocation rate is to:
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Assign a portion of indirect manufacturing costs to each product manufactured.
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ACCT 2521: CHAPTER 1