Chapter 01
Managerial Accounting and Cost Concepts
True / False Questions
1. Managerial accounting is primarily concerned with the organization as a whole rather than with segments of the organization.
True False
2. Managerial accounting places less emphasis on nonmonetary data than financial accounting.
True False
3. Direct labor is a part of both prime cost and conversion cost.
True False
4. Wages paid to production supervisors would be considered direct labor.
True False
5. Direct material cost combined with manufacturing overhead cost is known as conversion cost.
True False
6. Advertising is a product cost as long as it promotes specific products.
True
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An example of a period cost is:
A. fire insurance on a factory building.
B. salary of a factory supervisor.
C. direct materials.
D. rent on a headquarters building.
29. Transportation costs incurred by a manufacturing company to ship its product to its customers would be classified as which of the following?
A. Product cost
B. Manufacturing overhead
C. Period cost
D. Administrative cost
30. Micro Computer Company has set up a toll-free telephone line for customer inquiries regarding computer hardware produced by the company. The cost of this toll-free line would be classified as which of the following?
A. Product cost
B. Manufacturing overhead
C. Direct labor
D. Period cost
31. Rossiter Company failed to record a credit sale at the end of the year, although the reduction in finished goods inventories was correctly recorded when the goods were shipped to the customer. Which one of the following statements is correct?
[pic]
A. A
B. B
C. C
D. D
32. Cost of goods manufactured will usually include:
[pic]
A. A
B. B
C. C
D. D
33. Which two terms below describe the wages paid to security guards that monitor a factory 24 hours a day?
A. variable cost and direct cost
B. fixed cost and direct cost
C. variable cost and indirect cost
D. fixed cost and indirect cost
34. Within the relevant range, the difference between variable costs and fixed costs is:
A. variable costs per unit fluctuate
List four different cost objects for Dell. For each cost object, mention one example of a direct and indirect cost.
3. If a cost is identical under each alternative under consideration within a given decision context, the cost is considered:
In Year 1, Brun Corp. properly accrued $10,000 for an income item on the basis of a reasonable estimate. In Year 2, Brun determined that the exact amount was $12,000. Which of the following statements is true?
f) To evaluate the material misstatement in the accounts, I think both of the consolidated income statement and the three financial statements are useful. We need to use the information properly from all the financial statements. However the consolidated income statement is the most useful one. If there is a significant change in an account balance comparing with preceding two years, the auditor will examine whether there a material misstatement exists. For instance, the bad debt expense as a percent of net sales in 2011, 2010 and 2009 are 0.56%, 0.70% and 0.69%, respectively. There should
net operating income will tend to move up and down in response to changes in levels of production.
Management determines what they would like to include in the report. No authoritative body requires managerial accounting reports. Management carefully considers behavioral implications, when designing the managerial accounting system.
Management typically describes the accounting choices and estimates that are embedded in the company's key critical accounting policies in the “Management Discussion and Analysis” (MD&A) section of the Form 10-K.
Feedback: Management accounting is the preparation and use of accounting information systems to achieve the organization's objectives by supporting decision makers inside the enterprise. LO 4
3. Managerial Accounting deals with procuring of data for the organisation's management i.e. to serve the internal users with necessary accounting information to carry out the management tasks of planning, organising, actualising and controlling. " Management Accounting is the presentation of accounting Information in such a way as to assist management in creation of policy and in the day to day operations of an undertaking". 4. Financial Management deals with the process adopted by an organisation for taking financial decisions through analysing and interpretation of financial data for meeting the organisations objectives.
The first impression of the course managerial accounting for managers was that it would involve learning how to manage operations of a firm, especially in relation to its financial records and activities to ensure efficient and successful operation of a firm. I expected to learn how to deal with the final financial records and using them to perform an analysis of the records which will help to make informed decisions. It would also involve learning how to deal with the accounting records to make effective budget plans in considerations of resources available. My expectations of the course
Assuming Top That uses the first-in, first-out (FIFO) method to account for inventories, the assignment of costs to units completed and transferred to the Sewing Department during February is
According to Will S, Ray H, & Eric E.N. (2009), management accounting is a branch of accounting that is concerned with providing information to managers who direct and control the firm’s operations. Management directing function seeks to effectively use both the human and raw material wealth of a firm to achieve organizational set objectives on routine basis. Controlling function is the art of tele-guarding the activities of the organization to consistently fall in line with set objectives. Management accounting achieves this function through effective budgeting.
This is because of the different emphasis: management accounting information is used within an organization, typically for decision-making.