Chapter 10 - Management Accounting
42 Questions
0 Views

Choose a study mode

Play Quiz
Study Flashcards
Spaced Repetition
Chat to lesson

Podcast

Play an AI-generated podcast conversation about this lesson

Questions and Answers

What is the primary characteristic of overhead costs?

  • They are direct costs associated with production.
  • They are only related to selling and administrative functions.
  • They cannot be traced to products in a cost-effective manner. (correct)
  • They can be easily traced to specific products.

    • Which of the following is considered a component of manufacturing overhead?

  • Rent of manufacturing facilities. (correct)
  • Salaries of employees working in the accounting department.
  • Commissions paid to sales staff.
  • Direct materials used in the product.

    • What process is used to assign indirect costs to products?

  • Cost allocation (correct)
  • Cost segregation
  • Cost absorption
  • Cost tracing

    • Which of the following is NOT classified as a period cost?

    <p>Indirect labor used to manufacture inventory.</p> Signup and view all the answers

    Which of the following costs would be classified as indirect materials?

    <p>Light bulbs consumed in the factory.</p> Signup and view all the answers

    When is the expense for the tables recognized?

    <p>When the tables are sold</p> Signup and view all the answers

    How much does it cost to build each table?

    <p>$250</p> Signup and view all the answers

    What type of costs remain in an inventory account until the related revenue is earned?

    <p>Manufacturing costs</p> Signup and view all the answers

    Which costs are classified as direct raw materials costs?

    <p>Materials that can be traced easily and conveniently to products</p> Signup and view all the answers

    How are production wages treated in accounting?

    <p>Added to inventory and included in cost of goods sold</p> Signup and view all the answers

    Where does the depreciation cost for manufacturing equipment go?

    <p>Split between income statement and balance sheet</p> Signup and view all the answers

    Which costs are typically expensed in the period they are incurred?

    <p>Selling and administrative costs</p> Signup and view all the answers

    What happens to material costs at the time goods are sold?

    <p>They are transferred to the Cost of Goods Sold account</p> Signup and view all the answers

    What are direct materials in product costing?

    <p>Materials whose cost can be easily traced to specific products</p> Signup and view all the answers

    Which of the following statements is true about direct labor?

    <p>It is labor that can be easily traced to specific products</p> Signup and view all the answers

    What type of costs are considered indirect costs?

    <p>Costs related to utility expenses for manufacturing facilities</p> Signup and view all the answers

    How are managerial accounting reports typically delivered?

    <p>On a continuous basis, as needed for decision-making</p> Signup and view all the answers

    What is a primary use of product costing in manufacturing?

    <p>To assist in cost-plus pricing strategies</p> Signup and view all the answers

    Which users are considered insiders in the context of reporting?

    <p>Managers and executives</p> Signup and view all the answers

    Why is product costing essential for controlling business operations?

    <p>It helps identify and manage production-related expenses</p> Signup and view all the answers

    What type of transaction typically occurs with Tabor Manufacturing Company regarding their expenses?

    <p>Recording of zero total expenses</p> Signup and view all the answers

    What is one benefit of a just-in-time (JIT) inventory system?

    <p>It reduces costs associated with holding inventory.</p> Signup and view all the answers

    Which of the following is NOT a hidden cost mentioned?

    <p>Increased production volume</p> Signup and view all the answers

    Paula Elliott improved her flower sales by reducing which type of activity?

    <p>Nonvalue-added activities</p> Signup and view all the answers

    What pressure might management accountants face regarding confidential information?

    <p>To disclose it without consent</p> Signup and view all the answers

    Which action is a potential conflict for management accountants?

    <p>Undertaking unqualified duties</p> Signup and view all the answers

    What are included in product costs?

    <p>Direct materials, direct labor, and manufacturing overhead</p> Signup and view all the answers

    Which of the following represents a period cost?

    <p>Depreciation on office furniture</p> Signup and view all the answers

    Which costs are categorized as manufacturing overhead?

    <p>Quality department costs and repair &amp; maintenance salaries</p> Signup and view all the answers

    How is finished goods inventory on the balance sheet defined?

    <p>Materials, labor, and overhead costs related to unsold products</p> Signup and view all the answers

    Which statement correctly describes period costs?

    <p>They are deducted immediately as an expense when incurred.</p> Signup and view all the answers

    Which of the following is NOT a characteristic of product costs?

    <p>They include selling and administrative expenses.</p> Signup and view all the answers

    What is the primary difference between service organizations and merchandising companies?

    <p>Service organizations provide services to customers, while merchandising companies sell goods.</p> Signup and view all the answers

    What happens when a cost is initially classified as a product cost?

    <p>Its recognition as an expense is delayed until the product is sold.</p> Signup and view all the answers

    What is the primary distinction between manufacturing companies and service companies?

    <p>Finished products from service companies are consumed immediately.</p> Signup and view all the answers

    Which of the following is NOT one of the three distinct inventory accounts used by manufacturing companies?

    <p>Sales Inventory</p> Signup and view all the answers

    Which costs are included in the Work in Process Inventory account?

    <p>Labor and overhead costs for partially completed products</p> Signup and view all the answers

    What does the Finished Goods Inventory include?

    <p>Completed products that are ready for sale</p> Signup and view all the answers

    Which of the following costs would likely contribute to inventory holding costs?

    <p>Warehouse space utilization</p> Signup and view all the answers

    Which of the following statements about the Cost of Goods Manufactured is true?

    <p>It totals all manufacturing costs near the completion of products.</p> Signup and view all the answers

    Which cost category would NOT be typically included in manufacturing costs?

    <p>Marketing expenses</p> Signup and view all the answers

    What is the primary goal of Just-in-Time inventory management?

    <p>To minimize storage costs and waste.</p> Signup and view all the answers

    Study Notes

    Chapter 10 - Management Accounting

    • Management accounting differs from financial accounting
    • Financial accounting focuses on external users (investors, creditors)
    • Financial accounting provides limited information needed by business managers
    • Managerial accounting focuses on the needs of internal users (executives, managers, employees)
    • Internal users need information to plan, direct, and control business operations
    • External users need general economic information
    • Information for internal users is often more detailed, while information for external users is more aggregated
    • Users of managerial accounting receive timely information for decisions, which is used to make predictions
    • External Users receive information to determine company performance as a whole
    • Internal users require detailed information about specific parts of the company
    • Financial reporting focuses on the past
    • Managerial reporting focuses on the future as well as the now
    • Financial reporting is periodic (standard timeframe), while managerial reporting is continuous
    • Financial reports are often based on historical data that is objective, reliable, consistent, and has historical nature
    • Managerial reports are based more on estimations and less on facts
    • The main purpose for determining product costs in manufacturing companies is for pricing, along with managing business operations
    • Major costs in manufacturing are direct materials, direct labor, and manufacturing overhead; sometimes called the "Big Three"
    • Raw materials are materials used for production, costs are easy to trace
    • Direct labor is the cost of employees directly working on the product
    • Manufacturing overhead costs cannot be traced directly to a specific product (e.g., utilities, depreciation).

    Inventory Accounts

    • Raw materials inventory: Includes raw materials (lumber, metals, paints) that will be used to make the company's products
    • Work in process inventory: Includes partially completed products
    • Finished goods inventory: Includes completed products that are ready for sale

    Studying That Suits You

    Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

    Quiz Team

    Related Documents

    Introduction to Management Accounting PDF

    Description

    Explore the key differences between management accounting and financial accounting in this quiz. Understand how internal and external users rely on different types of information for decision-making. This chapter highlights the importance of timely, detailed data for managers versus aggregated reports for external stakeholders.

    More Like This

    Use Quizgecko on...
    Browser
    Open
    Browser
    Browser