Managerial Accounting Chapter 11

Podcast

Play an AI-generated podcast conversation about this lesson

Questions and Answers

What is the total manufacturing cost for producing 10,000 snowboards?

$900,000

$1,000,000

$846,000 (correct)

$746,000

Which cost item is classified as manufacturing overhead in the context of snowboard production?

Depreciation on factory equipment (correct)

Salary of quality inspector

Labor cost of employees

Material cost of snowboards

Which of the following costs associated with a bicycle company is considered a period cost?

Factory building depreciation

Advertising expenditures (correct)

Wages of tire installers

Factory machine lubricants

In the context of total manufacturing costs, which of the following direct costs are included?

Material costs of snowboards Signup and view all the answers

Which of the following components does NOT contribute to the total manufacturing product costs of snowboards?

Advertising expenditures Signup and view all the answers

What type of costs do nonmanufacturing expenses fall under?

Period Costs Signup and view all the answers

Which of the following is an example of direct materials in a manufacturing context?

Wood cores and fiberglass Signup and view all the answers

Which of the following statements best defines direct labor in manufacturing?

Labor directly associated with converting raw materials into finished goods Signup and view all the answers

Property taxes on a factory building are categorized as which type of cost?

Manufacturing overhead Signup and view all the answers

Which of the following costs would be charged to expense as incurred?

Selling expenses Signup and view all the answers

Which cost is NOT considered a product cost?

Administrative expenses Signup and view all the answers

Manufacturing overhead includes which of the following?

Depreciation on factory equipment Signup and view all the answers

What characterizes period costs in a financial setting?

They are recognized in the income statement when incurred Signup and view all the answers

What does the sum of direct material costs, direct labor costs, and manufacturing overhead incurred in the current year represent?

Total Manufacturing Costs Signup and view all the answers

Which inventory accounts are specifically mentioned in the calculation of Cost of Goods Manufactured?

Work in Process and Raw Materials Signup and view all the answers

For March, if Keystone Company had raw materials inventory of $12,000 on March 1 and $10,000 on March 31, what category do these amounts fall into?

Ending Inventory Signup and view all the answers

Which statement accurately describes the Cost of Goods Manufactured schedule?

It is used to determine the total manufacturing costs incurred during a period. Signup and view all the answers

What percentage of U.S. workers are employed by service companies as mentioned?

80% Signup and view all the answers

In the context of accounting, what does the term 'Value Chain' refer to?

Processes associated with providing a product or service Signup and view all the answers

Which of the following costs is not included in the total manufacturing costs?

Administrative Expenses Signup and view all the answers

What is the primary focus of managerial accounting in today's economy?

Providing services over manufacturing goods Signup and view all the answers

Which of the following best describes advertising costs in relation to product costs?

They are considered a period cost and not a direct product cost. Signup and view all the answers

What is the classification of sales commissions based on the provided information?

They are a period cost related to revenue generation. Signup and view all the answers

What type of cost does factory maintenance salaries fall under?

Product costs classified as manufacturing overhead. Signup and view all the answers

Which statement is true about the salary of the factory manager?

It is classified as manufacturing overhead. Signup and view all the answers

How should the cost of shipping boards to customers be categorized?

Period cost not associated with producing product. Signup and view all the answers

The salary of the product quality inspector is classified as?

Manufacturing overhead. Signup and view all the answers

Which cost is NOT associated with producing a product?

Advertising costs. Signup and view all the answers

Which of the following costs is likely considered part of manufacturing overhead?

Salary of the factory manager. Signup and view all the answers

What is the primary objective of the Total Quality Management (TQM) system?

To reduce defects in finished products. Signup and view all the answers

What does the Theory of Constraints aim to identify within the value chain?

Constraints that limit profitability. Signup and view all the answers

Which method is employed by Activity-Based Costing (ABC) to allocate overhead?

Based on each product's use of activities. Signup and view all the answers

Which of the following is a focus of a Balanced Scorecard evaluation?

Both financial and nonfinancial measures. Signup and view all the answers

What is one significant aspect of the Sarbanes-Oxley Act (SOX)?

It clarifies management’s responsibilities. Signup and view all the answers

What does Corporate Social Responsibility often evaluate in a business?

Sustainable business practices. Signup and view all the answers

What issue can arise from ineffective systems and controls within a business?

They may create incentives for unethical actions. Signup and view all the answers

What is a common sustainability reporting practice among large U.S. companies?

Nearly 80% provide sustainability reports. Signup and view all the answers

Which term refers to all activities associated with providing a product or performing a service?

Value chain Signup and view all the answers

Which method allocates overhead based on each product's use of activities in the production process?

Activity-based costing Signup and view all the answers

What system aims to reduce defects in finished products aiming for zero defects?

Total quality management (TQM) Signup and view all the answers

Which performance measurement approach uses both financial and nonfinancial measures tied to company objectives?

Balanced scorecard Signup and view all the answers

Which inventory system manufactures or purchases goods just as they are needed?

Just-in-time (JIT) inventory Signup and view all the answers

Which term refers to a company's sustainable business practices with respect to its stakeholders?

Corporate social responsibility Signup and view all the answers

What is the code of ethical standards developed by the Institute of Management Accountants called?

Statement of Ethical Professional Practice Signup and view all the answers

Which of the following is not associated with the concept of the value chain?

Financial reporting Signup and view all the answers

Study Notes

Chapter 11: Managerial Accounting

This chapter outlines managerial accounting, a field focused on providing economic and financial information for internal users, such as managers.
Managerial accounting differs from financial accounting, which focuses on external users like investors and creditors.
Managerial accounting reports are tailored to specific decisions and issued frequently as needed.
Financial accounting reports are general purpose and prepared for external users periodically (e.g., quarterly or annually).
Management functions include planning, directing, and controlling—maximizing profits and market share, coordinating resources, meeting objectives, and maintaining activities on track.
A typical organizational structure shows reporting relationships and delegation of authority.

Learning Objective 1

Managerial accounting provides information for managers and other internal decision-makers.
Similarities to financial accounting include relying on economic events quantification and communication.
Differences include users, report types and frequency (internal vs. external), report purpose (special-purpose vs. general-purpose), report content (detailed data vs. aggregated), and reporting verification (no independent audits vs. audits by CPAs).
Key management functions include planning, directing, and controlling.

Learning Objective 2

Manufacturing costs consist of direct materials, direct labor, and manufacturing overhead. These are the components needed to produce a product or service
Direct materials are raw materials or parts directly associated with the finished product.
Direct labor is the work by factory employees directly associated with creating the product.
Manufacturing overhead is all other manufacturing costs—like indirect materials and indirect labor.
Costs that are an integral part of creating the product are called product costs; they are recorded in the inventory account.
Costs not associated with the product, like selling or administrative expenses, are period costs and are expensed immediately.

Learning Objective 3

Manufacturing companies have different inventory accounts (raw materials, work in process, and finished goods) compared to merchandising companies.
Cost of goods manufactured is calculated in a specific manner, this varies from the cost of goods sold calculation for merchandising companies.
Financial statements for manufacturers reflect these different inventory accounts.
The cost of goods sold calculation for manufacturers is distinct from that of merchandisers, incorporating the cost of goods manufactured figure.

Learning Objective 4

Current trends in managerial accounting include shifts to service-based economies and an increased focus on the value chain, just-in-time inventory control, total quality management (TQM), theory of constraints, enterprise resource planning (ERP), activity-based costing (ABC) and evaluating operations integrated with financial and nonfinancial measures, including corporate social responsibility, and business ethics.
Balanced scorecards are used to evaluate company performance and goals.
The Sarbanes-Oxley Act (SOX) and ethical practices are vital for accountability, transparency, and responsible management.
Emphasis on sustainability and a "triple bottom line" (people, planet, and profit) reflecting current trends in corporate social responsibility.

Studying That Suits You

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

Description

Explore the key concepts of managerial accounting in this chapter focused on providing internal financial information for decision-making. Understand the differences between managerial and financial accounting, and learn about management functions crucial for planning and controlling operations.