ACCT Exam 1 Practice PDF

1.​ The CEO is hired by the __Board of directors________. 2.​ A subcommittee of the board of directors is called the __audit comitee_____. 3.​ Raising capital and investing funds are the direct responsibilities of the _treasurer_____. 4.​ The _CFO______ and the ___COO_____ report to the...

1.​ The CEO is hired by the __Board of directors________. 2.​ A subcommittee of the board of directors is called the __audit comitee_____. 3.​ Raising capital and investing funds are the direct responsibilities of the _treasurer_____. 4.​ The _CFO______ and the ___COO_____ report to the CEO. 5.​ Financial accounting, managerial accounting, and tax reporting are the direct responsibilities of the __CFO_______. 6.​ Management accountants often work on __internal auditing______. 7.​ The internal audit function reports to the _audit committee_ __and communicates with the CEO and _CFO_. 8.​ The company’s operations are the direct responsibility of the _COO________. You do not provide top managers with the detailed job descriptions they requested because you fear they may use this information to cut a position from your department. Credibility You tell your sister that your company will report earnings significantly above financial analysts’ estimates. Conf You failed to read the detailed specifications of a new software package that you asked your company to purchase. After it is installed, you are surprised that it is incompatible with some of your company’s older accounting software. Comp You see that other employees take office supplies for personal use. As an intern, you do the same thing, assuming that this is a “perk. Integ At a financial reporting seminar, you skip the afternoon session and go sightseeing. Your company paid for the registration fee, and you are getting paid for the day. Comp / Integrity The __internal audit________ is geared toward producing periodic financial statements that will be used by investors and creditors to make investment and lending decisions. __________ improves the quality of thought by skillfully analyzing, assessing, and reconstructing initial thoughts. The professional organization that promotes the advancement of the management accounting profession is __________. The ___treasurer_______ is the person responsible for raising the firm’s capital and investing its funds. The three pillars of sustainability are _people_________, __planet ________, and __profit________. The _CFO_________ is the person responsible for general financial accounting, managerial accounting, and tax reporting. The role of the ___audit committe_______ function is to ensure that the company’s internal controls and risk management policies are functioning properly. The __Sarbanes Oxley________ was enacted to restore trust in publicly traded corporations, their management, their financial statements, and their auditors. _sustainability_________ is focused on evaluating a company’s performance not only by its ability to generate economic profits but also by its impact on people and on the planet. control_________ is the management process of evaluating the results of business operations against the plan and making adjustments to keep the company pressing toward its goals. __direct________ is the management process of overseeing the company’s day-to-day operations. __________ serves the information needs of people in accounting as well as people in marketing and in the warehouse. __ Job vs Process costing A legal firm - job An oil refinery process A commercial plumbing contractor job A cereal manufacturer process A custom-home builder job Kirkland Furniture is a manufacturing plant that makes a variety of tables, benches, and other furniture. Indicate which inventory account(s) would be affected by the following actions that occur at Kirkland’s in the process of manufacturing its standard picnic tables. Also indicate whether the inventory account would increase or decrease as a result of the action. Lumber is delivered by the supplier to the plant, where it is stored in a materials storeroom until needed. Raw materials inc Lumber is requisitioned from the storeroom to be used for tops and seats for the tables. WIP inc raw materials dec Factory workers cut the lumber for the tables. WIP inc Five tables are completed and moved to the inventory storage area to await sale. WIP dec finished goods inc A customer purchases a table and takes it home. Finished goods dec cogs inc Bill of materials b. Job cost record c. Production scheduled. Purchase orders e. Raw materials record f. Labor time record g. Receiving report h. Materials requisition i. Invoice A(n) _job cost record____ is used to accumulate all of the costs affiliated with each job. All direct laborers in the factory fill out a(n) _labor time record ________. The accounting department will not pay a(n) __invoice____ unless it agrees with the quantity of parts both ordered and received. Each item in the raw materials storeroom has its own _raw materials record_________. The raw material record_____ is a control for the materials stored in the storeroom. In order to get direct materials, a(n) __material requisiton____ must be presented. Before production begins, a manufacturer’s purchasing department issues _purhcase order____ to its supplier for needed direct materials. A(n) __recieving report_____ is typically a duplicate of the purchase order but without the quantity pre-listed on the form. (don't want them to know because they can take) ***The _bill of materials ______ is like a list of ingredients in a recipe, stating the materials needed to produce a product. *** ON EXAM - (1 method) Edmonton Pools manufactures swimming pool equipment. Edmonton estimates total manufacturing overhead costs next year to be $1,400,000. Edmonton also estimates it will use 50,000 direct labor hours and incur $1,000,000 of direct labor cost next year. In addition, the machines are expected to be run for 40,000 hours. Compute the predetermined manufacturing overhead rate for next year under the following independent situations: Assume that the company uses direct labor hours as its manufacturing overhead allocation base. 28 Assume that the company uses direct labor cost as its manufacturing overhead allocation base. 1.4 Assume that the company uses machine hours as its manufacturing overhead allocation base. 35 Use your answers from S3-6 to determine the total manufacturing overhead allocated to Edmonton’s manufacturing jobs in the following independent situations: Assume that the company actually used 51,700 direct labor hours. 28 x 51700=1447600 Assume that the company actually incurred $1,020,000 of direct labor cost. 1.4 x 1020000=1428000 Assume that the company actually ran the machines 39,500 hours. 35 x 39500 =1382500 Briefly explain what you have learned about the total manufacturing overhead allocated to production. Use your answers from S3-7 to determine the total overallocation or underallocation of manufacturing overhead during the year. Actual manufacturing costs for the year for Edmonton Pools totaled $1,425,000. Assume that the company used direct labor hours as the allocation base. If its significant - COGS WIP FG Overallocated Assume that the company used the direct labor cost as the allocation base. Overallocated Assume that the company used machine hours as the allocation base. Underallocated SERVICE COMPANY Irvin Associates, a law firm, hires Attorney Amanda Hiller at an annual salary of $207,000. The law firm expects her to spend 2,300 hours per year performing legal work for clients. Indirect costs are assigned to clients based on attorney billing hours. Firm attorneys are expected to work a total of 22,000 direct labor hours this year. Before the fiscal year begins, Irvin estimates that the total indirect costs for the upcoming year will be $660,000. What would be the hourly (cost) rate to Irvin Associates of employing Hiller? 207,000/2300= 90 If Hiller works on Client 367 for 16 hours, what direct labor cost would be traced to Client 367? 90x16=1440 What is the indirect cost allocation rate? 660,000/22000=30 What indirect costs will be allocated to Client 367?What is the total job cost for Client 367? 30x16=480 total job cost = 1440+480=1920 Cost allocation Cost driver Job costing Process costing Cost tracing Job cost record Materials requisition _Job costing_____ is used by companies that produce unique services and products. Raw materials are stored in a storeroom until a _material requistion_______ is received requesting the transfer of materials to the production area. Cost tracing_____ is the assignment of direct costs to specific jobs. - direct costs can be TRACED Indirect costs cannot be traced to specific products, so they are divided up using a process called _cost allocation _ A custom-home builder would use a_job costinb_______ system to determine product cost. A __cost driver________ is any activity that causes a cost to be incurred._process costing ________ is used by companies that produce large numbers of identical units through a series of uniform production steps or processes. The job cost record_____ is used to track and accumulate all of the costs for an individual job. PepsiCo produces Ruffles potato chips; it would use a __process costing_____ system to determine product cost. Exercise 33 - to practice Robert Consulting, a real estate consulting firm, specializes in advising companies on potential new plant sites. The firm uses a job cost system with a predetermined indirect cost allocation rate computed as a percentage of expected direct labor costs.At the beginning of the year, managing partner DeeAnn Robert prepared the following plan, or budget, for the year: Direct labor hours (professionals)14,000 hours Direct labor costs (professionals)$2,150,000 Office rent$ 240,000 Support staff salaries$ 930,000 Utilities$ 290,000 Chase Resources is inviting several consulting firms to bid for work. Robert estimates that this job will require about 210 direct labor hours.Requirements Compute Robert Consulting’s (a) hourly direct labor cost rate and (b) indirect cost allocation rate. 153.57 1460000(all indirect costs) /2150000 =0.67 Compute the predicted cost of the Chase Resources job. 153.57 x 210 =32249.7 32250x.68 = 54180 If Robert Consulting wants to earn a profit that equals 25% of the job’s cost, how much should the company bid for the Chase Resources job? 54180+13545=67725