Managerial Accounting Basics
Which type of accounting emphasizes relevance and internal decision-making?
Managerial accounting
What inventory account holds wood, fabric, and steel before production begins?
Raw Materials Inventory
Which costing system is used for custom homes or special orders?
Job order costing
When raw materials are requested for production, what document is used?
Materials requisition
In lean production, what system produces only when customers place orders?
Just-in-time (JIT)
Which group is LEAST likely to receive detailed managerial accounting reports?
Shareholders
A salesperson’s salary is classified as what type of cost?
Period cost
Which inventory account is credited when a job is completed?
Work in Process Inventory
Allocating manufacturing overhead to jobs requires a debit to what account?
Work in Process Inventory
Activities that do NOT add value to the customer are called what?
Non-value-added activities
Which responsibility is being performed when managers compare actual results to the budget and take corrective action?
Controlling
Which cost category includes direct materials and direct labor?
Prime costs
Machine hours are 400 and the predetermined overhead rate is $18 per machine hour. How much overhead is applied?
$7,200
If manufacturing overhead is underallocated, were jobs undercosted or overcosted?
Undercosted
Which situation makes ABC most beneficial?
High indirect costs AND many different products
Under SOX, publicly traded companies must assess what annually?
Internal control systems
Beginning inventory is $27,000, purchases are $150,000, ending inventory is $32,000. What is cost of goods sold?
$145,000
(27,000 + 150,000 − 32,000)
Estimated overhead is $240,000 and estimated direct labor cost is $300,000. What is the predetermined overhead rate?
80% of direct labor cost
Estimated overhead = $160,000. Estimated labor hours = 12,000. Actual labor hours = 15,000. Actual overhead = $175,000. Over or under applied — and by how much?
$25,000 underallocated
Materials handling cost pool is $36,000 and 12,000 parts are expected. What is the activity rate?
$3 per part
According to IMA ethics guidance, what should accountants do FIRST when facing an ethical issue?
Discuss with immediate supervisor
What happens to total variable cost when production increases?
It increases in total but stays constant per unit
A job costs $48,000 and includes 600 identical units. What is the unit cost?
$80 per unit
When finished goods are sold, which TWO accounts are affected?r
Finished Goods Inventory and Cost of Goods Sold
If appraisal costs increase due to more inspections, internal failure costs usually do what?