A Cost Management System Provides Measures Of Inventory

A Cost Management System Provides A Measures Of Inventory

A cost management system provides ________. A) measures of inventory value and cost of goods sold for financial reporting B) cost information for strategic management decisions C) cost information for operational control D) all of the above

Cost accounting is that part of the cost management system that measures costs for the sole purpose of financial reporting. True or False

Which of the following costs is a direct cost to a manufactured product? A) depreciation expense on factory equipment used for the product B) the wages of an assembly worker who works specifically on the product C) accountants who accumulate the costs of the product D) a factory supervisor who oversees the production of several different types of products

Physically tracing ________ costs is usually straightforward, but allocating ________ costs is usually more complex. A) indirect; direct B) direct; product C) direct; indirect D) unallocated; indirect

Unallocated costs ________. A) have an identifiable relationship to a cost pool B) lack an identifiable relationship to a cost pool C) have an identifiable relationship to a cost object D) lack an identifiable relationship to a cost object

Unallocated costs ________. A) are not recorded in the cost accounting system B) are not allocated to cost objects C) are direct costs for service firms D) are indirect costs for merchandising firms

The manufacturing division of an electronics company uses activity-based costing. The company has identified three activities and the related cost drivers for indirect production costs.

Activity Cost Driver Activity 1 Direct materials cost Activity 2 Direct labor cost Activity 3 Kilowatt hours Three types of products are produced. Direct costs and cost-driver activity for each product for a month are as follows: Product A Product B Product C Direct materials cost $75,000 $50,000 $125,000 Direct labor cost $6,000 $1,000 $3,000 Direct labor hours 1,500 Kilowatt hours 150,000 Indirect production costs for the month are as follows: Activity 1 $12,000 Activity 2 $20,000 Activity 3 $16,000 Total $48,000 Required: A) Compute the indirect production costs allocated to each product using the ABC system. B) Compute the indirect production costs allocated to each product using a traditional costing system, assuming indirect production costs are allocated using direct labor hours.

Historical or past information can have an indirect bearing on a decision because ________. A) the past can be changed B) it can help predict the future C) past decisions are always good decisions D) none of the above

________ is the predicted future costs and revenues that will differ among alternative courses of action. A) Relevant information B) Sunk costs C) Predictable information D) Target pricing

Information is relevant in business decisions if it is a(n) ________. A) expected future cost or it differs among alternatives B) expected future cost and it differs among alternatives C) historical cost and it differs among alternatives D) expected future cost that differs from a past cost

The accountant's role in decision making involves providing the relevant information for decision makers. True or False

If perfectly accurate and relevant information is not available for decision making, the accountant should consider using information that is ________. A) precise but irrelevant B) imprecise but irrelevant C) imprecise but relevant D) imprecise but timely

In decision making, relevance is more crucial than ________. A) precision B) predictability C) variable costs D) fixed costs

The ________ approach is useful for short-run decisions and the ________ approach is useful for long-run decisions. A) contribution; absorption B) absorption; contribution C) full costing; target costing D) full costing; contribution

Comment on why an MBA should be knowledgeable about contribution and absorption methods.

Short answer please. about 1000 words and include 10 credible references.(Answer should be a comprehensive essay discussing the importance of understanding both methods in managerial decision-making, with emphasis on their suitability for different decision horizons and managerial needs, supported by scholarly sources.)

Washington Company has the following data about its only product: Direct materials used $200,000 Direct labor 80,000 Indirect manufacturing fixed 100,000 Selling and administrative fixed 300,000 Indirect manufacturing variable 20,000 Selling and administrative variable 60,000 Selling price(per unit) 100 Units produced and sold 10,000 Washington Company uses the absorption approach. What is the gross margin? A) $240,000 B) $540,000 C) $600,000 D) $660,000

Timmerman Company has budgeted sales of $30,000 with the following budgeted costs: Direct materials $6,300 Direct labor $4,100 Variable factory overhead $3,700 Fixed factory overhead $5,600 Variable selling and administrative costs $2,400 Fixed selling and administrative costs $3,200. Required: Compute the average target markup percentage for setting prices as a percentage of: A) Total costs B) Total variable costs C) Variable manufacturing costs D) Total manufacturing costs

Strangle Company manufactures ties. When 28,000 ties are produced, the costs per unit are: Direct materials $0.60 Direct manufacturing labor $3.00 Variable manufacturing overhead $1.20 Fixed manufacturing overhead $1.60 Variable selling $0.80 Fixed selling $1.13. The ties normally sell for $22 each. The company has received a special order for 2,000 ties at $10.00 per tie. The company has excess capacity. Required: Compute the amount by which operating income would change if the order were accepted. Comment on other non-numeric factors that would influence your decision as a manager to accept or reject a special order.

See your lecture notes, this answer will not be found in the textbook.

An opportunity cost is ________. A) the additional costs generated by a proposed alternative B) the difference in total cost between two alternatives C) a cash disbursement in the future D) the maximum available benefit foregone by using a resource for a particular purpose instead of the best alternative use

Company XYZ is a small company with limited expertise with information technology. Company XYZ has a contract with Company ZZ. Company ZZ handles all of Company XYZ's information technology needs. For Company XYZ, this is an example of ________. A) joint costs B) joint decision making C) outsourcing D) technology transfer

What would be a consideration in a make-or-buy decision? A) excess capacity B) variable factory overhead costs C) rental income from idle facilities when not making a part D) all of the above

Fixed overhead costs that will continue regardless of a make-or-buy decision are ________ to the make-or-buy decision. A) relevant B) irrelevant C) avoidable D) incremental

Goldwater Company manufactures a part for its production cycle. The annual costs per unit for 10,000 units are as follows: Direct materials $20.00 Direct labor $15.00 Variable factory overhead $16.00 Fixed factory overhead $10.00 Total costs $61.00. The fixed factory overhead costs are unavoidable. Olson Company has offered to sell 10,000 units of the same part to Goldwater Company for $60 per unit. The facilities currently used to make the part could be used to make 10,000 units per year of a new product that has a contribution margin of $20 per unit. No additional fixed costs would be incurred with the new product. Goldwater Company should ________. A) make the part to save $10,000 B) make the part to save $90,000 C) make the new product and buy the part to save $90,000 D) make the new product and buy the part to save $110,000 Comment on some of the issues of buying critical parts from a vendor versus manufacturing them yourself.

See lecture notes, answer is not in the textbook.

Each year, Mother Company purchases 8,000 units of a part that it needs for production of its product. The supplier notified Mother Company that a price increase will take effect shortly, which will bring the price of the part to $25 per part. Mother Company is considering the use of idle facilities to produce the part. The annual production costs to produce the needed 8,000 parts are as follows: Direct materials $17,500 Direct labor $30,000 Indirect production costs variable 14,000 Indirect production costs fixed 33,500. The idle facilities could also be rented out at an annual rent of $99,000. All the fixed indirect production costs are avoidable. Required: Determine if Mother Company should buy the part or produce it internally.

Olson Company has three departments. Data for the most recent year is presented below: Dept. C Dept. A Dept. T Sales $4,000 $1,920 $2,240 Variable expenses 3,280 1, ... Unavoidable fixed expenses Unavoidable fixed expenses Operating income(loss) $(315) $55 $920 Olson Company is considering eliminating Dept. C because it is operating at a loss. Required: A) Compute the change in operating income if Olson Company eliminates Dept. C and does not replace it. B) Compute the change in operating income if Olson Company eliminates Dept. C and doubles the sales of Dept. T without increasing fixed costs.

A major benefit of effective budgeting is that ________. A) it compels managers to think ahead B) it aids managers in communicating objectives to employees C) it provides benchmarks to evaluate subsequent performance D) all of the above

The most effective budget processes facilitate communication from top management to ________ and from lower level managers and employees to ________. A) the SEC; the audit committee B) stockholders; creditors C) lower level managers and employees; top management D) creditors; stockholders

A major drawback of using historical results for judging current performance is that ________. A) past results may be inaccurate B) results may refer to a different manager C) inefficiencies may be concealed in past results D) managers may have cooked the books

Budgets are generally more effective if they are ________. A) created with the active participation of all affected employees B) understood and accepted by affected managers C) supported by top management D) all of the above

Managers may ________ their budgeted costs or ________ their budgeted revenues to create a budget target that is easier to achieve. A) understate; overstate B) overstate; understate C) understate; understate D) overstate; overstate

A sales forecast is ________. A) a prediction of sales under a given set of conditions B) the sales budget C) based on input from the board of directors D) based on input from the audit committee

Which of the following statements about long-range plans is FALSE? A) Long-range plans provide forecasted financial statements for five to ten year periods. B) Long-range plans guide day-to-day operations. C) Companies coordinate long-range plans with capital budgets. D) A decision made during long-range planning is the acquisition of a plant building.

________ set the overall goals and objectives of the organization. A) Capital budgets B) Cash budgets C) Master budgets D) Strategic plans

Which of the following is a component of the financial budget? A) budgeted balance sheet B) budgeted income statement C) sales budget D) purchases budget

What is the final result of the operating budget process? A) budgeted balance sheet B) budgeted income statement C) budgeted cash flow statement D) cash budget

A decision made during long-range planning includes whether to delete a product from a company's product line. True or False

Bates Corporation has the following sales budget: Month Budgeted Sales May $84,000 June 100,000 July 92,000 August 116,000 September 98,000 Credit sales are 80% of total sales. Collections of credit sales are 80% in the month of sale, 15% in the month after sale and 5% are never collected. Required: Prepare a schedule of cash collections for June, July and August. Answer: June July August Cash sales $20,000 $18,400 $23,200 Collections of credit sales: Current month 64,000 58,880 74,240 Previous month 10,040 Total collections $94,080 $89,280 $108,480

Extend the three-month to an annual budget. Based on this, comment on what the line items of the subsequent year’s budget need most attention, and discuss possible errors in increasing a line item by a percentage without proper analysis. Comment on why a well-prepared, thoughtful budget is a good offense and defense, and how to obtain critical line-item estimates effectively.

Divine Intervention Company uses activity-based costing. The company is trying to estimate the costs of the processing activity in the factory. The company has developed the following flexible budget formula: Y = $10.50X + $13,000 Where: Y = Total processing cost per quarter and X = Number of machine hours. What are the expected total processing costs if 10,000 machine hours are expected next quarter? A) $13,000 B) $105,000 C) $113,000 D) $118,000

Puppy Company planned to produce 12,000 units. This required 20 setups at $22,000 plus $500 per setup. Actual production was 10,000 units, requiring 15 setups. Actual setup cost was $26,000. At 10,000 units, what is the flexible budget amount for total setup costs? A) $7,500 B) $22,000 C) $26,000 D) $29,500

Which is NOT a reason for a static budget variance? A) Actual sales volume was higher than projected sales volume. B) Actual variable costs per unit were higher than expected variable costs per unit. C) Actual fixed costs per unit were higher than expected fixed costs per unit. D) Actual sales volume in current period was higher than projected sales volume in last period.