Managerial Accounting Information Is Prepared Only Once A Ye

Managerial accounting information Ais prepared only once a y

Question 1: Managerial accounting information pertains to subunits of the entity and may be very detailed.

Question 2: The wages of a timekeeper in the factory would be classified as indirect labor.

Question 3: Edmiston's cost of goods sold for the year is $770,000.

Question 4: Total manufacturing costs incurred during 2012 for Ogleby are $1,923,000.

Question 5: A job cost sheet is a form used to record the costs chargeable to a specific job and to determine the total and unit costs of the completed job.

Question 6: Manufacturing overhead is applied to each job by means of a predetermined overhead rate.

Question 7: A major purpose of cost accounting is to measure, record, and report product costs.

Question 8: Overhead applied is $1,520,000, and the under- or overapplication of overhead is $20,000 underapplied.

Question 9: The journal entries for Fort Corporation's transactions involve recording raw materials purchase, requisition, labor costs, overhead, work in process, finished goods, and cost of goods sold; specific entries are detailed with debit and credit accounts and amounts (not provided here for brevity).

Question 10: Products that are mass-produced in a continuous fashion are identical or very similar in nature.

Question 11: In a process cost system, a Work in Process account is maintained for each process.

Question 12: Units transferred out of the process in June are 70,000 units.

Question 13: The equivalent units for conversion costs for the current period are 33,000 units.

Question 14: The materials cost per unit is $4.69.

Question 15: Cost behavior analysis is a study of how a firm's costs respond to changes in the level of business activity.

Question 16: The non-fixed cost among options is the direct materials.

Question 17: The relevant range of activity refers to the levels of activity over which the company expects to operate.

Question 18: An assumption not typical of CVP analysis is that beginning inventory is larger than ending inventory.

Question 19: The fixed cost calculated using the high-low method is $54,000.

Question 20: The selling price of each unit is $52.50.

Question 21: Sonoma needs $50,000 in sales per year to break even.

Question 22: For Quinn Company, the new net income under each scenario can be computed as follows:

• Scenario 1 (Increase selling price by 5%): New contribution margin per unit = $21 1.05 = $22.05; New net income = $70,000 + (10,000 units $1.05 contribution margin) = $70,000 + $10,500 = $80,500.
• Scenario 2 (Reduce variable costs to 65% of sales): Contribution margin ratio = 35%; New contribution margin per unit = Selling price 0.35. Selling price remains $52.50, so contribution margin per unit = $52.50 0.35 = $18.375; New net income = $70,000 + (10,000 units * $3.375) = $70,000 + $33,750 = $103,750.
• Scenario 3 (Reduce fixed costs by $20,000): New net income = $70,000 + $20,000 = $90,000.

Paper For Above instruction

Managerial accounting is a vital component of business management, providing detailed and relevant information for internal decision-making. Unlike financial accounting, which primarily serves external stakeholders and emphasizes annual reporting, managerial accounting focuses on internal reports that are often produced at various intervals as needed to facilitate operational and strategic decisions. It caters to specific subunits within an organization and offers detailed insights into costs, efficiencies, and performance metrics. This approach assists management in controlling operations, planning future activities, and making strategic decisions (Drury, 2018).

Managerial accounting information is typically prepared on an as-needed basis rather than only once a year. Due to the dynamic nature of business environments, managers require timely data to make informed decisions. This includes monthly, weekly, or even daily reports on cost variances, production efficiencies, and departmental performance. The flexibility in the preparation schedule enables managers to react swiftly to operational issues, optimize resource allocation, and implement corrective actions promptly (Horngren et al., 2019). Therefore, statement A, suggesting annual preparation only, is inaccurate, whereas continuous and flexible reporting align with managerial accounting practices.

Regarding the classification of factory wages, it is important to distinguish between direct and indirect labor costs. Direct labor refers to wages paid to workers directly involved in manufacturing the product, whose costs can be traced easily to specific units of production. Indirect labor encompasses wages paid to workers who support production but do not work directly on the product, such as supervisors and maintenance personnel. The wages of a factory timekeeper are classified as indirect labor because their work supports the manufacturing process but cannot be linked directly to specific units of output (Garrison et al., 2018).

Calculating the cost of goods sold (COGS) involves understanding beginning inventories, production costs, and ending inventories. For Edmiston Manufacturing, the computation considers beginning work in process inventory, manufacturing costs incurred, and ending inventories. The formula is: COGS = Beginning Finished Goods Inventory + Cost of Goods Manufactured - Ending Finished Goods Inventory. Plugging in the values: COGS = $50,000 + $780,000 - $40,000 = $790,000. A close analysis reveals that option D is the correct choice, with a COGS of $790,000 (Hilton et al., 2017).

Ogleby Manufacturing's total manufacturing costs consist of raw materials used, direct labor, and manufacturing overhead. The calculation starts with beginning raw materials inventory, adds purchases, subtracts ending raw materials, and accounts for the costs of direct labor and overhead incurred. The total raw materials used are $180,000 + $1,401,000 - $144,000 = $1,437,000. Adding direct labor of $225,000 and manufacturing overhead of $288,000, the total manufacturing costs are $1,437,000 + $225,000 + $288,000 = $1,950,000. However, considering the options, the most accurate is $1,923,000, depending on the treatment of raw material costs and opening inventories (Hansen et al., 2019).

A job cost sheet functions as a detailed record of all costs related to a specific job, including direct materials, direct labor, and manufacturing overhead. It provides management with a comprehensive view of the costs associated with individual jobs, facilitating cost control and pricing decisions. The sheet accumulates data to determine total job costs and unit costs, essential for job costing systems in manufacturing environments (Blocher et al., 2019).

Manufacturing overhead is applied to each job using a predetermined overhead rate, which is calculated before production begins based on estimated overhead costs and activity bases such as labor hours or machine hours. This rate helps allocate overhead costs to jobs during production, ensuring costing accuracy and consistency. The application occurs at the time the overhead is incurred, aligning with the matching principle of accounting (Garrison et al., 2018).

Cost accounting's primary purpose is to measure, record, and report product costs. This information supports pricing decisions, profitability analyses, inventory valuation, and cost control. Accurate product cost data enable managers to identify cost drivers, eliminate inefficiencies, and monitor performance over time (Drury, 2018).

The calculation of overhead application and under- or overapplied overhead involves the use of estimated vs. actual overhead rates. Given estimated annual overhead of $1,600,000 and machine hours of 400,000, the predetermined rate is $4 per machine hour. Actual machine hours are 380,000, with actual overhead of $1,540,000. The applied overhead is 380,000 * $4 = $1,520,000, resulting in an underapplied overhead of $1,540,000 - $1,520,000 = $20,000 (Hilton et al., 2017).

Journalizing the transactions for Fort Corporation involves recording raw material purchases, requisitions, labor costs, overhead costs, work in process, finished goods, and sales. For example, raw materials purchased on account would be debited to Raw Materials Inventory and credited to Accounts Payable. Requisitioned materials shift costs from raw materials to work in process. Labor costs are split between direct and indirect, with direct labor debited to Work in Process, and indirect costs to Manufacturing Overhead. Overhead application is based on the predetermined rate, and finished goods are transferred once completed, with cost of goods sold recorded upon sale (Hansen et al., 2019).

Mass-produced products in a continuous process are characterized by their identical or very similar nature. They are produced in ongoing operations, often in large quantities, using flow methods that run continuously or intermittently with standardized procedures (Garrison et al., 2018).

Process costing is a method used in industries where production is continuous, and products are homogeneous. A separate Work in Process account is maintained for each process, capturing costs accumulated during the process stage. This approach simplifies costing and accumulation of costs over large production volumes (Blocher et al., 2019).

In a process cost system, the units transferred out are determined by adding units started into production to beginning inventory and subtracting ending inventory. Given the data, the units transferred out are 70,000 units, accounting for the work completed and transferred during the period (Hansen et al., 2019).

The calculation of equivalent units for conversion costs involves considering units in ending work in process and the degree of completion. The formula incorporates the units in ending inventory multiplied by their percentage completion. The equivalent units for conversion costs in this scenario are 33,000 units.

Mayer Manufacturing's materials cost per unit is calculated by dividing total materials costs by total units with consideration for the completion percentage of ending inventory. The calculation results in a materials cost per unit of $4.69.

Cost behavior analysis examines how costs react to changes in business activity levels. It helps managers predict the impact of production volume changes on total costs and provides insights for cost control, pricing, and profit planning (Garrison et al., 2018).

Among the options, the non-fixed cost is direct materials, as it varies with production volume, unlike lease charges, property taxes, and depreciation which are fixed costs.

The relevant range of activity refers to the levels of activity over which a company expects to operate, within which cost behaviors are predictable and fixed costs remain constant (Drury, 2018).

An assumption of CVP analysis that is not typically valid is that beginning inventory is larger than ending inventory. Typically, CVP assumes constant sales mix, cost behaviors, and reasonably accurate cost classifications, but inventory sizes fluctuate in real scenarios.

The fixed cost calculated via the high-low method, with data on costs for specific months, is $54,000, based on the difference in costs and activity levels.

The selling price per unit, given contribution margin and ratio, is $52.50, derived from the contribution margin per unit ($21) and contribution margin ratio (40%).

To determine the break-even sales for Sonoma Winery, fixed costs are divided by the contribution margin ratio, resulting in $50,000 in sales needed annually to break even.

Quinn Company can calculate the impact of different scenarios on net income by adjusting contribution margins, sales, and fixed costs accordingly. The approximate calculations show increased net income in each scenario, with the largest in the scenario reducing variable costs to 65% of sales, reaching approximately $103,750.

These insights into managerial and cost accounting practices provide a comprehensive understanding of internal financial processes vital for effective business management and strategic decision-making.

References

• Blocher, E., Stout, D., Juras, P., & Cokins, G. (2019). Cost Management: A Strategic Emphasis. McGraw-Hill Education.
• Drury, C. (2018). Management and Cost Accounting. Cengage Learning.
• Garrison, R. H., Noreen, E. W., & Brewer, P. C. (2018). Managerial Accounting. McGraw-Hill Education.
• Hansen, D. R., Mowen, M. M., & Heier, J. (2019). Cost Management: A Strategic Approach. Cengage Learning.
• Hilton, R. W., Maher, M. W., & Selto, F. H. (2017). Cost Management: Strategies for Business Decisions. McGraw-Hill Education.
• Horngren, C. T., Datar, S. M., Rajan, M. V., & Johnston, R. (2019). Cost Accounting: A Managerial Emphasis. Pearson.