Accounting 2 Exam 3- Managerial Accounting

---THE WEIRD WORDS NEXT TO TRUE OR FALSE QUESTIONS TO HELP YOU IDENTIFY WHICH TRUE OR FALSE IT IS. The acronym is the beginning letter of each word in the question (for just the first few words). This is because Knowt will mark you wrong even if you put right answer (like True) if there is another (True) answer as an option. ---Accounting 2, dipping our toes into Managerial Accounting. This course is taught at Black Hills State University BHSU ---All of the C questions and few of the B questions

Managerial accounting information is primarily used by

Managerial accounting information is primarily used by

Internal managers

Managerial accounting information and reporting must conform with Generally Accepted Accounting Principles (GAAP)

False (maiar)

Managerial accounting pertains to which step of the value chain

Production / manufacturing

The board of directors provide oversight on company operations for

stockholders

From an accounting standpoint, manufacturing is the conversion of raw materials in to finished goods

True (facsm)

Direct materials are materials that

can be traced directly to the manufactured object

Indirect materials are materials such as

nails when building a house

Direct labor is labor that can be directly traced to the manufactured object

True (dlilt)

Which of these would not be considered indirect labor

Assembly line workers

Which would not be considered manufacturing overhead

Sales commissions

Which is not considered a product cost

Delivery fees

Which of these is not considered a period cost

Factory rent

Which of these is not considered a job costing type product

Oil

Raw materials that are used directly get added to

Work in process

Raw materials that are used indirectly get added to

Manufacturing overhead

Factory labor that is used directly goes into work in process inventory

True (fltisud)

Factory labor that is used indirectly goes into cost of goods manufactured

False (fltisi)

We estimate manufacturing overhead because the total amount of MOH will not be known until after production is complete

True (wemobt)

The first step in estimating manufacturing overhead is

calculate the predetermined overhead rate

Which is not one of the common choices for activities to proxy MOH

indirect materials

In the second step of estimating MOH we multiply the predetermined overhead rate by

actual activity level

Comparing actual MOH to applied MOH happens after which step

multiply overhead rate by actual activity

If applied MOH is less than actual MOH, we call this underapplied

True (iamohil)

If applied MOH is more than actual MOH, we call this

Overapplied

Companies use process cost systems to assign costs to similar products that are mass-produced in a continuous fashion

True (cupcst)

One important difference between job and process costing is that process costing uses

multiple work in process accounts

The reason to express partially completed units as total units is to 

assign manufacturing costs

Conversion costs are a combination of 

Direct labor and manufacturing overhead

calculate the equivalent units for ending WIP and completed items for direct materials and conversion costs is which process costing step

step 1

calculate the total dollar amount for materials and conversion costs from the beginning WIP and started items is which process costing step

step 2

find dollars per equivalent units for materials and conversion costs is which process costing step

step 3

apply the equivalent unit dollar rate to find the dollar amounts in ending WIP and completed items is which process costing step

step 4

When are materials assumed to be added to the WIP cycle

100% at beginning

Which category is considered to have 100% of materials and 100% of conversion costs

units completed during period

Which category is less than 100% for their associated costs

ending WIP, conversion costs

The process costing method is related to the inventory equation which allows dollar costs be transferred from one side of the equation to the other

True (tpcmisr)

Equivalent units is one of the items tracked in the production cost report

True (euisof)

Total variable costs vary in proportion to changes in the level of 

activity

Unit fixed costs do not vary with levels of activity

False (ufcdn)

The relevant range for variable and fixed costs are where they exhibit normal predictable behavior

True (trrfva)

Mixed costs are a combination of 

variable and fixed costs

What is the VC slope of the line using the Hi-Lo method (remember choose HiLo X then associated Y)
           Miles    Maint $
Jan     20         30
Feb     35        49
Mar    50        63
Apr    43        68

1.10

In the contribution margin income statement, Sales - variable costs - fixed costs = net income

True (itcmis)

Sales price = 5, VC = 3, FC = 20, what is the unit contribution margin

2

Sales price = 5, VC = 3, FC = 20, what is the breakeven point in units

10

Sales price = 5, VC = 3, FC = 20, what is the contribution margin ratio

0.4

Sales price = 5, VC = 3, FC = 20, how many units need to be sold to make $30 in profit

25

Contribution margin can be considered to be essentially the same as profit

False (cmcbct)

Which is the more advanced method of estimating total costs

regression analysis

Which axis represents level of activity on the cost-volume-profit graph

x-axis

B-Level: Beginning inventory plus goods manufactured is also called

Goods available for sale

B-Level: What is manufacturing overhead
Factory utilities 200
Depr. on delivery truck 50
Direct labor 500
Factory manager’s salary 100
Sales salaries 150

300 (200 + 100)

B-Level: How do you calculate the manufacturing overhead if you have a list of: factory utilities, depre. on delivery truck, direct labor, factory manager’s salary, and sales salaries?

Add factory utilities and factory manager’s salary

B-Level: How do you calculate cost of goods manufactured with a list of: direct materials, direct labor, MOH, Beginning WIP and ending WIP?

Add them all together.

B-Level: If 200 of labor (80% direct) and 100 of materials (70% direct) and other MOH of 50 – how much is total WIP?

230 ([200 × 80%] +[100 × 70%])

B-Level: Company uses MH to apply MOH. The estimates for MOH and MH are $330,000 and 150,000 hours. Actual MOH was 300,000 and actual hours were 100,000. What is the predetermined overhead rate:

2.2 (330000/150000)

B-Level: Company uses MH to apply MOH. The estimates for MOH and MH are $330,000 and 150,000 hours. Actual MOH was 300,000 and actual hours were 100,000. What is the applied MOH?

220,000 (2.2 × 100,000)

B-Level: 40 units were completed and 80 units were in ending process which were 60% complete as to conversion cost. What are the total equivalent units for materials (step 1)

120 (100% x 40) + (100% 80)

B-Level: 40 units were completed and 80 units were in ending process which were 60% complete as to conversion cost. What are the total equivalents units for conversion costs (step 1)?

88 (100% x 40) + (60% x 80)

B-Level:

Beginning WIP
DM $ 200
CC $ 130
Units started
DM $ 400

CC $ 17

What are the total materials cost in dollars (step 2)?
8

$600 (200 + 400)

B-Level:

Beginning WIP
DM $ 200
CC $ 130
Units started
DM $ 400

CC $ 17

What are the total conversion costs in dollars (step 2)?

308 (130 +178)

B-Level:

B-Level:

What is the FC using the Hi-Lo method
Miles Maint $
Jan 20 30
Feb 35 49
Mar 50 63
Apr 43 68

8 (VC=1.1 [C42]) plug into
30 = 1.1(20) + FC or
63 = 1.1(50) + FC

B-Level: Sales price = 5, CM% = 40%, FC =20, what is breakeven in sales dollars

$ 50 (Breakeven $ = FC / CM%)
($ 50 = 20 / 40%

B-Level: Sales price = 5, VC = 3, FC =20, expected sales $130, what is the margin of safety in dollars?

80 (expected sales – breakeven sales: 130 – 50 = 100