MBA REVIEWERS

Managerial accounting

What field of accounting provides economic and financial information for managers and other internal users?

Internal users

Who are the primary users of reports in managerial accounting?

External users

Who are the primary users of reports in financial accounting?

As frequently as needed

What is the frequency of reports in managerial accounting?

Quarterly and annually

What is the frequency of reports in financial accounting?

Special purpose

What is the purpose of reports in managerial accounting?

General purpose

What is the purpose of reports in financial accounting?

Subunits

What is the entity level of reports in managerial accounting?

Entity as a whole

What is the entity level of reports in financial accounting?

Any type of relevant data

What is the scope of data in managerial accounting?

Double entry and cost data

What is the scope of data in financial accounting?

Relevance to the decision

What is the reporting standard for managerial accounting?

GAAP

What is the reporting standard for financial accounting?

None

What is the verification process for managerial accounting?

Annual independent audit

What is the verification process for financial accounting?

Planning

Which management function involves establishing objectives and looking ahead?

Directing and Motivating

Which management function involves coordinating diverse activities and human resources?

Controlling

Which management function involves keeping activities on track and determining if goals are met?

Technological change

What contemporary development in managerial accounting affects how companies operate?

Quality

What contemporary development involves a focus on continuous improvement?

Focus on activities

What contemporary development is exemplified by activity based costing?

Planning

Which management function is connected to established objectives?

Directing

Which management function is connected to coordinating activities?

Controlling

Which management function is connected to keeping activities on track?

Manufacturing

What category of activities converts raw materials into finished goods?

Direct Materials

What class of manufacturing costs can be physically and conveniently associated with the finished product?

Direct Labor

What class of manufacturing costs involves factory employees physically associated with converting raw materials?

Manufacturing Overhead

What class of manufacturing costs cannot be classified as direct materials or direct labor?

Product Costs

What category of costs is a necessary part of producing the finished product?

Inventoriable Costs

What is another name for product costs?

Period Costs

What category of costs is matched with the revenue of a specific time period rather than a product?

Deducted from revenue

How are period costs treated on the income statement?

Nonmanufacturing costs

What is the nature of period costs?

Selling and administrative expenses

Give two examples of period costs.

Direct Materials and Direct Labor

What two items comprise Prime Costs?

Direct Labor and Manufacturing Overhead

What two items comprise Conversion Costs?

Balance Sheet

Where do product costs go before the income statement?

Income Statement

Where do period costs go immediately?

Indirect Materials

What are minor materials that cannot be conveniently traced to products?

Indirect Labor

What is labor that has no physical association with the finished product or is impractical to trace?

Direct

What type of cost is steel for a BMW X5?

Indirect

What type of cost is the lease for the factory making several models?

Cost

What represents the monetary measure of resources given up to attain an objective?

Actual cost

What is a cost that has already occurred?

Budgeted cost

What is a predicted or forecasted cost?

Cost object

What is anything of interest for which a cost is desired?

Expenses

What are expired costs used for producing revenue benefit?

Loss

What is a cost that expires without producing any revenue benefit?

Variable costs

Which category of costs changes in total directly and proportionately with activity level changes?

Remains the same

How does a variable cost per unit behave at every level of activity?

Fixed costs

Which category of costs remains the same in total regardless of activity level changes?

Vary inversely

How do fixed costs per unit behave in relation to activity?

Declines

What happens to unit cost as volume increases for fixed costs?

Mixed costs

Which category contains both a variable cost element and a fixed cost element?

Semivariable

What is another name for mixed costs?

Relevant range

What is the range of activity over which a company expects to operate?

Direct departmental charges

What costs are immediately charged to the benefiting department?

Indirect departmental charges

What costs are originally charged elsewhere and then allocated to a department?

Common costs

What costs relate to facilities or services used in two or more periods or operations?

Joint costs

What are costs of materials, labor, and overhead for manufacturing multiple products at once?

Capital expenditure

What expenditure is intended to benefit more than one period and is recorded as an asset?

Revenue expenditure

What expenditure benefits the current period only and is recorded as an expense?

Standard costs

What are predetermined costs for materials, labor, and overhead used as benchmarks?

Opportunity costs

What is the benefit given up when one alternative is chosen over another?

Differential costs

What cost is present under one alternative but absent in another?

Incremental cost

What is an increase in cost from one alternative to another?

Decremental cost

What is a decrease in cost from one alternative to another?

Marginal revenue

What is the revenue obtained from selling one more unit?

Marginal cost

What is the cost involved in producing one more unit?

Sunk cost

What is a cost that has already been incurred and cannot be changed?

Controllable cost

What is a cost that can be influenced by a manager?

Cost tracing

What is the process of assigning direct costs to a cost object?

Cost allocation

What is the process of assigning indirect costs to a cost object?

Direct materials, direct labor, and factory overhead

What are the three integral components of a manufactured product?

Committed fixed costs

What type of fixed costs represents relatively long term commitments?

Managed fixed costs

What type of fixed costs are incurred on a short term basis and easily modified?

Increases

What happens to total variable cost as output increases?

Decreases

What happens to fixed cost per unit as output increases?

Constant

What is the behavior of variable cost per unit?

Constant

What is the behavior of total fixed costs?

High low method

What mathematical method classifies mixed costs using peak and valley activity levels?

Job order cost system

What system assigns costs to specific jobs or batches?

Process cost system

What system is used for a large volume of uniform or homogeneous products?

Perpetual inventory

What inventory system provides immediate cost information in cost accounting?

Raw Materials Inventory

Which account is debited when raw materials are purchased?

Factory Labor

Which account is debited when factory labor costs are incurred?

Manufacturing Overhead

Which account is debited for factory utility costs?

Job cost sheet

What is the indispensable record used to assign costs to specific jobs?

Materials requisition slip

What document is the basis for debiting WIP and crediting Raw Materials?

Labor time ticket

What document is the basis for debiting WIP and crediting Factory Labor?

Predetermined overhead rate

What is used to assign manufacturing overhead to work in process?

80 percent

If annual overhead is 280,000 and direct labor is 350,000, what is the overhead rate?

Work in Process

Which account is debited when goods are completed?

Finished Goods

Which account is debited when goods are ready for sale?

Cost of Goods Sold

Which account is debited when the product is sold?

Underapplied overhead

What is the condition when overhead assigned to WIP is less than overhead incurred?

Overapplied overhead

What is the condition when overhead assigned to WIP is greater than overhead incurred?

Year end

When are underapplied or overapplied overhead balances typically eliminated?

Raw materials, WIP, and Finished Goods

What are the three inventory accounts of a manufacturer?

Horizontal analysis

Which tool of analysis evaluates a series of financial statement data over time?