Managerial Accounting - Final (COM 316) ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
exam with correct answers
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
Typical Cost Drivers - correct answers✔✔Direct Labour Hours
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
Dollars
Machine Hours ||\\||\\
Traditional Costing Allocation (TCA) - correct ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
answers✔✔Allocate overhead costs using one cost driver ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
All manufacturing costs are allocated to products, even when
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
not traceable ||\\||\\
Advantages of Traditional Costing Allocation - correct ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
answers✔✔Simple method to calculate and consistently apply ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
Disadvantages of Traditional Costing Allocation - correct ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
answers✔✔More costs included in overhead and not impacted ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
by cost driver means less accurate allocation
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
,Activity-Based Costing (ABC) - correct answers✔✔Recognizes ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
that the activities within a company vary, and that each activity
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
typically has a different driver that affects costs ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
Advantages of ABC - correct answers✔✔Improved decision ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
making from more accuracy ||\\||\\ ||\\||\\ ||\\||\\
Increased understanding of overhead costs and cost drivers ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
Focus on managing activities
||\\||\\ ||\\||\\ ||\\||\\
Focus on eliminating non-value-added activities
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
Improved product/customer profitability ||\\||\\ ||\\||\\
Disadvantages of ABC - correct answers✔✔Requires extensive ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
and costly review
||\\||\\ ||\\||\\
Performance measures not tied to ABC ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
Measurement of various cost drivers may not be reliable or ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
current
ABC systems may allocate non-manufacturing costs to products
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
that do not conform with GAAP
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
Focus on individual activities may cause the company to lose
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
focus on strategic objectives
||\\||\\ ||\\||\\ ||\\||\\
,5 Levels of Activity Defined by ABC - correct answers✔✔Unit-
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
level activities ||\\||\\
Batch-level actitivites ||\\||\\
Product-level activities ||\\||\\
Customer-level activities ||\\||\\
Organization-level activities ||\\||\\
Activity - correct answers✔✔An event that causes overhead
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
costs to be incurred ||\\||\\ ||\\||\\ ||\\||\\
Activity Cost Pool - correct answers✔✔All costs related to a
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
particular activity measure ||\\||\\ ||\\||\\
Activity Measure - correct answers✔✔An allocation base
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
related to the activity and its cost pool
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
Budgets - correct answers✔✔Used to help communicate ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
financial objectives for the future, allocate resources, and ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
coordinate activities across the different functional areas within ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
the organization
||\\||\\
, Budgeting - correct answers✔✔The act of preparing a budget ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
Budgetary Control - correct answers✔✔The use of a budget to ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
control a firm's activities ||\\||\\ ||\\||\\ ||\\||\\
Master Budget - correct answers✔✔Summarizes a company's
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
plans, setting specific targets for sales, production, distribution,
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
etc
Participative Budget - correct answers✔✔Managers from across ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
the organization develop budget estimates for their areas of
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
responsibility
Benefits of a Participative Budget - correct answers✔✔Shows
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
respect for managers experience and opinions
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
Leverages managers knowledge ||\\||\\ ||\\||\\
Increases managers motivation ||\\||\\ ||\\||\\
Empowers managers to take ownership and be accountable ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
exam with correct answers
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
Typical Cost Drivers - correct answers✔✔Direct Labour Hours
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
Dollars
Machine Hours ||\\||\\
Traditional Costing Allocation (TCA) - correct ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
answers✔✔Allocate overhead costs using one cost driver ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
All manufacturing costs are allocated to products, even when
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
not traceable ||\\||\\
Advantages of Traditional Costing Allocation - correct ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
answers✔✔Simple method to calculate and consistently apply ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
Disadvantages of Traditional Costing Allocation - correct ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
answers✔✔More costs included in overhead and not impacted ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
by cost driver means less accurate allocation
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
,Activity-Based Costing (ABC) - correct answers✔✔Recognizes ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
that the activities within a company vary, and that each activity
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
typically has a different driver that affects costs ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
Advantages of ABC - correct answers✔✔Improved decision ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
making from more accuracy ||\\||\\ ||\\||\\ ||\\||\\
Increased understanding of overhead costs and cost drivers ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
Focus on managing activities
||\\||\\ ||\\||\\ ||\\||\\
Focus on eliminating non-value-added activities
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
Improved product/customer profitability ||\\||\\ ||\\||\\
Disadvantages of ABC - correct answers✔✔Requires extensive ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
and costly review
||\\||\\ ||\\||\\
Performance measures not tied to ABC ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
Measurement of various cost drivers may not be reliable or ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
current
ABC systems may allocate non-manufacturing costs to products
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
that do not conform with GAAP
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
Focus on individual activities may cause the company to lose
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
focus on strategic objectives
||\\||\\ ||\\||\\ ||\\||\\
,5 Levels of Activity Defined by ABC - correct answers✔✔Unit-
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
level activities ||\\||\\
Batch-level actitivites ||\\||\\
Product-level activities ||\\||\\
Customer-level activities ||\\||\\
Organization-level activities ||\\||\\
Activity - correct answers✔✔An event that causes overhead
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
costs to be incurred ||\\||\\ ||\\||\\ ||\\||\\
Activity Cost Pool - correct answers✔✔All costs related to a
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
particular activity measure ||\\||\\ ||\\||\\
Activity Measure - correct answers✔✔An allocation base
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
related to the activity and its cost pool
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
Budgets - correct answers✔✔Used to help communicate ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
financial objectives for the future, allocate resources, and ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
coordinate activities across the different functional areas within ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
the organization
||\\||\\
, Budgeting - correct answers✔✔The act of preparing a budget ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
Budgetary Control - correct answers✔✔The use of a budget to ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
control a firm's activities ||\\||\\ ||\\||\\ ||\\||\\
Master Budget - correct answers✔✔Summarizes a company's
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
plans, setting specific targets for sales, production, distribution,
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
etc
Participative Budget - correct answers✔✔Managers from across ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
the organization develop budget estimates for their areas of
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
responsibility
Benefits of a Participative Budget - correct answers✔✔Shows
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
respect for managers experience and opinions
||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
Leverages managers knowledge ||\\||\\ ||\\||\\
Increases managers motivation ||\\||\\ ||\\||\\
Empowers managers to take ownership and be accountable ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\ ||\\||\\
