ACCY 201 MIDTERM 2 STUDY GUIDE
managerial accounting - Answer -accounting used to provide information and analyses
to managers inside the organization to assist them in decision making
-planning, controlling, decision-making
manufactoring costs - Answer -direct materials
direct labor
manufactoring overhead
non manufactoring costs - Answer -selling costs
administrative costs
direct costs - Answer -costs that can be easily and accurately traced to a cost object
indirect costs - Answer -Costs that cannot be easily and accurately traced to a cost
object.
manufacturing overhead includes what - Answer -indirect costs
factory supervision salary
depreciation
indirect labor
utilities
factory
-anything that is tied to the factory and in it
prime costs - Answer -Direct Materials + Direct Labor
conversion costs - Answer -Direct Labor + Manufacturing Overhead
product costs - Answer -direct materials, direct labor, manufacturing overhead
-flow through three inventory accounts on the balance sheet first and remain as
inventory
-only recorded as an expense (COGS) when the completed goods are sold
-not necessarily expensed in the same period as they are incurred (remember the
'matching principle!')
period costs - Answer -selling and administrative costs
-DO NOT flow through inventory accounts on the balance sheet
-NOT included in COGS when sale occurs.
-immediately expensed in the period incurred
fixed costs - Answer -total fixed costs will always remain constant
per unit fixed costs will change
, variable cost - Answer -total variable costs will change
per unit variable costs will always remain constant
mixed costs - Answer -Costs that contain both a variable- and a fixed-cost element and
change in total but not proportionately with changes in the activity level.
differential costs - Answer -costs that change in response to a particular course of
action
sunk costs - Answer -costs that have already been incurred and cannot be recovered
-should not factor into decision making
opportunity cost - Answer -the most desirable alternative given up as the result of a
decision
job order costing - Answer -used when special order
-customized production
-distinct/unique product or service
-unit costs assigned to each specific job
-ex: aircraft manufacturer, greeting cards, wedding invites, accounting or law firm
process costing - Answer -used when mass production
-homogeneous product or service
-unit costs assigned by department
-ex: cereal, soda, paper
similarities between job order and process costing - Answer --Both systems assign
material, labor, and overhead costs to products and they provide a mechanism for
computing unit product costs.
-Both systems use the same manufacturing accounts, including Manufacturing
Overhead, Raw Materials, Work in Process, and Finished Goods.
-The flow of costs through the manufacturing accounts is basically the same in both
systems.
predetermined overhead rate - Answer -computed before the period begins
cost driver - Answer -factor that causes overhead costs
-machine hours, bed occupied, computer time
allocation base - Answer -A measure of activity such as direct labor-hours or machine-
hours that is used to assign costs to cost objects.
MOH applied to job - Answer -predetermined overhead rate x amount of allocation
based incurred by specific job
managerial accounting - Answer -accounting used to provide information and analyses
to managers inside the organization to assist them in decision making
-planning, controlling, decision-making
manufactoring costs - Answer -direct materials
direct labor
manufactoring overhead
non manufactoring costs - Answer -selling costs
administrative costs
direct costs - Answer -costs that can be easily and accurately traced to a cost object
indirect costs - Answer -Costs that cannot be easily and accurately traced to a cost
object.
manufacturing overhead includes what - Answer -indirect costs
factory supervision salary
depreciation
indirect labor
utilities
factory
-anything that is tied to the factory and in it
prime costs - Answer -Direct Materials + Direct Labor
conversion costs - Answer -Direct Labor + Manufacturing Overhead
product costs - Answer -direct materials, direct labor, manufacturing overhead
-flow through three inventory accounts on the balance sheet first and remain as
inventory
-only recorded as an expense (COGS) when the completed goods are sold
-not necessarily expensed in the same period as they are incurred (remember the
'matching principle!')
period costs - Answer -selling and administrative costs
-DO NOT flow through inventory accounts on the balance sheet
-NOT included in COGS when sale occurs.
-immediately expensed in the period incurred
fixed costs - Answer -total fixed costs will always remain constant
per unit fixed costs will change
, variable cost - Answer -total variable costs will change
per unit variable costs will always remain constant
mixed costs - Answer -Costs that contain both a variable- and a fixed-cost element and
change in total but not proportionately with changes in the activity level.
differential costs - Answer -costs that change in response to a particular course of
action
sunk costs - Answer -costs that have already been incurred and cannot be recovered
-should not factor into decision making
opportunity cost - Answer -the most desirable alternative given up as the result of a
decision
job order costing - Answer -used when special order
-customized production
-distinct/unique product or service
-unit costs assigned to each specific job
-ex: aircraft manufacturer, greeting cards, wedding invites, accounting or law firm
process costing - Answer -used when mass production
-homogeneous product or service
-unit costs assigned by department
-ex: cereal, soda, paper
similarities between job order and process costing - Answer --Both systems assign
material, labor, and overhead costs to products and they provide a mechanism for
computing unit product costs.
-Both systems use the same manufacturing accounts, including Manufacturing
Overhead, Raw Materials, Work in Process, and Finished Goods.
-The flow of costs through the manufacturing accounts is basically the same in both
systems.
predetermined overhead rate - Answer -computed before the period begins
cost driver - Answer -factor that causes overhead costs
-machine hours, bed occupied, computer time
allocation base - Answer -A measure of activity such as direct labor-hours or machine-
hours that is used to assign costs to cost objects.
MOH applied to job - Answer -predetermined overhead rate x amount of allocation
based incurred by specific job
