Exam 1 - NAU ACC 256 Questions and Answers well Explained Latest 2024/2025 Update 100% Correct.

Fixed costs: - Stay constant in total over a wide range of activity levels (rent, depreciation, plant insurance, plant property taxes) variable costs - Change in total in direct proportion to changes in volume (direct materials, direct labor for hourly employees) Summary of IMA Ethical Standards: - Maintain professional Competence Preserve Confidentiality of information Uphold Integrity Perform duties with Credibility Managerial accounting focuses on: - Identifying, interpreting, analyzing, and implementing the financial information internal management needs to run the company efficiently, effectively, and profitably Specifically designed to help internal management (no GAAP or audit requirements) The future (planning) rather than the past (historical activity) Roles within the organization: - Internal business advisors who partner with management to make critical business decisions Prepare data for use within a company Work in public companies, private businesses, and government May also be called business advisors, analysts, finance professionals, cost accountants, managerial accountants, industrial accountants, private accountants, or corporate accountants Identify the different types of data: - Structured data: Data that is highly organized into predefined categories, easy to search and manipulate (company's financial data)Unstructured data: Data that is not organized in predefined categories (social media posts, digital photos, satellite images) Semi-structured data: Data that is both structured and unstructured Direct Costs - Costs are precise and can be directly traced to the products. Examples for automobile manufacturer: tires, glass, steel, engines (direct materials), assembly workers' wages (direct labor) indirect costs - MOH costs not easily traced to the product. Examples for automobile manufacturer: plant utilities, plant depreciation, depreciation of machinery (other indirect costs), oils and lubricants, VIN labels (indirect materials), janitorial staff, accounting staff, plant supervisor wages (indirect labor) Product Costs - Incurred by manufacturers to produce their products or by merchandisers to purchase their products (costs are incurred in the production or purchases function of the value chain) Period costs: - Do not relate to manufacturing or purchasing a product; includes any cost not treated as inventory; incurred in all other functions of the value chain including R&D, design, customer service, marketing, distribution, sales commissions, operating / SGA (selling, general & administrative) expenses Differential costs - Difference between two alternative courses of action Relevant costs: - Pricing plus additional considerations Irrelevant costs: Costs that would not be affected by a management decision Sunk costs: - Costs already incurred (should be ignored and are always irrelevant) Process costing - Used for similar products that are produced in large batches (bottled water, salsa, bags of chips)Job Costing - Used for unique, custom items produced in small batches (airplanes, furniture, individual chalets) Unit-level activities - Activities and costs incurred for every unit (inspecting and packaging each unit produced) Batch-level activities - Activities and costs incurred for every batch, regardless of number of units (machine set-up) Product-level activities - Activities and costs incurred for a particular product, regardless of number of units or batches (lease payments on equipment for manufacturing a particular product) Appraisal Costs: - Costs incurred to detect poor-quality goods or services Internal Failure Costs - Costs incurred on defective units before delivery to customers External Failure Costs: - Costs incurred because defective units are not detected until after delivery to customers Understand the correlation coefficient and relationship between variables - Value can range between -1 and 1 Negative value means variables move in opposite direction; positive value means variables move in the same direction The stronger the correlation or relationship, the closer the R-value is to 1 Facility-level activities - Activities and costs incurred no matter how many units, batches, or products are produced (depreciation, insurance, property tax, plant maintenance) Prevention Costs: - Costs incurred to avoid producing poor-quality goods or services