ACC 321 FinAl ExAm QuEstions with
AnswErs 100% CorrECt
Product Cost ✔✔ direct materials + direct labor + manufacturing overhead
Period Costs ✔✔ all costs that are not product costs
Management Accounting ✔✔ the area of accounting concerned with preparing data for use by
managers within the organization to formulate and implement a strategy
Cost Assignment (tracing) ✔✔ assigning costs to cost pools
Cost Allocation ✔✔ Cost assignment when direct tracing is not possible
Cost distortion ✔✔ Occurs when costs are inaccurately assigned or misrepresented (usually
inappropriate allocation Base)
2 Cost Drivers ✔✔ Activity based drivers, and volume based drivers
Types of costs ✔✔ Variable, fixed, mixed, step costs
Is controllable margin or CPC short term ✔✔ Controllable margin
EVA ✔✔ Economic value added ( = NOPAT - (k × Average invested capital)
, Residiual Income ✔✔ The amount of income left after subtracting the required return from
investments
ROI ✔✔ profit / average assets or ROS * Asset turnover
Return on Sales ✔✔ Profit / Sales
Asset turnover ✔✔ Sales / Average assets
Performance Measurement ✔✔ The process by which managers at all levels gain information
about the performance of tasks within the firm and judge that performance against budgets,
plans, and goals
Management Control ✔✔ The evaluation of mid level managers by top level managers
Operational Control ✔✔ The evaluation of operating level employees by mid level managers
Principal Agent Problems ✔✔ Misaligned Incentives, Information asymmetry, Uncertainty, risk
aversion
Four types of SBU ✔✔ Revenue Center, Profit cent, cost center, investment center
Revenue center ✔✔ Focus on the selling function and are defined either by a product line or by
a geographic area (typically marketing and sales area)
profit Centers ✔✔ are created when an SBU both generated revenues and incurs the major
portion of the cost for producing these revenues
AnswErs 100% CorrECt
Product Cost ✔✔ direct materials + direct labor + manufacturing overhead
Period Costs ✔✔ all costs that are not product costs
Management Accounting ✔✔ the area of accounting concerned with preparing data for use by
managers within the organization to formulate and implement a strategy
Cost Assignment (tracing) ✔✔ assigning costs to cost pools
Cost Allocation ✔✔ Cost assignment when direct tracing is not possible
Cost distortion ✔✔ Occurs when costs are inaccurately assigned or misrepresented (usually
inappropriate allocation Base)
2 Cost Drivers ✔✔ Activity based drivers, and volume based drivers
Types of costs ✔✔ Variable, fixed, mixed, step costs
Is controllable margin or CPC short term ✔✔ Controllable margin
EVA ✔✔ Economic value added ( = NOPAT - (k × Average invested capital)
, Residiual Income ✔✔ The amount of income left after subtracting the required return from
investments
ROI ✔✔ profit / average assets or ROS * Asset turnover
Return on Sales ✔✔ Profit / Sales
Asset turnover ✔✔ Sales / Average assets
Performance Measurement ✔✔ The process by which managers at all levels gain information
about the performance of tasks within the firm and judge that performance against budgets,
plans, and goals
Management Control ✔✔ The evaluation of mid level managers by top level managers
Operational Control ✔✔ The evaluation of operating level employees by mid level managers
Principal Agent Problems ✔✔ Misaligned Incentives, Information asymmetry, Uncertainty, risk
aversion
Four types of SBU ✔✔ Revenue Center, Profit cent, cost center, investment center
Revenue center ✔✔ Focus on the selling function and are defined either by a product line or by
a geographic area (typically marketing and sales area)
profit Centers ✔✔ are created when an SBU both generated revenues and incurs the major
portion of the cost for producing these revenues
