Chapter 15- Introduction to Managerial Accounting Exam verified solutions and explanations

Chapter 15- Introduction to Managerial Accounting Exam verified solutions and explanations What is financial accounting? - Correct Answers: Information is reported at fixed intervals in general-purpose financial statement What is managerial accounting? - Correct Answers: Information is designed to meet the specific needs of a company's management What information does managerial accounting include? - Correct Answers: 1) Historical data, which provide objective measures of past operations 2) Estimated data, which provide subjective estimates about future decisions The departments in a company can be viewed as having 2 of the responsibilities - Correct Answers: 1) Line 2) Staff What is a line department? - Correct Answers: Directly involved in providing goods or services to the customers of the company. What does staff department provide? - Correct Answers: Provides services, assistance, and advise to the departments with line or other staff responsibilities What is the controller? - Correct Answers: Chief management accountant What does the management process include? - Correct Answers: 1) Planning 2) Directing 3) Controlling 4) Improving 5) Decision making What is Planning? - Correct Answers: Developing the company's goals and translating these objectives into courses of action What is Strategic Planning? - Correct Answers: Developing long-term actions to achieve the company's objectives What is Operational Planning? - Correct Answers: Develops short-term actions for managing the day-to-day operations of the company What is Directing? - Correct Answers: Process by which managers run day-to-day operations What is Controlling? - Correct Answers: Monitoring operating results and comparing actual results with the expected results What is Continuous Process Improvement? - Correct Answers: Philosophy of continually improving employees, business processes, and products What is Decision Making? - Correct Answers: Inherent in each of the preceding management processes How can the operations of a business be classified? - Correct Answers: 1) Service 2) Merchandising 3) Manufacturing What is a cost? - Correct Answers: Payment of cash or the commitment to pay cash in the future for the purpose of generating revenues What is Cost Object? - Correct Answers: Costs are often classified according to the decision-making needs of management What is Direct Costs? - Correct Answers: Identified with and can be traced to a cost object _____ ______ cannot be identified with or traced to a cost object - Correct Answers: Indirect Costs What does the cost of a manufactured product include? - Correct Answers: Includes the cost of materials used in making the product What is Direct Materials cost? - Correct Answers: The cost of any material that is integral part of the finished product What is classified as a direct material cost? - Correct Answers: 1) An integral part of the finish product 2) A significant portion of the total cost of the product What is Direct Labor cost? - Correct Answers: The cost of employee wages that is an integral part of the finished product What must direct labor cost meet? - Correct Answers: 1) An integral part of the finish product 2) A significant portion of the total cost of the product What is Factory Overhead cost? - Correct Answers: Costs other than direct materials and direct labor that are incurred in the manufacturing process What is Prime cost? - Correct Answers: Consists of direct materials and direct labor costs What is Conversion cost? - Correct Answers: Consists of direct labor and factory overhead costs What is Product cost? - Correct Answers: Consist of manufacturing costs direct materials, labor, and factory overhead What is Period cost? - Correct Answers: Consist of selling and administrative expenses; straight to income statement What is Sustainability? - Correct Answers: The practice of operating a business to maximize profits while attempting to preserve the economy, environment, and needs of future generations; sustaining a business in long term, makes more money What is Eco-efficiency measures? - Correct Answers: Form of managerial accounting information that helps mangers evaluate the savings generated by using fewer natural resources in a company's operations Sustainability Accounting Standards Board (SASB) - Correct Answers: Organized in 2011 to develop accounting standards that help companies report decision-useful sustainability information to external financial statement users What 3 types of inventory are on a manufacturing business report? - Correct Answers: 1) Material Inventory 2) Work in process inventory 3) Finished goods inventory What is Materials Inventory? - Correct Answers: Sometimes called Raw Materials Inventory; consists of the costs of direct and indirect materials that have not entered the manufacturing process What is the Work in Process Inventory? - Correct Answers: Consists of the direct materials, direct labor, and factory overhead costs for product that have entered the manufacturing process What is the Finished Goods Inventory? - Correct Answers: Consists of completed or finished products that have not been sold What are the steps to the statement of cost of goods manufactured? - Correct Answers: 1) Determine the cost of direct materials used during the period 2) Determine the total manufacturing costs incurred during the period 3) Determine the costs of goods manufactured during the period