A200 - Managerial Exam Questions with
Verified Answers
what's the difference between financial acctg and managerial acctg? - Answer financial:
- users: outsiders (creditors, investors, gov't agencies, analysts, reporters)
- info type: financial
-level of aggregation: global info on the company as a whole
- info characteristics: factual info that is characterized by objectivity, reliability, consistency, and
accuracy
- time horizon: past only, historically based
-reporting frequency: delayed with emphasis on annual reports
managerial:
- users: insiders (exec, managers, operators)
- info type: non-financial info
- level of aggregation: local info on subunits of the organization
- info characteristics: estimates that promote relevance and enable timeliness
- time horizon: past, present, and future
- reporting frequency: continuous reporting
what are the different regulations of financial v. managerial - Answer financial: regulation by SEC, FASB,
and other determiners of GAAP
managerial: no regulation, limited only be the value-added principle
how do companies use product costs for preparing financial statements and decision - making - Answer
1. planning (how many units should we produce? how much should we budget for salaries or utilities?
how many items can we sell?)
2. Control evaluating outcomes (did things happen the way we thought they would)
,3. decision-making - choosing between alternatives
(work shifts, store hours, daily goals)
identify, classify, and give examples of: direct materials - Answer woods, metals, manufactured parts,
engines, glass, traced to specific products
identify, classify, and give examples of: direct labor - Answer the cost of wages paid to factory workers
involve din hands-on contact with the products being manufactured
identify, classify, and give examples of: manufacturing overhead (MOH) including indirect costs - Answer
* costs that are not easily traced to specific products (indirect costs)
indirect materials: glue, nails, paper, oil - used in production process but won't appear in finished
product
indirect labor - production supervisors, inspectors, maintenance personnel
factory costs: rental costs for manufacturing facilities and equipment, utility costs, depreciation costs,
security, cost of preparing equipment for manufacturing costs/ setup costs, maintenance costs for the
manufacturing facility and equipment
How are product costs recorded until inventory is sold? - Answer They are recorded as ASSETS (aka
"capitalizing" the costs)
what is a period cost? - Answer a cost recorded as an expense in the period in which they are incurred
Identify, classify and give examples of period costs: - Answer general, selling and administrative
expenses (SG&A), interest expense, income taxes expense
*these costs are NOT recorded in the inventory account
, *period costs are expensed immediately on the income statement
what's the difference between when product and period costs affect the net income? - Answer product
cost: delayed
period: immediate
what's the difference between how product and period costs affect the net income? - Answer product
cost: does not affect income statement until product has been sold and becomes part of COGS
period: immediately expensed onto income statement and net income
how do you calculate the Gross margin subtotal? - Answer Revenues - COGS = GM
When are period costs reported? - Answer after gross margin and before the subtotal operating income
(revenues - COGS = gross margin - operating expenses = Operating income)
identify and/or provide examples of these categories of costs for manufacturing companies: Upstream
costs - Answer research and development (r&D), product design
*period costs incurred before production
identify and/or provide examples of these categories of costs for manufacturing companies: midstream
costs - Answer direct materials, direct labor, MOH
*product costs
identify and/or provide examples of these categories of costs for manufacturing companies:
Downstream costs - Answer Marketing, distribution, customer service
Verified Answers
what's the difference between financial acctg and managerial acctg? - Answer financial:
- users: outsiders (creditors, investors, gov't agencies, analysts, reporters)
- info type: financial
-level of aggregation: global info on the company as a whole
- info characteristics: factual info that is characterized by objectivity, reliability, consistency, and
accuracy
- time horizon: past only, historically based
-reporting frequency: delayed with emphasis on annual reports
managerial:
- users: insiders (exec, managers, operators)
- info type: non-financial info
- level of aggregation: local info on subunits of the organization
- info characteristics: estimates that promote relevance and enable timeliness
- time horizon: past, present, and future
- reporting frequency: continuous reporting
what are the different regulations of financial v. managerial - Answer financial: regulation by SEC, FASB,
and other determiners of GAAP
managerial: no regulation, limited only be the value-added principle
how do companies use product costs for preparing financial statements and decision - making - Answer
1. planning (how many units should we produce? how much should we budget for salaries or utilities?
how many items can we sell?)
2. Control evaluating outcomes (did things happen the way we thought they would)
,3. decision-making - choosing between alternatives
(work shifts, store hours, daily goals)
identify, classify, and give examples of: direct materials - Answer woods, metals, manufactured parts,
engines, glass, traced to specific products
identify, classify, and give examples of: direct labor - Answer the cost of wages paid to factory workers
involve din hands-on contact with the products being manufactured
identify, classify, and give examples of: manufacturing overhead (MOH) including indirect costs - Answer
* costs that are not easily traced to specific products (indirect costs)
indirect materials: glue, nails, paper, oil - used in production process but won't appear in finished
product
indirect labor - production supervisors, inspectors, maintenance personnel
factory costs: rental costs for manufacturing facilities and equipment, utility costs, depreciation costs,
security, cost of preparing equipment for manufacturing costs/ setup costs, maintenance costs for the
manufacturing facility and equipment
How are product costs recorded until inventory is sold? - Answer They are recorded as ASSETS (aka
"capitalizing" the costs)
what is a period cost? - Answer a cost recorded as an expense in the period in which they are incurred
Identify, classify and give examples of period costs: - Answer general, selling and administrative
expenses (SG&A), interest expense, income taxes expense
*these costs are NOT recorded in the inventory account
, *period costs are expensed immediately on the income statement
what's the difference between when product and period costs affect the net income? - Answer product
cost: delayed
period: immediate
what's the difference between how product and period costs affect the net income? - Answer product
cost: does not affect income statement until product has been sold and becomes part of COGS
period: immediately expensed onto income statement and net income
how do you calculate the Gross margin subtotal? - Answer Revenues - COGS = GM
When are period costs reported? - Answer after gross margin and before the subtotal operating income
(revenues - COGS = gross margin - operating expenses = Operating income)
identify and/or provide examples of these categories of costs for manufacturing companies: Upstream
costs - Answer research and development (r&D), product design
*period costs incurred before production
identify and/or provide examples of these categories of costs for manufacturing companies: midstream
costs - Answer direct materials, direct labor, MOH
*product costs
identify and/or provide examples of these categories of costs for manufacturing companies:
Downstream costs - Answer Marketing, distribution, customer service
