Primer for Midterm - Winter 2008

Primer for Midterm - Winter 2008 - Acc. 208 Managerial...

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Acc. 208 – Managerial Accounting Primer for Midterm Chapter #1 – Cost Concepts _______ 1. As the activity level decreases, fixed costs per unit should – a. Decrease; b. Increase; c. Remain constant; d. None of the above. B - The fixed cost per unit should increase because the fixed cost is being spread over fewer units. _______ 2. If the activity level drops by 5%, one would expect the variable costs: a. to increase per unit of product; b. to drop in total by 5%; c. to remain constant in total; d. to decrease per unit of product; e. None of the above. B By definition, total variable cost changes in proportion to changes in activity. Acc. 208 – Managerial Accounting Primer for Midterm Last Revised: January 27, 2008 Page 1 of 41
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_______ 3. The term used to describe the cost of goods transferred from work in process inventory to finished goods inventory is: a. Cost of Goods Sold; b. Raw Materials; c. Period Cost; d. Cost of Goods Manufactured; e. None of the above. D The cost of goods manufactured refers to the costs of goods that are completed and ready for sale during the period. Chapter #1 - General Notes: 1. What are the three major activities of managers: a. Planning – identify alternatives and select the best alternative; b. – directing and motivating people and overseeing day to day activities; and c. Controlling – using feedback to make sure all departments of company are on the same page. Acc. 208 – Managerial Accounting Primer for Midterm Last Revised: January 27, 2008 Page 2 of 41
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2. What is the difference between financial accounting and managerial accounting: Characteristics Financial Accounting Managerial Accounting End Users of Data Reports to Shareholders, Directors, Lenders, Regulators & other outside parties (i.e. IRS Reports to those inside company for planning, directing & motivating, controlling and performance evaluation Emphasis of Reports Financial consequences of past performance – summary of what has happened Decisions affecting future (i.e. planning) – requires use of estimates Relevance of Data Data should be objective & verifiable Data must be relevant (i.e. appropriate for the problem at hand ) and may require use of Emphasizes Precision Timeliness Objective of Reports Summary data concerning company as a whole Detailed reports regarding departments, products, GAAP Must follow GAAP GAAP not required Other External financial reports requires use of historical data Managerial accounting reports may require use current cost data 3. Manufacturing Costs (a.k.a. inventoriable costs): a. Direct Materials – are those materials that become an integral part of a finished product and can be conveniently traced into it (i.e. tires on a car); Note: Indirect materials are small material items (i.e. glue) which are too costly and inconvenient to trace such small costs to individual units. b.
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This note was uploaded on 06/05/2010 for the course ACC Acc208 taught by Professor Acc208 during the Fall '09 term at Cal Poly Pomona.

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Primer for Midterm - Winter 2008 - Acc. 208 Managerial...

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