Q25-1. Percentage of profit to sales is a measure of
current operating activities. Revenue production, cost incurrence, and cost control are
embodied in this ratio. The capital-employed
turnover rate is a measure of the amo
Measuring and Assigning Costs for Income Statements
Chapter 14 addresses the following questions:
Q1 How are absorption costing income statements constructed?
Q2 What factors affect the choice of production volume measures f
Q20-1. Direct costs are direct materials, direct labor,
and other costs directly assignable to a product.
Direct costing is a procedure by which only
prime costs plus variable factory overhead
are assigned to a product or i
Product costing provides useful cost information for all the following except:
A. Both manufacturing and non-manufacturing firms.
B. For non-manufacturing firms.
C. Management planning, cost control, and performance evaluation
Activity-Based Costing and Management
Chapter 7 addresses the following questions:
Q1 How is activity-based costing (ABC) different from traditional costing?
Q2 What are activities, and how are they identified?
Q3 What proces
Q16-1. A capital expenditure is an expenditure
intended to benefit future periods. It is normally associated with the acquisition or
improvement of plant assets. The real distinction between a capital and revenue expenditur
Purpose of Financial Analysis
Main Objective of Financial Analysis
Users of Financial Analysis
Types of Financial Analysis
Major Tools of Financial Ana
The major limitation of volume-based costing systems is the use of volume-based:
Volume-based rates produce inaccurate product cost when:
A. A large share of factory o
Since indirect cost cannot be conveniently or economically traced directly to a cost pool or cost object,
the management accountant will:
A. Assign them by means of cost allocation.
B. Assign them where needed.
C. Assign them randomly to
In SWOT analysis, strengths and weaknesses are most easily identified by looking:
A. At the firm as a potential customer.
B. Inside the firm at its specific resources.
C. At the firm's competition.
D. At the firm's product.
E. Outside the
Short-term decision making
Real world case 9.1
This case study shows a typical situation in which management accounting can be helpful.
Read the case study now but only attempt the discussion points after you have finished studying
What is management accounting?
Real world case 1.1
What is management accounting?
Management accounting combines
accounting, finance and management with
leading edge techniques needed to drive
successful businesses. It combines technical
Managers need to estimate future revenues, costs, and profits to help them
plan and monitor operations. They use cost-volume-profit (CVP) analysis to
identify the levels of oper
Master Budget and Responsibility
1. Describe the master budget and
explain its benefits
2. Describe the advantages of budgets
3. Prepare the operating budget and
its supporting schedules
4. Use computer-based financial pl
All managers want to know how profits will change as
the units sold of a product or service change.
1. Explain the features of cost-volumeprofit (CVP) analysis
Home Depot managers, for example, might wonde
Flexible Budgets, Direct-Cost Variances,
and Management Control
Professional sports leagues thrive on providing
excitement for their fans.
1. Understand static budgets and
It seems that no expense is spared t
Flexible Budgets, Overhead Cost
Variances, and Management Control
What do this weeks weather forecast and organization
performance have in common?
1. Explain the similarities and differences in planning variable overhead
costs and f
Which of the following does not represent a main focus of cost management information?
A. Strategic management.
B. Performance measurement.
C. Planning and decision making.
D. Preparation of financial statements.
E. Internal audit and con
FLEXIBLE BUDGETS, OVERHEAD COSTS,
VARIANCES, AND MANAGEMENT CONTROL
Overhead costs are a major part of costs for most companies more than 50% of
all costs for some companies.
Terms to Learn:
ALLOCATION OF SUPPORT DEPARTMENT
COMMON COSTS, AND REVENUES
The dual cost-allocation method classifies costs into two pools, a budgeted cost
pool and an actual cost pool.
Terms to Le
Companies that produce identical or similar units of a
product or service (for example, an oil-refining
company) often use process costing.
1. Identify the situations in which
process-costing systems are
Inventory Costing and Capacity Analysis
Few numbers capture the attention of managers and
shareholders more than operating profits.
1. Identify what distinguishes variable
costing from absorption costing
In industries that require s
Custom products and services, which are produced singly or in small batches,
need to be valued for financial statements, tax reporting, and management
monitoring. Job costing is an accounting
Decision Making and Relevant
How many decisions have you made today?
Maybe you made a big one, such as accepting a job offer. Or
maybe your decision was as simple as settling on your plans for the
weekend or choosing a
Determining How Costs Behave
What is the value of looking at the past?
Perhaps it is to recall fond memories youve had or help you
understand historical events. Maybe your return to the past
enables you to better understand and pre
Its fair to say that no one likes to lose money.
Whether a company is a new startup venture providing marketing
consulting services or an established manufacturer of custom-built
motorcycles, knowing how to job costhow m
Allocation of Support-Department
Costs, Common Costs, and Revenues
How a company allocates its overhead and internal
support costscosts related to marketing, advertising,
and other internal servicesamong its various production
departments or projects,
Cost Allocation: Joint Products and
Many companies, such as petroleum refiners, produce
and sell two or more products simultaneously.
1. Identify the splitoff point in a jointcost situation and distinguish joint
Activity-Based Costing and ActivityBased Management
A good mystery never fails to capture the imagination.
Money is stolen or lost, property disappears, or someone meets
with foul play. On the surface, what appears unremarkable to t
Balanced Scorecard: Quality, Time, and
the Theory of Constraints
To satisfy ever-increasing customer expectations,
managers need to find cost-effective ways to
continuously improve the quality of their products and
services and shorten response times.