Term
| Why do most companies adhere to GAAP for their basic internal financial statements? |
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Definition
| Accrual accounting provides a uniform method to measure an organization's financial performance. |
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Term
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Definition
| is the sequence of business functions in which customer usefulness is added to products or services. |
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Term
| Which of the following is not a key success factor in a company's effort to deliver increased levels of performance to the customer? |
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Definition
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Term
| ___management exists to provide advice and assistance to those responsible forattaining the objectives of the organization |
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Definition
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Term
| Which of the following is not one of the ethical responsibilities of a management accountant |
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Definition
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Term
| The Institute of Management Accountants issues which certification |
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Definition
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Term
| The cost of printer paper on a college campus would be a direct cost to the college but would need to be allocated as an indirect cost to |
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Definition
| Individual student instruction |
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Term
What is the total fixed cost of the shipping department of Elaine Co. if it has the following information for 2020? Salaries $800,000 75% of employees on guaranteed contracts
Packaging $400,000 depending on size of item(s) shipped
Postage $500,000 depending on weight of item(s) shipped
Rent of warehouse space $250,000 annual lease |
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Definition
850000
(800,000)*75% = 250,000+ Fixed Costs = 850,000 |
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Term
| Rosland Graphics successfully bid on a job printing standard notebook covers during the year using last year's price of $0.27 per cover. This amount was calculated from prior year costs, noting that no changes in any costs had occurred from the past year to the current year. At the end of the year, the company manager was shocked to discover that the company had suffered a loss. "How could this be?" she exclaimed. "We had no increases in cost and our price was the same as last year. Last year we had a healthy income." What could explain the company's loss in income this current year? |
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Definition
| Their costs were mostly fixed costs and the amount produced this year was less than last year |
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Term
| Which type of company converts raw materials into finished products? |
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Definition
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Term
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Definition
| recorded as assets when incurred |
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Term
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Definition
| all costs in the income statement other than cost of goods sold |
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Term
| The cost of a product can be measured as any of the following except as one |
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Definition
| Identified as period cost. |
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Term
| Which of the following is not a factor in cost-volume-profit analysis? |
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Definition
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Term
| Which of the following is not an assumption of cost-volume-profit analysis? |
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Definition
| The time value of money is incorporated in the analysis |
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Term
| Contribution margin is calculated as |
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Definition
| total revenue - total variable costs. |
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Term
Tee Times, Inc. produces and sells the finest quality golf clubs in all of Clay County. The company expects the following revenues and costs in 2020 for its Elite Quality golf club sets:
Revenues (400 sets sold @ $600 per set) $240,000
Variable costs 160,000
Fixed costs 50,000
How many sets of clubs must be sold for Tee Times, Inc. to reach their breakeven point? |
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Definition
250
Math:
Variable cost per unit = 160,000/400 units sold = $400
Contribution Margin = 600 - 400 = $200 per unit
Breakeven point = 50,000/200= 250 units |
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Term
Tee Times, Inc. produces and sells the finest quality golf clubs in all of Clay County. The company expects the following revenues and costs in 2020 for its Elite Quality golf club sets:
Revenues (400 sets sold @ $600 per set) $240,000
Variable costs 160,000
Fixed costs 50,000
What amount of sales must Tee Times, Inc. have to earn a target net income of $63,000 if they have a tax rate of 30%? |
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Definition
420,000
Math:
TNI = 50,000 +63000/(1-0.3)/$200= 700 units * $600 = 420,000 |
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Term
| One way for managers to cope with uncertainty in profit planning is to |
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Definition
| use sensitivity analysis to explore various what-if scenarios in order to analyze changes in revenues or costs or quantities |
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Term
| The Beta Mu Omega Chi (BMOC) fraternity is looking to contract with a local band to perform at its annual mixer. If BMOC expects to sell 250 tickets to the mixer at $10 each, which of the following arrangements with the band will be in the best interest of the fraternity? |
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Definition
$1000 fixed fee + $5 per person attending.
Math:
Cost of option a: $2,500 Profit = 0
Cost of option b: $1,000 + 5(250) = $2,250 Profit = $250
Cost of option c: $10 (250) = $2,500 Profit = 0 Cost of option d: $25 (125) = $3,125 Loss ($625) |
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Term
LSB Company has the following income statement:
Revenues $100,000
Variable Costs 40,000
Contribution Margin 60,000
Fixed Costs 30,000
Operating Income 30,000
If LSB's sales increase by $20,000, what will be the company's operating profit? |
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Definition
12,000
Math:
$20,000 / $100,000 = 20%
20% × 2 = 40%
40% × $30,000 = $12,000 increase |
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Term
| Valley Company sells two products. Product M sells for $12 and has variable costs per unit of $7. Product Q's selling price and variable costs are $15 and $10, respectively. If fixed costs are $60,000 and Valley sells twice as many units of Product M as Product Q, what is the BEP in units for Product M? |
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Definition
8000
Math:
Product M contribution margin (12 - 7) = 5 x sales mix of 2 = 10
Product Q contribution margin (10 - 5) = 5 x sales mix of 1 = 5
Total contribution margin of both products = 15
FC/CM = BEP - package $60,000/15 = 4,000 packages
BEP - units of Product M = BEP - packages x sales mix of 2 = 8,000 units |
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Term
| A mixed cost function has a constant component of $20,000. If the total cost is $60,000 and the independent variable has the value 200, what is the value of the slope coefficient? |
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Definition
$200
60,000(Total Costs)-20,000(Fixed Costs) =40,000(Variable Costs)
40000/200 units = $200 |
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Term
| [CMA Adapted] Of the following methods, the one that would not be appropriate for analyzing how a specific cost behaves is |
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Definition
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Term
| When the high-low method is used to estimate a cost function, the variable cost per unit is found by |
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Definition
| dividing the difference between costs associated with the highest and lowest observations of the cost driver by the difference between the highest and lowest observations of the cost driver. |
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Term
Tory Company derived the following cost relationship from a regression analysis of its monthly manufacturing overhead cost.
y = $80,000 + $12X where: y = monthly manufacturing overhead cost X = machine-hours
The standard error of estimate of the regression is $6,000.
The standard time required to manufacture one six-unit case of Tory's single product is four machine-hours. Tory applies manufacturing overhead to production on the basis of machine hours, and its normal annual production is 50,000 cases.
[CMA Adapted] Tory's predetermined fixed manufacturing overhead rate would be |
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Definition
$1.60/MH
Math:
Fixed costs = $80,000 = $0.40/ machine hour
Machine hours 50,000 × 4
$0.40/ machine hour × 4mh/unit = $1.60 |
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Term
| With the cumulative average-time learning model |
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Definition
| the cumulative time per unit declines by a constant percentage when production doubles. |
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Term
| When using the incremental unit-time learning model |
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Definition
| the time needed to produce the last unit declines by a constant percentage when production doubles. |
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Term
| Which of the following is not true about strategy? |
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Definition
| It has a short-term focus. |
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Term
| The five-step decision-making process |
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Definition
| includes planning and control activities |
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Term
| In supporting managers, management accountants have three guidelines. These guidelines are |
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Definition
| Cost-benefit analysis, behavioral considerations and technical considerations, and different costs for different purposes |
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Term
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Definition
| undertakes banking, financing, investments, and cash management duties |
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Term
| Galway Co. management desires cost information regarding its Celtic brand. The Celtic brand is a(n) |
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Definition
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Term
| The three categories of inventories commonly found in many manufacturing companies are: |
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Definition
| Materials, work-in-process, and finished goods |
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Term
| The primary focus of cost management is to |
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Definition
| help managers make different decision |
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Term
Tee Times, Inc. produces and sells the finest quality golf clubs in all of Clay County. The company expects the following revenues and costs in 2020 for its Elite Quality golf club sets:
Revenues (400 sets sold @ $600 per set) $240,000
Variable costs 160,000
Fixed costs 50,000
How many sets of clubs must be sold to earn a target operating income of $90,000? |
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Definition
700
Math:
TOI = (50,000+ 90000)/200= 700 units |
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Term
LSB Company has the following income statement:
Revenues $100,000
Variable Costs 40,000
Contribution Margin 60,000
Fixed Costs 30,000
Operating Income 30,000
What is LSB's DOL? |
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Definition
2.00
Math:
DOL = $60,000/$30,000 = 2.0 |
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Term
Tory Company derived the following cost relationship from a regression analysis of its monthly manufacturing overhead cost.
y = $80,000 + $12X where: y = monthly manufacturing overhead cost X = machine-hours
The standard error of estimate of the regression is $6,000.
The standard time required to manufacture one 6-unit case of Tory's single product is 4 machine-hours. Tory applies manufacturing overhead to production on the basis of machine hours, and its normal annual production is 50,000 cases.
[CMA Adapted] Tory's estimated variable manufacturing overhead cost for a month in which scheduled production is 10,000 cases would be |
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Definition
$480,000
Math:
y = 80,000 + 12x
Variable Cost: 480,000 = 10,000 cases x 4 machine hours/case x $12/machine hour |
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Term
| Three criteria to use in identifying cost drivers from the potentially large set of independent variables that can be included in a regression model are |
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Definition
| economic plausibility, goodness of fit, and significance of independent variable. |
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Term
| Companies that take advantage of quantity discounts in purchasing their materials have |
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Definition
| nonlinear cost functions. |
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Term
| Which of the following is not a common problem encountered in collecting data for cost estimation? |
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Definition
| Lack of observing extreme values |
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