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Acct 212

Reports prepared in financial accounting are general-purpose reports, whereas reports prepared in managerial accounting are usually special-purpose reports.
True
Managerial accounting applies to all forms of business organizations.
True
Managerial accounting internal reports are prepared more frequently than are classified financial statements.
True
The Sarbanes-Oxley Act replaces generally accepted accounting principles in a manufacturing company.
False
Decision-making is an integral part of the planning, directing, and controlling functions.
True
Manufacturing costs that cannot be classified as direct materials or direct labor are classified as manufacturing overhead.
True
Raw materials are equal to direct materials minus indirect materials.
False
The total cost of a finished product does not generally contain equal amounts of materials, labor, and overhead costs.
True
Period costs include selling and administrative expenses.
True
Direct materials and direct labor are the only product costs.
False
Total period costs are deducted from total cost of work in process to calculate cost of goods manufactured.
False
Ending finished goods inventory appears on both the balance sheet and the income statement of a manufacturing company.
True
In calculating gross profit for a manufacturing company, the cost of goods manufactured is deducted from net sales.
False
Finished goods inventory does not appear on a cost of goods manufactured schedule.
True
product cost
components-direct material
beginning work in process inv + total manufacturing costs
total work in process
total work in process- ending work in process=
cog manufactured
The balanced scorecard approach attempts to maintain as little inventory on hand as possible
false
Many companies have significantly lowered inventory levels and costs using just-in-time inventory methods.
true
Planning involves coordinating the diverse activities and human resources of a company to produce a smooth running operation.
false
Product costs are also called inventoriable costs.
true
The sum of the direct materials costs, direct labor costs, and beginning work in process is the total manufacturing costs for the year.
false
Cost accounting is primarily concerned with accumulating information about product costs.
true
A process cost accounting system is appropriate for similar products that are continuously mass produced.
true
a job order cost system and a process cost system are two alternative methods for valuing inventories
true
A company may use either a job order cost system or a process cost system, but not both.
false
Accumulating and assigning manufacturing costs are two important activities in a job order cost system.
true
Manufacturing costs are generally incurred in one period and recorded in a subsequent period.
false
When raw materials are received, there’s no effort at this point to associate the cost of materials with specific jobs.
true
When raw materials are purchased, the Work in Process Inventory account is debited.
false
Fringe benefits and payroll taxes associated with factory workers should be accumulated as a part of Factory Labor.
true
In a job order cost system, each entry to the Work In Process Inventory account should be accompanied by a posting to one or more job cost sheets.
true
Manufacturing overhead is the only product cost that can be assigned to jobs as soon as the costs are incurred
false
There should be a separate job cost sheet for each job.
true
The formula for the predetermined overhead rate is:
estimated annual overhead costs/ an expected annual operating activity.
true
A good system of internal control requires that the job order cost sheet be destroyed as soon as the job is complete.
false
When goods are sold, the Cost of Goods Sold account is debited and Work in Process Inventory account is credited
false
Overapplied overhead means that actual manufacturing overhead costs were greater than the manufacturing overhead costs applied to jobs.
false
A cost accounting system consists of manufacturing cost accounts that are fully integrated into the general ledger of a company.
true
The cost of raw materials purchased is credited to Raw Materials Inventory when materials are received.
false
The predetermined overhead rate is based on the relationship between estimated annual overhead costs and expected annual operating activity expressed in terms of a common activity base.
true
At the end of the year, underapplied overhead is usually credited to Cost of Goods Sold.
false
Traditional costing systems use multiple predetermined overhead rates.
false
Traditionally, overhead is allocated based on direct labor cost or direct labor hours.
true
Activity-based costing allocates overhead to multiple cost pools and assigns the cost pools to products using cost drivers.
true
a cost driver does not generally have a direct cause-effect relationship with the resources consumed
false
To achieve accurate costing, a high degree of correlation must exist between the cost driver and the actual consumption of the activity cost pool.
true
Low-volume products often require more special handling than high-volume products.
true
ABC leads to enhanced control over overhead costs.
true
ABC usually results in less appropriate management decisions.
false
ABC eliminates all arbitrary cost allocations.
false
ABC is particularly useful when product lines differ greatly in volume and manufacturing complexity
true
Activity-based management focuses on reducing costs and improving processes
true
Any activity that increases the cost of producing a product is a value-added activity.
false
Non-value-added activities increase the cost of a product but not its market value.
true
Machining is a non-value-added activity.
false
The overall objective of installing ABC in service firms is no different than it is in a manufacturing company.
true
What sometimes makes implementation of activity-based costing difficult in service industries is that a smaller proportion of overhead costs are company-wide costs.
false
Plant management is a batch-level activity.
false
Painting is a product-level activity.
false
Quality control is less important in just-in-time than in traditional manufacturing philosophies
false
Inventory storage costs are reduced in just-in-time processing.
true
Inventory system in which goods are manufactured or purchased just as they are needed for use.
Just-in-time (JIT) inventory
A method of allocating overhead based on each product’s use of activities in making the product
Activity-based costing
Systems that are especially important to firms adopting just-in-time inventory methods.
Total quality management (TQM)
One part of the value chain for a manufacturing company.
Research and development, and product design
Research and development, and product design
Service industries
A performance-measurement approach that uses both financial and nonfinancial measures, tied to company objectives, to evaluate a company’s operations in an integrated fashion
Balanced scorecard
manufacturing overhead rate for the year
expected total cost for year / estimated hours
predetermined overhead rate
estimated overhead / direct labor cost

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