The primary users of management accounting information are typically:
Politicians, Bankers, and the IRS
Shareholders and others who can use it to sue the corporation and get rich
Managers within the organization
all stakeholders of the organization
all of the above
The Management Accountants' Ethics code states that when faced with significant ethical issues, management accountants should first:
discuss such problems with the President of the organization except when it appears that the President is involved.
clarify relevant concepts by confidential discussion with an objective advisor to obtain an understanding of possible courses of action.
follow the established policies of the organization bearing on the resolution of such conflict.
submit and informative memorandum describing the ethical issue to an appropriate representative of the organization and resign if no action is taken as a result of the memorandum
Managerial accounting:
has its primary emphasis on the future
is required by regulatory bodies such as SEC
focuses on the organization as a whole, rather than on the organization's segments.
all the above.
The three basic elements of manufacturing cost are:
cost of goods manufactured
cost of goods sold
work in process
manufacturing overhead
direct material
direct labor
Transportation costs incurred by a manufacturing company to ship its product to its customers would be classified as which of the following?
Product cost
period cost
administrative cost
Cost of goods manufactured will usually include
only costs incurred during the current period
only direct labor and direct materials costs
some costs incurred during the prior period as well as costs incurred during the current period
some period costs as well as some product costs
which one of the following costs should NOT be considered an indirect cost of serving a particular customer at a Dairy Queen fast food outlet?
a cost of the hamburger patty in the burger they ordered
the wages of the employee who takes the customer's order
the cost of heating and lighting the kitchen
the salary of the outlet's manager
The cost of goods sold in a merchandising company typically would be classified as a
fixed cost
variable cost
step-variable cost
mixed cost
The contribution approach to the income statement:
organizes costs on a functional basis
is useful to managers in planning and decision making
shows a contribution margin rather than a net operating income figure at the bottom of the statement
can be used only by manufacturing companies
On a cost-volume-profit graph, the break-even point is located
at the origin
where the total revenue line intersects the volume axis
where the total expenses line intersects the dollars axis
where the total revenue
Which of the following is true regarding the contribution margin ratio of a single product company?
as fixed expenses decrease, the contribution margin ratio increases
the contribution margin ratio multiplied by the variable expense per unit equal the contribution margin per unit
if sales increase, the dollar increase in net operating income can be computed by multiplying the contribution margin ratio by the dollar increase in sales
the contribution margin ratio increases as the number of units sold increases
a company increased the selling price for its product from $5 to $6 per unit when total fixed expenses increased from $100,000 to $200,000 and variable expense per unit remained unchanged. How would these changes affect the breakeven point?
the break-even point in units would decrease
the break-even point in units would increase
the break-even point in units would remain unchanged
the effect cannot be determined from the information given
Financial accounting reports are prepared for external parties, whereas managerial accounting reports are prepared for internal users.
Financial accounting is more focused on precision when making reports. Managerial accounting provides decision makers with good estimates ASAP and precise data later.
Managerial accounting focuses on the company as a whole, financial accounting focuses on segment reports.
Financial accounting must follow GAAP and IRS guidelines. Managerial accounting doesn't have externally imposed rules.
Managerial accounting is mandatory while financial accounting is optional.
What are the 3 activities that managerial accounting helps managers carry out?
planning
financing
controlling
decision making
hiring
What does the planning aspect of managerial accounting include?
establishing goals and specifying how to achieve them (includes budgeting)
setting a structure for the company
gathering feedback to make new plan for running the company
planning is not relevant to managerial accounting
What is involved in the control aspect of managerial accounting
controlling is not relevant
it involves gathering feedback to ensure that plans are being followed. (involves performance reports that compare budgeting to actual results)
involves making budgets to follow
involves being a tyrannical boss.
What 3 questions does managerial decisions making revolve around?
Who are we?
What should we be selling?
Who should we be serving?
What is our budget?
How should we execute?
What purpose do we serve?
What is the IMA
International Management Association
Institue of Managerial Accounting
Institue of Management Accountants
International Money Association
What 2 things does the IMA's Statement of Ethical Professional Practice offer guidelines for?
Ethical Behavior
How to be a managerial accountant
Rules of managerial accounting
Resolution for an ethical conflict.
What are the 4 categories of guidelines for Ethical Behavior as defined by the IMA?
Competence
Confidentiality
Integrity
Credibility
Communication
Respectfulness
Which of the following does not fall under the category of Competency in IMA's guidelines for Ethical Behavior?
Recognize and communicate professional limitations that preclude responsible judgment.
Follow applicable laws, regulations, and standards.
Ensure that subordinates do not disclose confidential information.
Maintain professional competence.
Provide accurate, clear, concise, and timely decision support information.
Which of the following does not fall under the category of Confidentiality in IMA's guidelines for Ethical Behavior?
Do not disclose confidential information unless legally obligated to do so.
Refrain from conduct that would prejudice carrying out duties ethically.
Do not use confidential information for unethical or illegal advantage.
Which of the following does not fall under the category of Integrity in IMA's guidelines for Ethical Behavior?
Communicate information fairly and objectively.
Mitigate conflicts of interest and advise others of potential conflicts.
Abstain from activities that might discredit the profession.
Which of the following does not fall under the category of Credibility in IMA's guidelines for Ethical Behavior?
Disclose all relevant information that could influence a user’s understanding of reports and recommendations.
Disclose delays or deficiencies in information timeliness, processing, or internal controls.
Contact with levels above the immediate supervisor should only be initiated with the supervisor's knowledge, assuming they are not involved.
If your immediate supervisor is the CEO who should you consider going to?
Board of directors/audit committee
You should just go to the CEO
Owner of Company
Government
If your superior is involved should you just let go of the conflict
An example of a direct material is:
Cleaning supplies for manufacturing machines
Glue for parts
Radio in a car
Oil for car engine
An example of Direct Labor would be wages paid to
Maintenance workers
Security guards
Assembly workers
Executive workers
What two things makeup Manufacturing Overhead?
Direct Labor
Indirect Labor
Indirect costs
Indirect materials
What is considered to be an indirect material
Cleaning supplies used in manufacturing plants
Car radio
Car Metal
Processing Chip in a computer
What is an example of Indirect Labor (costs)
Assembly line workers
Janitors
What are the 2 non manufacturing costs
Selling Costs
Administrative Costs
Direct Labor Costs
Materials Costs
Costs for janitors
Which of the following is not a selling cost?
Advertising
Shipping
Sales
Cost of finished goods warehouses
Cost of packaging an item
Which of the following is not an Administrative Cost?
Executive compensation
Salaries for plant workers
Secretarial costs
PR costs
Which is NOT a Product Cost?
Direct materials
selling costs
Which is NOT a period cost?
labor costs
administrative costs
Product costs are recognized as expenses when the products are sold
Period costs are expensed on the income statement
When are period costs "incurred"?
When employees earn them
When employees are paid
Which of the following costs would be considered a period rather than a product cost in a manufacturing company?
Manufacturing equipment depreciation
Property taxes on corporate headquarters
Direct materials costs
Electrical costs to light the production facility
Sales commissions
What two things make up a prime cost?
Manufacturing overhead
Indirect labor
Indirect Materials
What two things make up conversion costs?
Direct Materials
Manufacturing Over
Indirect Material
Direct Material
Variable costs vary in direct proportion to activity
Variable costs per unit do not remain constant as activity changes
As the level of the activity base increases, the total variable cost
decreases proportionately
increases proportionately
When activated rises, the fixed costs per unit,
decreases
increases
Committed Fixed Costs can be altered in the short-term.
Discretionary costs are long term.
Which of the following costs would be variable with respect to the number of cones sold at a Baskins and Robbins shop?
The cost of lighting the store
The wages of the store manager
The cost of ice cream
The cost of napkins for customers
Y=a+bX is the equation for:
Fixed Costs
Variable Costs
Mixed Costs
Total Costs
In the equation Y=a+bX, Y=
total mixed costs
total fixed costs (vertical intercept)
total variable costs per unit of activity (slope)
level of activity
In the equation Y=a+bX, a=
total variable costs per unit of activity(slope)
In the equation Y=a+bX, b=
total variable cost per unit of activity (slope)
In the equation Y=a+bX, X=
Total variable cost per unit (slope)
Gross margin=
sales-cogs
cogs-sales
contribution margin-sales
sales+cogs
