Managerial Accounting Final Milestone

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Arapahoe Community College *

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122

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Accounting

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Feb 20, 2024

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Managerial Accounting Milestone 1 1. Which of the following is true of the chart of accounts? a. The chart of accounts contains the unique names used for the general ledger and general journal accounts. 2. Managers exist in all parts of the company. Which statement is true regarding managers? a. They can hold line or staff positions in the organization. 3. Which of the following can be used to understand the flow of costs in a manufacturing company? a. Balance sheet, income statement, and schedule of the cost of goods manufactured 4. Occupational fraud can be described as the use of one’s occupation for personal gain by intentionally __________. a. misusing an employer’s resources 5. Which two accounts will be included in the balance sheet of a merchandising company? a. An account for the estimated returns and an account for refunds payable 6. Land is not a depreciable asset because __________. a. land is not consumed over time 7. A manufacturing company’s product costs consist of which of the following? a. Direct labor, direct materials, and manufacturing overheads 8. T-accounts represent debits and credits that relate to the transaction activity. If the resulting balance of a T-account has a dollar value on the left, the account __________. a. has a debit balance 9. Which inventory method results in the lowest tax liability in a period of inflation? a. The last-in first-out inventory system 10. Managerial accounting information should be __________. a. relevant 11. Which principle sets forth the amounts at which assets, liabilities, revenues, and expenses are recorded? a. The cost principle 12. Which tool provides insight into trial balance accounts, adjustments, and financial statements? a. The worksheet 13. Which financial statement can be used to connect the balance sheet and the income statement? a. Statement of retained earnings 14. Which of the following certifications is obtained from passing a professional licensing exam? a. Certified Public Accountant (CPA) Managerial Accounting Milestone 2 1. Calculate the target selling price if the unit price cost is $50, the target markup is 42%, and the variable overhead per unit is $10. a. $71 b. The target selling price is calculated by (1) multiplying $50 times the target markup of 42% (0.42), which equals $21, and (2) Adding the unit price cost of $50 to the markup of $21, which equals $71. The variable overhead is already included in the unit product cost; therefore, we don't use it in the calculation of the target selling price.

2. Which of the following is an example of a facility-level activity? a. Rent b. Rent is considered a facility level activity. Design, quality testing, and value chain are not considered facility-level activities. 3. Which of the following is a difference between absorption costing and variable costing? a. Absorption costing includes all overhead as a product cost. b. Absorption costing includes all overhead as a product cost. Variable costing separates variable overhead from fixed overhead. In variable costing, fixed overhead costs are considered expenses in the period that it is incurred. 4. Which of the following companies would use process costing to track production costs? a. A company mass producing similar products b. A company mass producing similar products would use process costing. 5. Which three costs are required to be identified in job order costing for each individual job? a. Direct materials, direct labor, and overhead b. Direct materials, direct labor, and overhead are required to be identified in job order costing for each individual job. 6. Which of the following can be compared to job costs to determine the profit on the job? a. The revenue for each job b. Once the total cost for each product is determined, managers can compare the cost of each job with the revenue that they received for each job. Knowing the revenue and the costs that are related to each job will help the company determine the amount of profit that each job generated. 7. What is the major premise behind activity-based costing? a. The major premise behind activity-based costing is that products use activities, and activities use resources. b. Activity-based costing focuses on activities that occur within the production process; these activities in turn use resources. The plantwide rate will use a single cost driver, departmental rates are used when there are multiple departments that use multiple rates, and activity-based costing assigns a different rate to each activity. 8. Which of the following is provided in the production cost report? a. The cost per equivalent units of production b. The production cost report shows the equivalent units of production, the cost per equivalent unit of production, and the reconciling of costs—this is all information that managers are able to use to make decisions related to controlling costs and setting sales prices, evaluating performance, evaluating process improvements, and addressing ethical issues with the use of process costing. 9. Budgeting helps managers determine if their goals are reasonable and achievable a. Budgeting helps managers determine if their goals are reasonable and achievable. b. A budget is a financial plan of the revenues and costs that are needed to carry out activities and meet financial goals. Budgeting helps managers to determine if their goals are reasonable and achievable, and if they are not, what changes are necessary to make the goals reasonable and achievable. 10. The departmental overhead rate is calculated by dividing the total budgeted departmental overhead costs by the ________________.

a. total amount of departmental allocation base b. The formula for calculating the departmental overhead rate is to divide the total budgeted departmental overhead costs by the total amount of departmental allocation base. The departmental allocation base will align with the cost driver for each department. The effective allocation base is what drives the costs in each department. Machine hours and labor hours are possible cost drivers, however, they are not presented in the formula since the departmental allocation base may vary from one department to the next. 11. A company has 10,000 units in process on March 1 and started 30,000 units during the month of March. What are the physical units of production to account for in the month of March? a. 40,000 b. 40,000. 10,000 units in process on March 1 plus 30,000 units started during the month of March equals 40,000 physical units of production to account for in the month of March. The number of physical units of production to account for consists of what we already had in the production process and what we added to the production process. 12. There should be a(n) __________ and __________ relationship between the allocation base and overhead costs. a. Cause, effect b. When choosing an allocation base, managers need to think about how many and which activity bases to use when calculating overhead for each job. There should be a cause and effect relationship between the allocation base and the overhead costs. 13. Using variable costing, what is the unit product cost given the following: Direct Materials $10 per unit, Direct Labor $20 per unit, Variable Overhead $5 per unit, Fixed Overhead is $600,000 and expected production is 120,000 units? a. $35 per unit b. The unit product cost is $35 per unit, calculated by adding $10 in Direct Materials plus $20 in Direct Labor plus $5 in Variable Overhead per unit costs. Product cost consist of the costs that are necessary to manufacture a product including direct materials, direct labor, and overhead. 14. Which of the following is included in a time ticket? a. Hourly rate b. A time ticket will record the employee name and number, the job number that they are working on, their start and finish time, and their hourly rate. 15. Which of the following is an example of a cost of capacity? a. Downsizing b. Costs of capacity are expenses that are made to increase the company’s ability to conduct their operations at a larger scale. If a company is considering expanding its product lines or storefronts, growing the team of workers making the product, or marketing to new potential customers, the costs involved with these decisions would be costs of capacity. Similarly, downsizing, cutting hours, and discontinuing products are also costs of capacity. 16. Which of the following illustrates the allocation of overhead in a process costing system? a. Debit work-in-process; credit factory overhead

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