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The practice of identifying and reduce business expenses to increase profits, and it starts with the budgeting process in maintaining and growing profitability.
Actual Cost is a past cost or historical cost.
Margin of Safety is the point wherein actual or planned sales maybe reduced without incurring a loss
In comparing financial and management accounting, which of the following more accurately describes management accounting information?
Budgeted Cost is the amount that is anticipated to be incurred in the future
The one cost that would be classified as part of both prime cost and conversion cost would be:
To be able to answer the following questions, kindly refer to the problem below: ABC Co. provided the following information related to the production of a single product Selling price per unit P 250 Total fixed cost P150,000 Contribution margin percentage 40% Desired profit after tax P250,000 Income tax rate 20% Q: What is the amount of total variable cost at desired profit calculation?
Activity based costing is an approach to the costing and monitoring of activities which does not involve tracing resource consumption and costing final outputs.
It is the position in the organization structure wherein the personnel assigned are directly involved in the responsibility of achieving the goals of an organization
Direct labor is an inappropriate cost driver to use if a company is highly automated.
Alamo's customer service department follows up on customer complaints by telephone inquiry. During a recent period, the department initiated 7,000 calls and incurred costs of $203,000. If 2,940 of these calls were for the company's wholesale operation (the remainder were for the retail division), costs allocated to the retail division should amount to:
To be able to answer the following questions, kindly refer to the problem below: ABC Co. provided the following information related to the production of a single product Selling price per unit P 250 Total fixed cost P150,000 Contribution margin percentage 40% Desired profit after tax P250,000 Income tax rate 20% Q: What should be the unit sales to break-even?
The company's normal operating range is referred to as the operating cycle.
Product Costs are also inventoriable costs
This phase involves the process of gathering responses and feedbacks on the plan being executed through evaluation and monitoring
If a company opt to use the activity-based costing in allocating overhead costs, companies do not need to classify at which level of activities costs were incurred.
The distinction between direct and indirect costs depends on whether a cost
Traditional costing systems tend to distort unit manufacturing costs when numerous goods are made that have widely varying production requirements.
ABC Corporation has the following data for use of its machinery
Traditional costing uses a host of different cost drivers (e.g., number of production setups, inspection hours, orders processed) to improve the accuracy of product costing.
Financial accounting is most concerned with meeting the needs of external users.
Which of the following would not likely be used by service providers to accumulate job costs?
Businesses are established because owners are just after the break-even point.
Purpose of information of managerial accounting
Which of the following is the proper sequence of events in an activity-based costing system?
Contribution Margin is the amount remaining from sales revenue after deducting the variable expenses.
It is a systematic process of providing financial information of an organization or unit that is intended to be useful in decision making
To be able to answer the following questions, kindly refer to the problem below: ABC Co. provided the following information related to the production of a single product Selling price per unit P 250 Total fixed cost P150,000 Contribution margin percentage 40% Desired profit after tax P250,000 Income tax rate 20% Q: What is the amount of income tax?
Net Income is the amount available to cover fixed costs
All of the following are examples of product costs except:
The cost of goods sold of a manufacturing company equals beginning finished goods inventory + cost of goods manufactured - ending finished goods inventory.
What is the amount of total variable cost at break-even point calculation?
Managerial accounting is most concerned with addressing the needs of the company as a whole.
Materials used in the operation of a factory, such as cleaning supplies, that are not an integral part of the final product should be classified as:
Cost accounting serves as a bridge between financial and managerial accounting.
What is the amount of direct materials for Job #200?
Period Costs are also inventoriable costs.
Product Costs can either be presented in the balance or income statement
Purpose of information of financial accounting
The need of independent examination and verification process for financial accounting
How much is the factory overhead cost per unit for TV under activity-based costing?
Managerial accounting adheres strict compliance to Generally Accepted Accounting Principles (GAAP)
If direct labor is a good cost driver, increases in direct labor are matched with increases in manufacturing overhead.
Break-even Point is the point of activity level where total revenue is equal to total cost.
A variable cost is constant if expressed on a per unit basis but the total dollar amount changes as the number of units' increases or decreases.
The estimates used to calculate the predetermined overhead rate will virtually always:
These are the primary users of financial information
ANo ____ cost increases or decreases in intervals as activity changes
The Graphic Approach is the widely used method in calculating the break-even point.
Activity based costing assigns overhead to products produced on a basis of usage of activities during the production process like purchase order activities, machine set-ups and other activities that are required to complete the manufacturing process.
HiTech Products manufactures three types of remote-control devices: Economy, Standard, and Deluxe. The company, which uses activity-based costing, has identified five activities (and related cost drivers). Each activity, its budgeted cost, and related cost driver is identified below. What is HiTech's pool rate for the material-handling activity?
Opportunity costs are the potential benefit that is given up when one alternative is selected over another.
Financial accounting is most concerned with addressing the needs of individual departments of the company.
Prime costs consist of:
Referring to the preceding problem, what is HiTech's pool rate for the automated machinery activity?
The need of independent examination and verification process for managerial accounting
Product Costs are always presented in the income statement as part of cost of goods sold.
Fletcher, Inc. disposes of under- or overapplied overhead at year-end as an adjustment to cost of goods sold. Prior to disposal, the firm reported cost of goods sold of $590,000 in a year when manufacturing overhead was underapplied by $15,000. If sales revenue totaled $1,400,000, determine (1) Fletcher's adjusted cost of goods sold and (2) gross margin:
Using the high-low method of separating mixed costs,how much is the fixed cost?
External parties and management never use product cost information for investment decision and, planning and controlling.
To be able to answer the following questions, kindly refer to the problem below: ABC Co. provided the following information related to the production of a single product Selling price per unit P 250 Total fixed cost P150,000 Contribution margin percentage 40% Desired profit after tax P250,000 Income tax rate 20% Q: What is the amount of desired profit before tax?
External parties and management uses product cost information for:
To be able to answer the following questions, kindly refer to the problem below: ABC Co. provided the following information related to the production of a single product Selling price per unit P 250 Total fixed cost P150,000 Contribution margin percentage 40% Desired profit after tax P250,000 Income tax rate 20% Q: How much should be the actual peso sales to realize the desired profit?
Overhead costs are applied to products on the basis of volume-related measures.
Scope of information of financial accounting
A tailoring company has gathered information on utility costs for the past year. The accountant has decided that utilities are a function of the hours worked during the month. The following information is available and representative of the company’s utility costs: Hours worked Utility cost incurred Low point 1,300 P 903 High point 1,680 1,074 If 1,425 hours are worked in a month, total utility cost (rounded to the nearest peso) using the high-low method should be
Overriding criteria of managerial accounting
The accountant is the personnel assigned in overseeing the overall financial operations of the company.
One major difference between financial and management accounting is that
To be able to answer the following questions, kindly refer to the problem below: ABC Co. provided the following information related to the production of a single product Selling price per unit P 250 Total fixed cost P150,000 Contribution margin percentage 40% Desired profit after tax P250,000 Income tax rate 20% Q: What should be the actual unit sales to realize the desired profit?
Direct labor is gaining importance in many manufacturing applications with respect to being a significant cost driver.
Financial accounting adheres strict compliance to Generally Accepted Accounting Principles (GAAP)
Period Costs are treated as outright expenses
Referring to the preceding problem, the cost of wages and salaries and other overhead that would be charged to each delivery is closest to:
IMA members have a responsibility to comply with and uphold the standards of Competence, Confidentiality, Integrity, and Credibility
To be able to answer the following questions, kindly refer to the problem below: ABC Co. provided the following information related to the production of a single product Selling price per unit P 250 Total fixed cost P150,000 Contribution margin percentage 40% Desired profit after tax P250,000 Income tax rate 20% Q: How much should be the peso sales to break-even?
To be able to answer the following questions, kindly refer to the problem below: ABC Co. provided the following information related to the production of a single product Selling price per unit P 250 Total fixed cost P150,000 Contribution margin percentage 40% Desired profit after tax P250,000 Income tax rate 20% Q: What is the contribution margin per unit?
Using the high-low method of separating mixed costs, what is the variable cost per unit?
Direct labor is the most commonly used cost driver when calculating a predetermined overhead rate.
Thread used in the production of bed sheet set, an indirect material, is classified as manufacturing overhead.
Generally speaking, companies prefer doing business with customers who order small quantities rather than large quantities.
Inventoriable costs that have become expenses can be found in:
This analysisfocuses on how profits are affected by selling prices, sales volume, unit variable costs, total fixed costs, and mix of products sold
Institute of Management Accountants' (IMA) overarching ethical principles include the following except one:
Direct costs:
External parties and management uses product cost information for investment decision and, planning and controlling
If the company still employs the plantwide factory overhead rate method, how much is the overhead cost per unit for TV, Computer and cellphone using the total direct labor hours as a basis of allocation.
Companies can use either direct labor cost or direct labor hours as a cost driver.
Planning is a function that involves
The amount that was paid by a company for a building to house its operations is an example of a sunk cost.
All of the following are examples of opportunity costs: salary given up to start a business; rental income given up when you live in a house you own; interest income that could be earned on money spent for a car.
Step costs can either be variable cost or fixed cost.
Aladin's customer service department follows up on customer complaints by telephone inquiry. During a recent period, the department initiated 7,000 calls and incurred costs of $203,000. If 2,940 of these calls were for the company's wholesale operation (the remainder were for the retail division), costs allocated to the wholesale operation should amount to:
It is in the planning phase where the problems and issues of the company are identified.
The sum of all costs that composed manufacturing costs except direct materials is called manufacturing overhead.
Manufacturing overhead includes:
All costs in a manufacturing company are product costs.
Purpose of informationof managerial accounting
If the resolution efforts of resolving ethical issues are not successful, the member may wish to consider disassociating from the organization.
Using the high-low method of separating mixed costs,what is the mixed cost equation?
In an activity-based costing system, direct materials used would typically be classified as a unit-level cost.
The following tasks are associated with an activity-based costing system: 1- Assignment of cost to products 2- Calculation of pool rates 3- Identification of cost drivers 4- Identification of cost pools Which of the following choices correctly expresses the proper order of the preceding tasks?
If the resolution efforts of resolving ethical issues are not successful, the member should stay at the organization and must find other ways to resolve such issues.
Tiffany charges manufacturing overhead to products by using a predetermined application rate, computed on the basis of labor hours. The following data pertain to the current year:
In the value chain, planning and controlling activities in the organization is to be managed on a sequential order of the business functions.
It is a cycle of processes in an organization
It is the point of activity level where total revenue is equal to total cost
How much is the factory overhead cost per unit for Cellphone under activity-based costing?
Which of the following statements about cost accounting is not true?
Activity-based costing systems have a tendency to distort product costs.
These are items for which management accumulates costs
A cost that remains constant in total but varies on a per-unit basis with changes in activity is called aNo
A computer manufacturer recently shipped several laptops to a customer (cost: $25,000) and billed the customer $30,000. Which of the following options correctly expresses the accounts that are debited and credited to record this transaction?
One of the uses of financial accounting data is to determine product costs in order to help management in making decisions.
Scope of information of managerial accounting
Within the relevant range, the two main cost behaviors are direct and indirect costs.
Traditional costing is mainly focused on highly automated manufacturing industry
The emphasis of information of managerial accounting is past oriented.
The term "normal costing" refers to the use of
As activity increases within the relevant range, fixed costs remain constant on a per unit basis.
Generally speaking, cost accounting can be defined as aNo
The emphasis of information of financial accounting is future oriented.
At Break-even Point, there could either be a net income or net loss.
What amount of these costs would be considered as product costs?
Overriding criteria of financial accounting
All manufacturing costs are easily traceable to the goods produced.
In applying the Standards of Ethical Professional Practice, the member will never encounter unethical issues or behavior.
Managerial accounting is most concerned with meeting the needs of internal users.
Which of the following defines variable cost behavior?
Based on the preceding number, compute the fixed cost element (to the nearest whole peso)
Product Costs are treated as outright expenses.
How much is the factory overhead cost per unit for Computer under activity-based costing?
When faced with unethical issues, the member should follow the established policies of his or her organization, including use of an anonymous reporting system if available.
Media, Inc., an advertising agency, applies overhead to jobs on the basis of direct professional labor hours. Overhead was estimated to be $150,000, direct professional labor hours were estimated to be 15,000, and direct professional labor cost was projected to be $225,000. During the year, Media incurred actual overhead costs of $146,000, actual direct professional labor hours of 14,500, and actual direct labor cost of $222,000. By year-end, the firm's overhead was:
To be able to answer the following questions, kindly refer to the problem below: ABC Co. provided the following information related to the production of a single product Selling price per unit P 250 Total fixed cost P150,000 Contribution margin percentage 40% Desired profit after tax P250,000 Income tax rate 20% Q: What is the amount of total variable cost at break-even point calculation?
What amount of overhead is applied to Job #200?
To be able to answer the following questions, kindly refer to the problem below: ABC Co. provided the following information related to the production of a single product Selling price per unit P 250 Total fixed cost P150,000 Contribution margin percentage 40% Desired profit after tax P250,000 Income tax rate 20% Q: What is the amount of net income by considering the desired profit calculations?
Prime cost is the sum of direct labor and manufacturing overhead.
P0.83 per factory overhead
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