Cost Accounting and Control System

Cost Accounting and Control System

This course is intended to orient students to the accounting of costs of a manufacturing business. These covers overview of cost accounting, manufacturing cost accounting cycle, product costing systems, and variance analysis. This course also
introduces the students to managerial and cost accounting with special emphasis on applications to managerial decision making for strategic purposes. It also provides the student with the basic conceptual and technical skills needed to manage financial and strategic control problems facing entrepreneurs. Areas covered include cost behavior, understanding strategy in the context of managing financial decisions, and the nature of strategic planning and managerial control.




AnswersQuestions
Segment of organizationScope of information of managerial accounting
P7,500What amount of overhead is applied to Job #200?
P400Using the high-low method of separating mixed costs, what is the variable cost per unit?
CredibilityInstitute of Management Accountants' (IMA) overarching ethical principles include the following except one:
FALSEManagerial accounting is most concerned with addressing the needs of the company as a whole.
FALSEDirect labor is gaining importance in many manufacturing applications with respect to being a significant cost driver.
manufacturing overheadMaterials 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:
TRUEIn the value chain, planning and controlling activities in the organization is to be managed on a sequential order of the business functions.
TRUEActual Cost is a past cost or historical cost.
TRUECost accounting serves as a bridge between financial and managerial accounting.
TRUEBreak-even Point is the point of activity level where total revenue is equal to total cost.
Helps managers to make decisions to fulfill an organization's objectivesPurpose of informationof managerial accounting
4,625 unitsQ: What should be the actual unit sales to realize the desired profit?
FALSEIf 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.
FALSEIn applying the Standards of Ethical Professional Practice, the member will never encounter unethical issues or behavior.
FALSEWithin the relevant range, the two main cost behaviors are direct and indirect costs.
Value ChainIt is a cycle of processes in an organization
all manufacturing costs except direct labor and direct materialsManufacturing overhead includes:
FALSEPeriod Costs are also inventoriable costs.
FALSEFinancial accounting is most concerned with addressing the needs of individual departments of the company.
TRUEActivity 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.
budgeted, informative, adaptableIn comparing financial and management accounting, which of the following more accurately describes management accounting information?
P62,500To be able to answer the following questions, kindly refer to the problem below:
$1,000 underappliedMedia, 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:
TRUEProduct Costs can either be presented in the balance or income statement
break-even pointIt is the point of activity level where total revenue is equal to total cost
break-even pointIt is the point of activity level where total revenue is equal to total cost
FALSEBusinesses are established because owners are just after the break-even point.
FALSEThe company's normal operating range is referred to as the operating cycle.
Financial reports must be audited by an independent Certified Public Accountant (CPA)The need of independent examination and verification process for financial accounting
FALSEActivity-based costing systems have a tendency to distort product costs.
TRUEIMA members have a responsibility to comply with and uphold the standards of Competence, Confidentiality, Integrity, and Credibility
TRUEFinancial accounting adheres strict compliance to Generally Accepted Accounting Principles (GAAP)
Cost ObjectThese are items for which management accumulates costs
TRUEOpportunity costs are the potential benefit that is given up when one alternative is selected over another.
TRUEFinancial accounting is most concerned with meeting the needs of external users.
FALSEMany traditional costing systems trace manufacturing overhead to individual activities and require the development of numerous activity-costing rates.
FALSEThe emphasis of information of financial accounting is future oriented.
TRUEAn example of a customer-value-added activity is final painting and polishing of the product.
P 959A 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:
P225,000To be able to answer the following questions, kindly refer to the problem below:
P62,500What is the amount of income tax?
TRUEIt is in the planning phase where the problems and issues of the company are identified.
$1.00 per partHiTech 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.
$19.63Referring to the preceding problem, the cost of wages and salaries and other overhead that would be charged to each delivery is closest to:
FALSEProduct Costs are always presented in the income statement as part of cost of goods sold.
Financial reports do not need to be audited by an independent CPAThe need of independent examination and verification process for managerial accounting
FALSEPrime cost is the sum of direct labor and manufacturing overhead.
result in either underapplied or overapplied overhead that is closed to Cost of Goods Sold if it is immaterial in amountThe estimates used to calculate the predetermined overhead rate will virtually always:
TRUEThe cost of goods sold of a manufacturing company equals beginning finished goods inventory + cost of goods manufactured - ending finished goods inventory.
P138Based on the preceding number, compute the fixed cost element (to the nearest whole peso)
Conveys financial information to investors, banks, government regulatory agencies and other outside partiesPurpose of information of financial accounting
FALSEGenerally speaking, companies prefer doing business with customers who order small quantities rather than large quantities.
Line position onlyIt is the position in the organization structure wherein the personnel assigned are directly involved in the responsibility of achieving the goals of an organization
P250,000Which of the following is NOT a period cost?
TRUEConsumption ratios are useful in determining the existence of product-line diversity.
FALSENet Income is the amount available to cover fixed costs
external and internal usersThese are the primary users of financial information
Internal reporting system that provides product costing and other information used by managers in performing their functionsGenerally speaking, cost accounting can be defined as a
TRUEIf the resolution efforts of resolving ethical issues are not successful, the member may wish to consider disassociating from the organization.
Must conform with Generally Accepted Accounting Principles (GAAP)Overriding criteria of financial accounting
FALSEThe Graphic Approach is the widely used method in calculating the break-even point.
AccountingIt is a systematic process of providing financial information of an organization or unit that is intended to be useful in decision making
FALSEManagerial accounting adheres strict compliance to Generally Accepted Accounting Principles (GAAP)
TRUEIf direct labor is a good cost driver, increases in direct labor are matched with increases in manufacturing overhead.
P250,000To be able to answer the following questions, kindly refer to the problem below:
All of the following because service providers cannot use job-costing systemsWhich of the following would not likely be used by service providers to accumulate job costs?
Does not conform with GAAP as long as it is relevant to management decision making and complies with standards set by the managementOverriding criteria of managerial accounting
P7.00 per direct labor hourIf 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.
P6,300What amount of overhead is applied to Job #100?
TRUEManagerial accounting is most concerned with meeting the needs of internal users.
TRUEBudgeted Cost is the amount that is anticipated to be incurred in the future
manufacturing overhead costsThe primary difference between normalized and actual costing methods lies in the determination of a job's
cost of goods soldInventoriable costs that have become expenses can be found in:
Its generated information is not important to any companyWhich of the following statements about cost accounting is not true?
Overapplied by $35,000Tiffany 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:
P100To be able to answer the following questions, kindly refer to the problem below:
All of the followingOne major difference between financial and management accounting is that
EntireorganizationScope of information of financial accounting
TRUEPeriod Costs are treated as outright expenses
FALSEAt Break-even Point, there could either be a net income or net loss.
direct labor and direct materialsPrime costs consist of:
P375,000To be able to answer the following questions, kindly refer to the problem below:
Helps managers to make decisions to fulfill an organization's objectivesPurpose of information of managerial accounting
P28,920Assume that Jobs #100 and #300 are incomplete at the end of December. What is the balance in Work in Process Inventory at that time?
P1,156,250Q: How much should be the actual peso sales to realize the desired profit?
P25.48 per unitHow much is the factory overhead cost per unit for Computer under activity-based costing?
ControllingThis phase involves the process of gathering responses and feedbacks on the plan being executed through evaluation and monitoring
FALSEOne of the uses of financial accounting data is to determine product costs in order to help management in making decisions.
FALSEThe sum of all costs that composed manufacturing costs except direct materials is called manufacturing overhead.
P312,500Q: What is the amount of desired profit before tax?
TRUEExternal parties and management uses product cost information for investment decision and, planning and controlling
investment decision and, planning and controllingExternal parties and management uses product cost information for:
FALSEAs activity increases within the relevant range, fixed costs remain constant on a per unit basis.
TRUEProduct Costs are also inventoriable costs
fixed costA cost that remains constant in total but varies on a per-unit basis with changes in activity is called a
depreciation on the company's retail outletsAll of the following are examples of product costs except:
P0.98ABC Corporation has the following data for use of its machinery
Using the high-low method, compute the variable cost element
1,500 unitsTo be able to answer the following questions, kindly refer to the problem below:
TRUEContribution Margin is the amount remaining from sales revenue after deducting the variable expenses.
TRUEAll 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.
Debits: Accounts Receivable, Cost of Goods Sold; credits: Sales Revenue, Finished-Goods Inventory.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?
TRUEWhen 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.
increases constant remainsWhich of the following defines variable cost behavior?
FALSEExternal parties and management never use product cost information for investment decision and, planning and controlling.
FALSEIf 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.
FALSEThe emphasis of information of managerial accounting is past oriented.