Chapter 13—Managerial Accounting Concepts and Decision-
Making Support Key
1. Management accounting information is only used by manufacturing organizations.
2. The managerial activity of monitoring a plan’s implementation and taking corrective action as needed is
referred to as decision making.
3. The process of choosing among competing alternatives is decision making.
4. Managerial accounting information isnot important for not-for-profit organizations.
5. Managerial accounting is designed primarily for internal users.
6. Managerial accounting has its emphasis on the future.
7. Financial accounting is governed by generally accepted accounting principles.
8. The value chain is the set of activities required to design, develop, produce, market, and deliver products and
service to customers.
9. Activity-based costing is a less detailed approach to determining the cost of goods and services than
traditional cost accounting.
10. Excellent customer service is an example of a value-added activity.
11. It is important to assign indirect costs to cost objects.
12. Price must be greater than cost in order for the firm to generate revenue.
13. Accumulating costs is the way that costs are measured and recorded.
14. Assigning costs involves the way that a cost is linked to some cost object.
15. Assigning costs tells the accountant who spent the money.
16. A cost object is any item such as products, customers, departments, regions, and so on, for which costs are
measured and assigned.
17. Costs are directly, not indirectly, associated with cost objects.
18. Direct costs are those costs that cannot be easily and accurately traced to a cost object.
19. Indirect costs are costs that are not easily and accurately traced to a cost object.
20. Allocation means that an indirect cost is assigned to a cost object using a reasonable and convenient
method.
21. A variable cost is one that does not increase in total as output increases and does not decrease in total as
output decreases.
22. A fixed cost is a cost that does not increase in total as output increases and does not decrease in total as
output decreases.
23. An opportunity cost is the benefit given up or sacrificed when one alternative is chosen over another.
24. Cost is a dollar measure of the resources used to achieve a given benefit.
25. A cost object is something for which a company wants to know the cost.
26. The revenue per unit is called cost.
27. As costs are used up in the production of revenues, they are said to expire. Expired costs are called
expenses.
28. Costs are incurred to produce future benefits.
29. Expired costs are called assets.
30. Reducing the cost required to achieve a given benefit means that a company is becoming less efficient.
31. Costs can be assigned to cost objects in only one way.
32. Property taxes on a factory building would normally be classified as a fixed cost.
33. Glue used in the manufacture of cabinets would be an example of a fixed cost.
34. Industries that provide intangible services do not normally have direct contact with their customers.
35. Research and development costs would be classified as product cost.
36. Product costs include direct materials, direct labor, and selling costs.
37. All product costs other than direct materials and indirect labor are called overhead.
38. Direct materials can be directly traced to the goods or services being produced.
39. Any costs associated with storing, selling, and delivering the product are classified as product costs.
40. Prime cost is the sum of direct materials cost and direct labor cost.
41. Product costs are carried in inventory until the goods are finished.
42. Marketing costs would be classified as period costs.
43. The cost of janitorial services for a factory building would be classified as indirect labor.
44. Period costs are all costs that are not product costs, such as office supplies.
45. Employees who convert direct materials into a product or who provide a service to customers are classified
as indirect labor.
46. All manufacturing costs are classified as overhead.
47. For external reporting purposes, costs must be classified into only three categories.
48. Cost of goods manufactured represents the cost of direct materials, direct labor, and overhead incurred
during the current accounting period.
49. Cost of goods sold is the total product cost of the units sold during a period.
50. Sales revenue equals the product cost per unit times the number of units sold.
51. Gross margin is the difference between sales revenue and cost of goods sold.
52. The belief that each member of a group bears no responsibility for the well-being of other members is a
common principle underlying all ethical systems.
53. The detailed formulation of action to achieve a particular end is the management activity
called_____________.
54. ______________________________ is the provision of accounting information for a company’s internal
users.
55. The process of choosing among competing alternatives is called ________________________.
56. The managerial activity of monitoring a plan’s implementation and taking corrective action as needed is
referred to as ______________.
57. The managerial accounting system produces information for __________ users.
58. ____________________ is primarily concerned with producing information for external users.
59. Managerial accounting strongly emphasizes providing information about _________________.
60. The _____________________ is the set of activities required to design, develop, produce, market and
deliver products and services as well as provide support services to customers.
61. __________________________ organizes costs according to the value chain and collects both financial and
nonfinancial information.
62. __________________________________________ is a management philosophy in which manufacturers
strive to create an environment that will enable workers to manufacture perfect (zero-defect) products.
63. _____________________________ is the continual search for ways to increase the overall efficiency and
productivity of activities by reducing waste, increasing quality, and managing costs.
64. The ____________________ is responsible for the finance function.
65. In June 2002, Congress passed the____________________________________ in response to financial
scandals such as Enron.
66. Expired costs are called ____________.
67. ______________is the amount of cash or cash equivalent sacrificed for goods and/or services that are
expected to bring a current or future benefit to the organization.
68. _____________________ is the way that a cost is linked to some cost object.
69. A __________________ is any item such as a product, customer, department, project, geographic region,
plan and so on, for which costs are measured and assigned.
70. Costs that can be easily and accurately traced to a cost object are called __________.
71. The process of assigning an indirect cost to a cost object by using a reasonable and convenient method is
called _____________.
72. A(n)_________________ is the benefit given up or sacrificed when one alternative is chosen over another.
73. A(n) ________________ is a cost that does not increase in total as output increases and does not decrease in
total as output decreases.
74. Organizations that produce products are called _______________________.
75. ________________ are those costs, both direct and indirect, of producing a product in a manufacturing firm
or of acquiring a product in a merchandising firm and preparing it for sale.
76. Materials that become part of a product usually are classified as _______________.
77. Insurance coverage, medical care, and accounting are examples of _________________ performed for
customers.
78. _________________ equals the sum of direct materials, direct labor, and manufacturing overhead.
79. All product costs other than direct materials and direct labor are put into a category called
_________________________.
80. ______________________ is the sum of direct labor cost and manufacturing overhead cost.
81. ________________ and _________________ costs are considered period costs.
82. Employees who convert direct materials into a product are classified as _____________.
83. ___________________ is the cost of the partially completed goods that are still on the factory floor at the
end of a time period.
84. The difference between sales revenue and cost of goods sold is known as the ______________.
85. The ____________________________ represents that total product cost of goods completed during the
current period and transferred to finished goods inventory.
86. ________________________ involves choosing actions that are right, proper, and just.
87. To promote ethical behavior by managers and employees, organizations commonly establish
a__________________________.
88. Which of the following is not an objective of managerial accounting?
89. Which of the following is an example of the management activity referred to as planning?
90. Developing a company strategy for responding to anticipated new markets is an example of
91. Investigating production variances and adjusting the production process is an example of
92. The primary objective of managerial accounting is
93. Managerial accounting
94. Managerial accounting reports are prepared
95. Financial accounting
96. Which of the following would not be an example of a value-added activity?
97. Total quality management emphasizes
98. Activity-based costing
99. The controller of an organization participates in
100. Expired costs are called
101. Assigning costs to cost objects
102. An indirect cost
103. A variable cost in total
104. Cost is
105. Price is not
106. Assigning costs
107. An opportunity cost is
108. Non-manufacturing costs include
109. Which of the following is an example of an intangible product?
110. Which of the following is an example of a tangible product?
111. Costs are subdivided into what two major functional categories?
112. Product costs
113. Which of the following would not be a period cost?
114. Which of the following would be an example of a direct materials cost?
115. Product costs consist of
116. Which of the following is not an example of a direct materials cost?
117. Materials in the raw materials account do not become direct materials
118. Which of the following is an example of direct labor?
119. Direct labor is a(n)
120. Overhead includes
121. Which of the following would not be included in overhead?
122. Indirect labor would include
123. The unit cost
124. Prime cost is
125. Conversion cost is the sum of
126. Period costs
127. Which of the following is an example of a period cost?
128. Product costs are expensed
129. Rancor Inc. had a per-unit conversion cost of $2.50 during April and incurred direct materials cost of
$100,000, direct labor costs of $75,000, and overhead costs of $45,000 during the month. How many units did
they manufacture during the month?
130. Lakeland Inc. manufactured 5,000 units during the month of March. They incurred direct materials costs of
$100,000 and overhead cost of $40,000. If their per-unit prime cost was $26.00 per unit how much direct labor
cost did they incur during March?
131. During the month of January, Enterprise Inc. had total manufacturing costs of $110,000. They incurred
$40,000 of direct labor costs and $30,000 of overhead cost during the month. If the materials inventory on
January 1 was $3,000 less that the materials inventory on January 31, what was the cost of materials purchased
during the month?
132. Production costs that are not attached to units that are sold are reported as:
133. Information from the records of Cain Corporation for December 2011 is as follows:
Sales
Selling and administrative expenses
Direct materials used
Direct labor
Overhead
Dec. 31,
2011
Direct materials
$42,000
Work in process
84,000
Finished goods
57,000
134. Information from the records of Cain Corporation for December 2011 is as follows:
Sales
Selling and administrative expenses
Direct materials used
Direct labor
Overhead
Dec. 31,
2011
Direct materials
$42,000
Work in process
84,000
Finished goods
57,000
The prime costs are:
135. Figure 13-2
Concam Inc. manufactures television sets. Last month direct materials (electronic components, etc.) costing
$500,000 were put into production. Direct labor of $800,000 was incurred, overhead equaled $450,000, and
selling and administrative costs totaled $360,000. The company manufactured 8,000 television sets during the
month. Assume that there were no beginning or ending work in process balances.
Refer to Figure 13-2. The per-unit conversion cost was:
136. Figure 13-2
Concam Inc. manufactures television sets. Last month direct materials (electronic components, etc.) costing
$500,000 were put into production. Direct labor of $800,000 was incurred, overhead equaled $450,000, and
selling and administrative costs totaled $360,000. The company manufactured 8,000 television sets during the
month. Assume that there were no beginning or ending work in process balances.
Refer to Figure 13-2. The total product costs for last month were:
137. Figure 13-2
Concam Inc. manufactures television sets. Last month direct materials (electronic components, etc.) costing
$500,000 were put into production. Direct labor of $800,000 was incurred, overhead equaled $450,000, and
selling and administrative costs totaled $360,000. The company manufactured 8,000 television sets during the
month. Assume that there were no beginning or ending work in process balances.
Refer to Figure 13-2. The total per unit prime cost was:
138. Figure 13-2
Concam Inc. manufactures television sets. Last month direct materials (electronic components, etc.) costing
$500,000 were put into production. Direct labor of $800,000 was incurred, overhead equaled $450,000, and
selling and administrative costs totaled $360,000. The company manufactured 8,000 television sets during the
month. Assume that there were no beginning or ending work in process balances.
Refer to Figure 13-2. What was the amount of cost of goods manufactured last month?
139. Cost of goods manufactured equals
140. Cost of goods manufactured equals
141. The cost of the partially completed goods at the end of the period would be
142. Cost of goods sold