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Details

managerial accounting
final exam
31
Accounting
Undergraduate 2
12/10/2012

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Cards

Term
the method of assigning costs is essentially the same in a job order and a process cost system
Definition
FALSE
Term
the method of accumulating cost is essentially the same in a job order and a process cost system
Definition
TRUE
Term
Machine hours are widely used in allocating manufacturing overhead costs in a process cost system
Definition
TRUE
Term
Activity-based costing allocates overhead to multiple cost pools and assigns the cost pools to products using cost drivers
Definition
TRUE
Term
A cost driver does not generally have a direct cause-effect relationship with the resources consumed
Definition
FALSE
Term
To achieve accurate costing, a high degree of correlation must exist between the cost driver and the actual consumption of the activity cost pool
Definition
TRUE
Term
The first step in activity-based costing is to assign overhead costs to products, using cost drivers
Definition
FALSE
Term
ABC eliminates all arbitrary cost allocations
Definition
FALSE
Term
In incremental analysis, total variable costs will always change under alternative courses of action, and total fixed cost will always remain constant
Definition
FALSE
Term
A special one-time order should never be accepted if the unit sales price is less than the unit variable cost
Definition
TRUE
Term
A company should never accept an order for its products at less than its regular sales price
Definition
FALSE
Term
If a company is operating at less than capacity, the incremental costs of a special order will likely include variable manufacturing costs, but not fixed costs
Definition
TRUE
Term
An opportunity cost is the potential benefit obtained by using resources in an alternative course of action
Definition
TRUE
Term
The basic decision rule in a sell or process or process further decision is: process further if the incremental revenue from processing exceeds the incremental processing costs
Definition
TRUE
Term
In a decision to retain or replace old equipment, the salvage value of the old equipment is relevant in incremental analysis
Definition
TRUE
Term
If an unprofitable product is eliminated, fixed expenses allocated to the eliminated segment will likely be eliminated
Definition
FALSE
Term
A variable cost remains constant per unit at various levels of activity
Definition
TRUE
Term
A fixed cost remains constant in total and on per unit basis at various levels of activity
Definition
FALSE
Term
Changes in the level of activity will cause unit variable and unit fixed costs to change in opposite directions
Definition
FALSE
Term
For CVP analysis, both variable and fixed costs are assumed to have a linear relationship within the relevant range of activity
Definition
TRUE
Term
Contribution margin is the amount of revenues remaining after deducting cost of goods sold
Definition
FALSE
Term
The margin of safety tells a company how far sales can drop before it will be operating at a loss
Definition
TRUE
Term
Sales mix is not important to managers when different products have substantially different contribution margins
Definition
FALSE
Term
The weighted-average contribution margin of all the products is computed when determining the break-even sales for a multi-product firm
Definition
TRUE
Term
The break-even point in dollars is variable costs divided by the weighted-average contribution margin ratio
Definition
FALSE
Term
When a company has limited resources to manufacture products, it should manufacture those products which have the highest contribution margin per unit at the product level
Definition
FALSE
Term
Cost structure refers to the relative proportion of fixed versus variable costs that a company incurs
Definition
TRUE
Term
An assumption of CVP analysis is that all costs can be classified as either variable or fixed
Definition
TRUE
Term
The trend in most companies is to have more variable costs and fewer fixed costs
Definition
FALSE
Term
The degree of operating leverage provides a measure of a company's earnings volatility
Definition
TRUE
Term
Variable costing is the approach used for external reporting under generally accepted accounting principles
Definition
FALSE
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