Managerial Accounting - Ivy Software
Study online at https://quizlet.com/_i2bqjn
1. IMA: Institute of Management Accountants. IMA sponsors the CMA designation.
2. CMA: Certified Management Accountant. Must adhere to a strict code of ethics to practice management account-
ing.
3. How does managerial accounting differ from financial accounting?: Managerial
accounting deals with things that management is responsible for such as planning, controlling and decision making.
It typically involves documents prepared for INTERNAL purposes and has NO set of rules for report preparation.
4. Performance Report: shows the budget amounts for certain expenses, the actual amounts and the
variance between the two. This report is the most useful to management in exercising their control functions.
5. Flexible Budget: accounts for different revenue levels and the corresponding expenses associated with those
levels. It determines which expenses are variable and how the total variable expenses change according to different
revenue levels.
6. What does a manufacturing firm's balance sheet have that a merchandising
firm's does not?: On a manufacturing firm's balance sheet, inventory includes raw materials, work in progress
and finished goods. This also includes different types of costs: fixed, variable, semi-variable and semi-fixed.
7. Opportunity Cost: the profit lost when one alternative is selected over another. All reasonable alternatives
must be considered before making a decision.
8. Fixed cost: In total do not change over any production level; however, on a per unit basis fixed costs decrease
as production increases
9. Fixed cost: business expenses that are not dependent on the level of goods or services produced by the
business. They tend to be time-related, such as interest, utilities or rent being paid per month.
10. Interest is an example of a fixed or variable cost?: Fixed cost
11. Rent is an example of fixed or variable cost?: Fixed cost
12. Variable cost: Costs per unit do not change over different production levels but the total variable cost
increases as you produce more products.
13. Variable cost: Costs that change as the quantity of the good or service that a business produces changes.
Variable costs are the sum of marginal costs over all units produced.
14. Semi-variable cost: A cost which contains within it a fixed cost element and a variable cost element. Costs
are fixed for a set level of production or consumption, and become variable after this production level is exceeded.
15. Equation for Prime Costs: Direct Materials + Direct Labor
16. Prime Costs: costs directly incurred to create a product or service such as direct materials, piece rate pay,
service labor and commission. Prime costs do not include overhead costs. Prime costs are variable costs.
17. Prime costs to not include:: Overhead costs
, Managerial Accounting - Ivy Software
Study online at https://quizlet.com/_i2bqjn
18. Prime costs are variable or fixed costs?: Variable costs
19. Equation for Conversion Costs: Direct Labor + Manufacturing Overhead
20. Conversion Costs: Costs incurred during the transformation of raw materials inventory into finished goods.
Direct Labor and Overhead. Includes all three: Raw materials, direct labor and overhead.
21. Overhead: costs indirectly incurred - fixed costs. Costs that are used to create many products.
22. Costs for items like sandpaper or machine oil are an example of:: Overhead
23. List main portions of the Cost of Goods Manufactured Statement: Direct Materials
Direct Labor
Overhead
= Total Manufacturing costs
Plus: Beginning WIP inventory
Less: Ending WIP inventory
= Cost of Goods Manufactured
24. inventoriable costs: Direct materials + direct labor + overhead
25. Inventoriable costs are also known as:: A. variable costs.
B. conversion costs.
C. product costs.****
D. fixed costs.
26. Period costs include: all selling costs and administrative costs
27. Applied Overhead: overhead calculated based on a projected production level; the quantity you hope to
produce. In reality, the quantity will be +/- what was projected. If less is made, the overhead calculation is underapplied,
if more are made, it has been overapplied.
28. Applied Overhead Equation: predetermined overhead rate x actual activity level
29. overhead application rate: A rate used to apply manufacturing overhead to output; estimated factory
overhead for a period divided by the estimated application base
30. Process Costing: A costing method used when essentially homogeneous products are produced on a
continuous basis, instead of one unit at a time. Requires the use of equivalent units.
31. Job Order Costing: A costing method used when costs such as direct materials, direct labor or overhead
are added to the product as it moves through the process, one at a time. Does NOT require the use of equivalent units.
32. Which requires the use of equivalent units: Process or Job Order Costing?: -
Process Costing
, Managerial Accounting - Ivy Software
Study online at https://quizlet.com/_i2bqjn
33. Equivalent Unit: The amount of work done by a manufacturer on units of output that are partially completed.
The fully completed units and the partially completed units are expressed in terms of fully completed units.
34. Profit: = revenue - expenses
35. Cost-Volume-Profit equation for Profit: Profit = (price per unit X * # units sold) - (variable cost
per unit X * units sold) - fixed costs
36. Variable expenses equation: Quantity Sold (Q) * Variable Expenses (VE) per unit.
VE = VE per unit X Q sold = V x Q
37. Variable Costing: A costing method that isolates the variable costs of manufacturing (including selling
& admin) from the fixed costs (manufacturing & admin) resulting in a contribution margin type statement. Not in
accordance with GAAP but may be used internally by management.
38. Contribution Margin Equation: Sales Revenue - Variable Costs
39. Contribution Margin: Sales revenue less variable costs; shows the contribution made by the sale revenue
less the variable costs to cover the fix costs plus profit.
40. contribution margin per unit: sales price per unit - variable cost per unit
41. Contribution margin equation at breakeven: sales - variable costs = fixed costs
42. Breakeven: Where the priceline slope intersects the combination of fixed and variable costs; Here, sales
revenue = costs. There is no profit.
43. Absorption Costing: FULL costing; a costing method done in accordance with GAAP. The fixed cost
element of factory overhead inventoried and later when the products are sold, becomes a part of the COGS - instead
of being COGS when production exceeds sales. Inventories a piece of the fixed inventory overhead in each unit.
44. True/False: If a company has no beginning and ending inventories, produces
and sells the same amount of units, the net income will be the same using
variable or absorption costing methods.: True
45. True/False: Variable costing differs from absorption costing in that absorp-
tion costing does not include fixed inventory overhead in inventory.: False: variable
costing does not include fixed inventory overhead in inventory
46. True/False: If units produced equal units sold, net income is the same: True
47. True/False: If units produced > units sold, net income is less under absorp-
tion costing: False: if units produced > units sold, net income is greater under absorption costing
48. True/False: if units produced < units sold, net income is less under absorption
costing: True
Study online at https://quizlet.com/_i2bqjn
1. IMA: Institute of Management Accountants. IMA sponsors the CMA designation.
2. CMA: Certified Management Accountant. Must adhere to a strict code of ethics to practice management account-
ing.
3. How does managerial accounting differ from financial accounting?: Managerial
accounting deals with things that management is responsible for such as planning, controlling and decision making.
It typically involves documents prepared for INTERNAL purposes and has NO set of rules for report preparation.
4. Performance Report: shows the budget amounts for certain expenses, the actual amounts and the
variance between the two. This report is the most useful to management in exercising their control functions.
5. Flexible Budget: accounts for different revenue levels and the corresponding expenses associated with those
levels. It determines which expenses are variable and how the total variable expenses change according to different
revenue levels.
6. What does a manufacturing firm's balance sheet have that a merchandising
firm's does not?: On a manufacturing firm's balance sheet, inventory includes raw materials, work in progress
and finished goods. This also includes different types of costs: fixed, variable, semi-variable and semi-fixed.
7. Opportunity Cost: the profit lost when one alternative is selected over another. All reasonable alternatives
must be considered before making a decision.
8. Fixed cost: In total do not change over any production level; however, on a per unit basis fixed costs decrease
as production increases
9. Fixed cost: business expenses that are not dependent on the level of goods or services produced by the
business. They tend to be time-related, such as interest, utilities or rent being paid per month.
10. Interest is an example of a fixed or variable cost?: Fixed cost
11. Rent is an example of fixed or variable cost?: Fixed cost
12. Variable cost: Costs per unit do not change over different production levels but the total variable cost
increases as you produce more products.
13. Variable cost: Costs that change as the quantity of the good or service that a business produces changes.
Variable costs are the sum of marginal costs over all units produced.
14. Semi-variable cost: A cost which contains within it a fixed cost element and a variable cost element. Costs
are fixed for a set level of production or consumption, and become variable after this production level is exceeded.
15. Equation for Prime Costs: Direct Materials + Direct Labor
16. Prime Costs: costs directly incurred to create a product or service such as direct materials, piece rate pay,
service labor and commission. Prime costs do not include overhead costs. Prime costs are variable costs.
17. Prime costs to not include:: Overhead costs
, Managerial Accounting - Ivy Software
Study online at https://quizlet.com/_i2bqjn
18. Prime costs are variable or fixed costs?: Variable costs
19. Equation for Conversion Costs: Direct Labor + Manufacturing Overhead
20. Conversion Costs: Costs incurred during the transformation of raw materials inventory into finished goods.
Direct Labor and Overhead. Includes all three: Raw materials, direct labor and overhead.
21. Overhead: costs indirectly incurred - fixed costs. Costs that are used to create many products.
22. Costs for items like sandpaper or machine oil are an example of:: Overhead
23. List main portions of the Cost of Goods Manufactured Statement: Direct Materials
Direct Labor
Overhead
= Total Manufacturing costs
Plus: Beginning WIP inventory
Less: Ending WIP inventory
= Cost of Goods Manufactured
24. inventoriable costs: Direct materials + direct labor + overhead
25. Inventoriable costs are also known as:: A. variable costs.
B. conversion costs.
C. product costs.****
D. fixed costs.
26. Period costs include: all selling costs and administrative costs
27. Applied Overhead: overhead calculated based on a projected production level; the quantity you hope to
produce. In reality, the quantity will be +/- what was projected. If less is made, the overhead calculation is underapplied,
if more are made, it has been overapplied.
28. Applied Overhead Equation: predetermined overhead rate x actual activity level
29. overhead application rate: A rate used to apply manufacturing overhead to output; estimated factory
overhead for a period divided by the estimated application base
30. Process Costing: A costing method used when essentially homogeneous products are produced on a
continuous basis, instead of one unit at a time. Requires the use of equivalent units.
31. Job Order Costing: A costing method used when costs such as direct materials, direct labor or overhead
are added to the product as it moves through the process, one at a time. Does NOT require the use of equivalent units.
32. Which requires the use of equivalent units: Process or Job Order Costing?: -
Process Costing
, Managerial Accounting - Ivy Software
Study online at https://quizlet.com/_i2bqjn
33. Equivalent Unit: The amount of work done by a manufacturer on units of output that are partially completed.
The fully completed units and the partially completed units are expressed in terms of fully completed units.
34. Profit: = revenue - expenses
35. Cost-Volume-Profit equation for Profit: Profit = (price per unit X * # units sold) - (variable cost
per unit X * units sold) - fixed costs
36. Variable expenses equation: Quantity Sold (Q) * Variable Expenses (VE) per unit.
VE = VE per unit X Q sold = V x Q
37. Variable Costing: A costing method that isolates the variable costs of manufacturing (including selling
& admin) from the fixed costs (manufacturing & admin) resulting in a contribution margin type statement. Not in
accordance with GAAP but may be used internally by management.
38. Contribution Margin Equation: Sales Revenue - Variable Costs
39. Contribution Margin: Sales revenue less variable costs; shows the contribution made by the sale revenue
less the variable costs to cover the fix costs plus profit.
40. contribution margin per unit: sales price per unit - variable cost per unit
41. Contribution margin equation at breakeven: sales - variable costs = fixed costs
42. Breakeven: Where the priceline slope intersects the combination of fixed and variable costs; Here, sales
revenue = costs. There is no profit.
43. Absorption Costing: FULL costing; a costing method done in accordance with GAAP. The fixed cost
element of factory overhead inventoried and later when the products are sold, becomes a part of the COGS - instead
of being COGS when production exceeds sales. Inventories a piece of the fixed inventory overhead in each unit.
44. True/False: If a company has no beginning and ending inventories, produces
and sells the same amount of units, the net income will be the same using
variable or absorption costing methods.: True
45. True/False: Variable costing differs from absorption costing in that absorp-
tion costing does not include fixed inventory overhead in inventory.: False: variable
costing does not include fixed inventory overhead in inventory
46. True/False: If units produced equal units sold, net income is the same: True
47. True/False: If units produced > units sold, net income is less under absorp-
tion costing: False: if units produced > units sold, net income is greater under absorption costing
48. True/False: if units produced < units sold, net income is less under absorption
costing: True
