Cost Accounting Chapter 1

Front 1

Accounting System

Back 1

is the major quantitative information system in almost every organizations.

Front 2

True

Back 2

t/f

Accounting system provides information for:

Internal Reporting to managers, for use in (1) planning and controlling operations. (2) formulating plans and policies and (3) External Reporting to stockholders, government and other outside parties.

Front 3

Management Accounting

Back 3

internal reporting is known as?

Front 4

Financial Accounting

Back 4

External Reporting is known as ____________ because it is principally concerned with the historical and stewardship aspects of accounting.

Front 5

Cost Accounting

Back 5

______________'s third purpose deals with costing of products for inventory valuation and income determination.

It therefore fulfill demands of outsiders and those of management for such information.

Front 6

True

Back 6

t/f

Cost Accounting is management accounting, plus a small part of financial accounting to the extent that its product costing function satisfies the needs of external reporting.

Cost Accounting is one of the most valuable management tools to control operations.

Front 7

Cost Accounting

Back 7

is a system that records, summarizes, analyzes, and interprets the details of the costs of materials, labor, and overhead necessary to produce and sell an article.

refers to the gathering and providing of information for decision needs of all sorts, ranging from the management of recurring information to the making of strategic decision and the formulation of major orhanizational policies.

refers to recording, classifying, and reporting all costs aspects of company performance during a particular period of time.

Front 8

Budget

Back 8

is the overall financial plan for future activities.

Front 9

Standard Cost procedures

Back 9

are helpful in evaluating the results of the operations.

Front 10

Unit Costs

Back 10

are projected on the basis of standard conditions. These standards are often based on the past experience of the firm or on statistics from the industry.

Front 11

Manufacturing

Back 11

is the process of converting materials into finished goods by using labor and incurring other costs, generally called manufacturing overhead.

Front 12

Overhead Costs

Back 12

include utilities, supplies, taxes, insurance, and depreciation.

Front 13

True

Back 13

t/f

one of the function of a cost accounting system is to clasify and record all costs according to category.

Front 14

Direct Materials

Direct Labor

Manufacturing Overhead

Back 14

the 3 major manufacturing cost classifications are:

and is a basis of accounting procedures.

Front 15

Direct Materials

Back 15

also called raw materials, are those materials used in the manufacturing process that become a significant part of the finished goods.

Front 16

Direct Labor

Back 16

The employees who work directly with the raw materials in converting them into finished goods represents ___________.

Front 17

Manufacturing Overhead

Back 17

All costs incurred in the factory that cannot be considered direct materials or direct labor are classified as ___________.

also called as factory overhead, manufacturing expenses or factory burden.

Front 18

indirect materials

indirect labor

other manufacturing overhead

Back 18

Manufacturing Overhead is subdivided into 3 categories:

Front 19

Indirect Materials

Back 19

materials that are used in small amounts in the manufacturing process or that cannot easily be traced to specific product are called?

example: glue or thread.

Front 20

Factory Supplies or Operating Supplies

Back 20

another type of indirect materials is called __________ is consists of items that are used in the manufacturing process but do not become a part of the finished goods.

example: cleaning supplies in the factory.

Front 21

Indirect Labor

Back 21

the wages of factory personnel who do not work directly on raw materials are called ___________.

example: salaries of janitor, etc.

Front 22

Other Manufacturing Overhead

Back 22

includes such costs as payroll taxes on factory wages, rent, depreciation, taxes, and insurance on factory buildings and machinery; heat, light, and power, repairs and maintenance of machinery and equipment.

is a growing part of the total cost of production because of the increasing use of labor-saving equipment such as computers and robots in many manufacturing process.

Front 23

Prime Cost

Back 23

the sum of direct materials and direct labor is ___________.

reflects the primary sources of costs for units of production.

Front 24

Conversion Cost

Back 24

the total of direct labor and manufacturing overhead is called ___________.

indicates the cost required to convert the raw materials into finished products.

Front 25

Raw Materials Inventory

Work in Process Inventory

Finished Goods Inventory

Back 25

manufacturing company has 3 distinct inventory accounts called:

Front 26

Raw Materials Inventory

Back 26

reflects the cost of raw materials and factory supplies that will be used in the manufacturing process.

Front 27

Work in Process Inventory account

Back 27

reflects the cost of raw materials, direct labor and manufacturing overhead of goods on which manufacturing has begun but has not been completed at the end of the fiscal period.

Front 28

Finished Goods Inventory account

Back 28

reflect the cost of goods that have been completed and are ready for use.

This account corresponds to the Merchandise Inventory account of a merchandising business.

Front 29

True

Back 29

t/f

The basic objective of cost accounting is the determination or accumulation of a product's cost for inventory valuation and income determination.

Front 30

Actual Cost System (Historical)

Back 30

Systems of Cost Accumulation:

Front 31

Actual Cost System (Historical)

Back 31

Under this system, direct materials, direct labor and factory overhead costs are determined as they occur simultaneously with the manufacturing operation but the total of these costs is known only after the operation has been completed.

collects the actual amounts of direct materials, direct labor and manufacturing overhead that are incurred for each product.

Front 32

Standard Costs System (Predetermined)

Back 32

under this sytem, costs are determined in advance from analysis and forecasts made before the actual production begins.

under this system, standard unit costs are computed for direct materials, direct labor and factory overhead; these amounts, rather than the actual cost, are carried to FG Inventory.

Front 33

Normal Cost System

Back 33

This system is a combination of the actual cost system and the standard cost system.

This system accumulates only the actual amounts of direct materials and direct labor costs. Factory Overhead are accumulated on the basis of a predetermined rate.