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KSU / Accounting / ACCT 23021 / Financial accounting system is an online integrated, what?

Financial accounting system is an online integrated, what?

Financial accounting system is an online integrated, what?

Description

School: Kent State University
Department: Accounting
Course: Introduction to Managerial Accounting
Professor: John rose
Term: Fall 2016
Tags:
Cost: 50
Name: Exam 1: Study Guide
Description: Taken from class notes, examples in class, homework assignments, etc. Best of luck on the exam!
Uploaded: 09/22/2017
19 Pages 54 Views 7 Unlocks
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EXAM 1 Study Guide/Review Sheet


Financial accounting system is an online integrated, what?



Date of Exam: Tuesday, September 26th- Thursday September 28th Things to remember:

I am a student going through the class just as you are, so this Guide is information  that I have gathered without knowing what the exam is going to look like. I cannot  guarantee that everything on this review guide will or will not be on the exam, but I  can promise that I have tried my best. Note that you are permitted one sheet of  paper (8.5” x11”) front and back for the exam. All information can be found in the  class syllabus and I recommend reviewing this prior to the exam. All in all, I hope  that you find this review helpful! If you have any questions, feel free to reach out to  me by email at: kjohn190@kent.edu We also discuss several other topics like What are the characteristics of a good theory?

Best of Luck,


What is the meaning of confidentiality?



Kaitlyn

Chapter 1 (24 Points total):

∙ 9 Multiple Choice Questions (18 Points)

∙ 1 Exercise (6 Points)

Vocabulary to know:

∙ CEO: The person hired by the board of directors to run the company daily ∙ CFO: The person responsible for all the company’s financial needs ∙ Controlling: One of the managements primary responsibilities, they evaluate  

the results of the business operations against the plan and adjust to keep  

the company moving forward towards their goals

∙ Controller: The position responsible for general financial accounting,  


Who calculates the cost of a product?



managerial accounting and reporting taxes If you want to learn more check out What does silicon-oxygen tetrahedron like?

∙ Critical thinking: Improving the quality of thought through skillfully  

analyzing, assessing, and reconstructing the process

∙ Directing: One of managements primary responsibilities; running the  

company on a day to day basis

∙ Economic: Justified in terms of profitability  

∙ Environmental: The ability to meet the needs if the present while not  

compromising the ability of future generations to meet their own needs  ∙ ERP: Enterprise resource planning, software systems that can integrate all a  

company’s worldwide functions, departments and data onto a single system ∙ Financial accounting system: An online integrated financial accounting  

system that records, monitors and maintains all accounting and financial  transactions of the business

∙ Integrated report: A process resulting in a report that describes how a  company is creating value over time using financial, manufactured,  

intellectual, human, social, and natural capital  

∙ Internal audit: The corporate unction charged with assessing the  effectiveness of the company’s internal controls and risk management  If you want to learn more check out Are psychological traits innate or do we acquire them?

policies  

∙ Planning: One of managements primary responsibilities: setting goals and  

objectives for the company and deciding how best to achieve them ∙ SOX: A congressional act that enhances internal control and financial  If you want to learn more check out What happened to scipio africanus?

reporting requirements and establishes new regulatory requirements for  

publicly traded companies and their independent auditors

∙ Six Sigma: The goal of producing near perfection, with less than 3.4 defects  We also discuss several other topics like How do scientists use the word “theory” compared to the common use?

per million opportunities  

∙ Social: The ability of a system to endure without giving way or use resources

so that they are not depleted or permanently damaged  

∙ Sustainability: The ability of a system to endure without giving way or use  resources so that they are not depleted or permanently damaged. The ability to meet the needs if the present while not compromising the ability of future  

generations to meet their own needs

∙ Treasure: The position responsible for raising the firm’s capital and investing  funds  

Can differentiate the difference between Managerial Accounting and Financial  Accounting, found in chapter 1 notes.

IMA Ethical Standards:

∙ Competence:

o Having the expertise/knowledge/skills/qualifications to perform job  

duties

o Maintaining your skills through education/seminars

o Performing your job duties in accordance with laws, regulations and  

technical standards

o Providing decision support that is accurate

∙ Integrity:

o Abstaining from engaging in or supporting any activity that would  Don't forget about the age old question of What is the function of the asthenosphere?

discredit the profession

o Reporting conflicts of interest

o Ex) cheating on expense report, stealing supplies, accepting bribes ∙ Credibility  

o Communicating info fairly and objectively  

o Basically, is your work product credible?

∙ Confidentiality:

o Keeping info confidential unless it is legally required or authorized to  

disclose

o Inform relevant parties of appropriate use of the confidential info o The need to monitor subordinates’ activities to ensure they are  

complying

o One must refrain from using the confidential info for unethical/illegal  

advantage

o Ex) Knowing a company is going to lower stock worth and selling it  

before it happens

∙ Know the cross Functional Team  

Board of

Directors 

Chief

Executive

Officer (CEO 

Chief

Operating

Vice President of various

Chief

Financial

Officer

Treasure

Audit Committee

Controller

Internal Audit

Practice Questions for Chapter 1:

1. Britz Industry manufactures lamp shades. The CEO, Lucy Abbott, is trying to  decide if she should adopt a new lean thinking model. She suspects that  

adopting this new model would save the company $102,000 in warehousing  expenses and $35,200 in spoilage costs. Adopting lean production will require several one-time up-front expenditures: $14,500 for employee training,  $95,000 to streamline the production process of the plant, and $7,500 to  identify suppliers that will guarantee zero defects and on-time delivery.

Question 1: What are the total Costs for adopting lean production? Question 2: What are the total benefits of adopting lean production? Total benefits are:

Question 3: Should the company adopt lean production? Why or why not?

The company should/should not adopt lean production because the  expected benefits are greater than/less than the costs.

2. Who checks to make sure that company risk management procedures are  being followed?

3. Who Issues company stock?

4. Who calculates the cost of a product?

For the following clarify if it is the responsibility of Planning, Directing, and/or  Controlling

5. Management decides to increase sales growth by 25% next year 6. Management reviews hourly sales reports to determine the level of staffing  needed for the customer service desk

7. Management analyzes the impact of a recent advertising campaign by  comparing budgeted sales to actual.

For the following declare if it is financial accounting or managerial accounting

8. Reports tend to be prepared for parts of the organization rather than the  whole

9. Focus is on the future

10.Primary users are external

11.Focus is on the past

12.Reports are prepared quarterly and annually

Chapter 2 (24 points total):

∙ 6 Multiple choice questions (12 points)

∙ 2 Exercises (12 Points)

Things to Know:

∙ Most Common Business Sectors

o Service Companies

 No products, product is the persons time

 Progressive Insurance, Bank of America, Southwest airlines ∙ EX) heath care, insurance, banking, consulting

 Largest sector of the U.S. Economy

 Generally, no inventory

o Merchandising companies

 Resell tangible products bought from manufacturers and suppliers  Walmart, best buy, Amazon.com, Home depot, etc.

 Retailer vs. Wholesale: middle man, buy it- jack up the price and  sell

 Carry a substantial amount of inventory- Think of Walmart, they  have food, clothing, office supplies, etc.

o Manufacturing companies

 Use labor, plant, and equipment to convert raw materials into  finished products

 EX) Toyota, proctor and gamble, Kellogg’s, Toyota, Apple

 3 types of inventory

∙ Raw materials- Used in making a product

o Desk ex) wood, bolts, nails, etc.

∙ Work in process- Making the product- Not finished

o Raw materials/direct materials

o Labor force/direct labor

o Manufacturing plant/ overhead (Utilities, rent, etc.)

∙ Finished goods

o Finished product, but it is not yet sold

∙ Value Chain:

o Research and development

o Design

o Production/Purchases

o Marketing

o Distribution

o Customer Service

∙ Inventoriable Product Cost: Production/Purchases

∙ Period Costs: Other 5 on the value chain

∙ Treatment of Costs:

o Where does it belong on value chain?

o If its Purchases then is it DM, DL, MOH

o Treatment:

 Production/purchases-inventory until sold, when sold becomes cost  of goods sold

 Five other blocks- Expenses immediately as period costs

∙ Inventoriable Product Costs- Merchandiser

 +Purchase price from suppliers

 +Cost to get ready for sale

 + Freight-in

 +Import duties or tariffs

∙ Inventoriable product costs-Manufacturers

+ Direct materials (direct costs)

+ Direct Labor (Direct Costs)

+ Manufacturing OH (MOH)

∙ Does the cost relate to producing the product?  

o Yes, then it’s probably an inventoriable product cost (DM, DL, MOH o No, then it’s a period cost

∙ Income statement- Service Company

Service Revenue

-Operating Expenses 

=Operating Income

∙ Income Statement- Merchandizers  

Sales

-Cost of goods sold  

=Gross Profit

-Operating Expenses 

=Operating Income

o Cost of goods sold:

 Beg. Inventory

Purchases

Import duties or tariffs  

+Freight-In 

=Cost of goods available for sale

-Ending Inventory 

=Cost of goods sold

∙ Income Statement- Manufacturer

Sales

-COGS 

=Gross Profit

-Operating Expenses 

=Operating Income

o COGS

Finished goods inventory

+Cost of goods manufactured 

=Cost of goods available for sale

-Ending finished goods inventory 

=Cost of goods sold 

 Cost of goods manufactured

Beginning work in process inventory

Direct materials used 

Direct Labor

+Manufacturing Overhead 

=Total manufacturing cost to amount for -Ending work in process inventory 

=Cost of goods manufactured 

∙ Direct materials used 

Beginning raw materials inventory

Purchases

Import duties

+Freight in 

=Materials available for use

-Ending raw materials inventory 

=Direct materials used

Chapter 2, practice Questions

1. Congrats! You just got the new position as an intern at Kelley’s Button  Company. Your boss gave you the following information and asks you to  compute the cost of direct materials used.

Import Duties: $800

Beginning Raw Materials Inventory: $4,600

Ending Raw Materials Inventory: $1,600

Freight in: $400

Freight-out: $600

Purchases of direct materials: $15,900

Kelley’s Buttons

Calculation of direct materials used

Direct materials used:

__________________________ ___________ Plus: ______________________ ___________

 _______________________ ___________

 _______________________ ____________ _____________ ___________________________ ____________ Less: _______________________ _____________

Direct materials Used  

_____________

2. Bisto Boristo is a retail chain that specializes in specialty Furniture. During the year, the company had sales of $39,150,000. The company began the year  with $2,865,000 of merchandise inventory and ended the year with  $3,600,000 of inventory. During the year, they purchased $21,400,000 of  merchandise inventory. The company’s selling, general, and administrative  expenses totaled $6,150,000 for the year. Prepare Bisto Boristo’s income  statement for the year.

Bisto Boristo

Calculation of Cost of goods sold

For the Year ended

___________________ ____________________ Plus: _______________ _____________________ ___________________ ____________________ Less: _______________ _____________________ ___________________ _____________________

Bistro Boristo

Income Statement

For the Year Ended

___________________ _____________________ Less _______________ _____________________ ___________________ _____________________

Less_______________ ______________________

___________________ ______________________

Determine where each of these fit on the value chain:

3. Cost of a prime-time TV ad featuring Bistro Boristo’s new chair 4. Salary of engineers who are designing the plants new layout 5. Depreciation on Mt. Gilead, Ohio plant

6. Depreciation on delivery vehicles

7. Cost of a customer support center website

8. Plant managers salary

Determine if the following is a product cost or a period cost

9. Cost of chemicals included in paint to inhibit rust

10.Life insurance for the CEO  

11.Cost of electricity at the plant in Ohio

12.Depreciation on the buildings at the plant in Ohio

13.Cost of the ad campaign and slogan

Chapter 3 (24 points total):

∙ 6 Multiple choice questions (12 points)

∙ 2 Exercises (12 Points)

Things to Know:

∙ Allocating Manufacturing Overhead

o Step 1: Estimate the total manufacturing overhead costs for the  coming year

o Step 2: Select an allocation base and estimate the total amount that  will be used during the year

o Step 3: Calculate predetermined MOH rate using the information from  the prior two steps:

 Predetermined MOH rate= Total estimated manufacturing  

overhead costs/total estimated amount of the allocation base

o Step 4: Allocate some manufacturing overhead to each individual job  as follows  

 MOH Allocated to a job= Predetermined MOH rate x actual  

amount of allocation base used by the job

∙ PMOHR Process timing

o Step 1: Beginning of the year: Determine total estimated  

manufacturing overhead cost

o Step 2: Beginning of year: Determine total estimated amount of  allocation base

o Step 3: Beginning of the year: Calculate PMOHR

o Step 4: During the year: Use this rate to allocate MOH

∙ Cost of a Job? DM+DL+MOH

o MOH  

 Allocate it all year long

o At the end of the period did you over or under allocated MOH  Compare What was allocated all year (PMOHR) to actual MOH

Chapter 3 Practice Questions

1. Cheekies Cookie is a company who manufactures Cookie making equipment.  They estimate that MOH cost next year will be $1,200,000. They also  estimate that they will use 20,000 direct labor hours and incur $750,000 of  direct labor cost next year. In addition, the machines are expected to run for  16,000.

a. Compute the predetermined MOH rate for next year assuming  Cheekies uses direct labor hours as its manufacturing overhead  allocation base. Identify the formula and compute the predetermined  MOHR for next year using direct labor hours as the MOH allocation  base

i. __________________________/___________________=Overhead rate ii. __________________________/___________________=______ per DL  hour

b. Compute the predetermined manufacturing overhead rate for next  year if the company uses direct labor cost as its MOH allocation base.  Identify the formula and compute the PMOHR for next year using direct labor as the manufacturing overhead allocation base.

i. _________________________/_____________________=Overhead rate ii. _________________________/_____________________=_____% of DL  Cost

c. Compute the PMOH for next year if the company uses machine hours  as its manufacturing overhead allocation base. Identify the formula and compute the predetermined manufacturing overhead rate for next year using machine hours as the MOH allocation base

i. _________________________/____________________=Overhead rate ii. _________________________/____________________=_____ per  

machine hr.

Determine if the following is Job Costing or Process costing:

2. A legal firm

3. An oil refinery

4. Commercial plumbing contractor

5. Cereal Manufacturer

6. Custom Home Builder

Chapter 4 (28 points total):

∙ 8 Multiple choice questions (16 points)

∙ 2 Exercises (12 Points)

Things to Know:

∙ Cost Hierarchy Defined

o Unit-Level Activities

 Incurred for every unit.  

 Examples include inspecting and packaging each unit the  

company produced

o Batch-Level Activities

 Activities and costs incurred for every batch, regardless of the  number of units in the batch.

 Example machine set up. Once the machines are set up for the  specification of the production run, the company could produce  a batch of 1, 10, or 100 units, yet the company only incurs the  machine set-up cost once for the entire batch

o Product-level activities

 Incurred for a product, regardless of the number of units or  

batches of the product produced.

 Examples are the cost to research, develop, design, and market  new models

o Facility-level activities

 Activities and cost incurred no matter how many units, batches,  or products are produced in the plant.  

 Example facility upkeep: the cost of depreciation, insurance,  property tax, and maintenance on the entire production plant

∙ 4 types of Quality Costs

o Prevention Cost

 Training Personnel  

 Evaluating potential suppliers

 Using better materials

 Preventative maintenance

 Improved equipment

 Redesigning product or process

o Appraisal Cost

 Inspection of incoming materials

 Inspection at various stages of production

 Inspection of final products or services

 Product testing

 Cost of inspection equipment

o Internal Failure Costs

 Production loss determined by downtime

 Rework

 Abnormal quantities of scrap

 Rejected product units

 Disposal of rejected units

 Machine breakdowns

o External Failure Costs

 Loss of profit because of loss of customers

 Warranty costs

 Service costs at customer sites

 Sales returns and allowances due to quality problems   Product liability claims

 Cost of recalls

Chapter 4 Practice Questions:

Classify as prevention cost, appraisal cost, internal failure cost, or external failure  cost

1. Warranty Repairs

2. Legal fees from customer lawsuits

3. Training employees  

4. Cost incurred producing and disposing of defective units

5. Lost productivity due to machine breakdown

6. Inspecting products that are halfway through the production process 7. Inspecting incoming raw materials

8. Repairing defective units found during inspection

9. Incremental cost of using a higher-grade raw material

10.Redesigning the production process

Grannies Golden Sock just received an order to produce 15,000 of her specialty  golden sock. The order will take 19 hours to create the thread and 35 hours  crocheting the actual product.

Activity Cost allocation rate base unit

Preparation $25 per hour of  making thread

Crocheting $25 per hour of  crocheting  

Packaging $0.09 per unit  packaged

11.What is the total amount of MOH that should be allocated to this order  

 _________________ x________________=MOH Allocated Preparation _______________ x _________________= ___________ Crocheting _________________x_________________=____________ Packaging ________________x_________________=____________ The total amount of MOH assigned to this order is $_______

12.How much should be assigned to each bag?

________________________/____________________=MOH per Unit

________________________/____________________=___________

13.What other cost will the company need to consider determining the total  manufacturing cost of this order?  

 In addition to the costs above,  

Grannies needs to consider________________

For the following identify if the MOH cost are value added and which are non-value  added

14.Cost of reworking defective units

15.Cost of moving raw materials into production

16.Cost arising from backlog in production

17.Salary for supervisor on the factory floor

18.Wages of the workers assembling products

19.Cost of warehousing raw materials  

20.Engineering design costs for a new product

21.Product inspection

Classify if the following cost are unit-level, batch-level, product-level, or facility-level

22.Engineering cost for new product

23.Depreciation on factory

24.Direct Labor

25.Machine setup costs that are incurred whenever a new production order is  started

Karl’s Washing machine uses departmental overhead rate (rather than plantwide) to allocate its manufacturing overhead to jobs. The company’s two production  departments have the following departmental overhead rates

Cutting department: $9 per machine per hour

Finishing department: $18 per direct labor hour

Job 154 used the following direct labor hours and machine hours in the two  manufacturing departments: Cutting Department Finishing Department

Direct labor Hours 6 9 Machine Hours 6 7

26.How much MOH should be allocated to job 154

a. Calculate the total MOH for the job by using a formula for each  department overhead amount and then adding both amounts together. ___________________________x_________________________=Cutting Department  Overhead

___________________________x_________________________=$__________

___________________________x_______________________=Finishing Department  Overhead

___________________________x_______________________=$_________

Total MOH for job 154 is $_________

27.Assume that direct labor is paid at a rate of $26 per hour and job 154 uses  $2,550 of direct materials. What was the total manufacturing cost of job 154?

Direct materials _______________

Direct Labor _________hours x ____ rate/hr. _______________

MOH  

_______________

Total Job cost  

_______________

Answer Sheet

Chapter 1:

1. $117,000, $137,200. Should/greater than

2. Internal Auditing Department

3. Treasurer

4. Controller

5. Planning  

6. Directing

7. Controlling

8. Managerial  

9. Managerial

10.Financial

11.Financial

12.Financial

Chapter 2:

1.

Kelley’s Buttons

Calculation of direct materials used

Direct materials used:

_Beginning Raw materials Inventory  

_$4,600__

Plus: ___Purchases of direct materials _$15,900_

 __Import Duties__________ ____800__

 __Freight-in_____________ ___400_____ __17,100____ _Materials available for use___ ___21,700__ Less: Ending raw materials inventory ___1,600__

Direct materials Used  

___20,100__

2.

Bisto Boristo

Calculation of Cost of goods sold

For the Year ended

_Beginning Inventory__  

___$2,865,000_________

Plus: ___Purchases______ _21,400,000- ___________

_Cost of goods available for sale  

___24,265,000__________

Less: Ending Inventory ___3,600,000- ___________

_Cost of goods sold  

__$20,665,000__________

Bistro Boristo

Income Statement

For the Year Ended

_Sales Revenues______  

__$39,150,000_________

Less ___Cost of goods sold  

__20,665,000__________

_Gross Profit________ __18,485,000__________ Less__Operating Expenses ___6,150,000___________ _Operating Income __ ___12,335,000__________

3. Marketing

4. Design

5. Production

6. Distribution

7. Customer Service

8. Production

9. Product Cost

10.Period Cost

11.Product Cost

12.Product cost  

13.Period Cost

Chapter 3:

1.

a. Estimated manufacturing overhead costs/estimated direct labor  hours=Predetermined manufacturing overhead rate:  

$1,200,000/20,000=$60 per DL hour

b. Estimated manufacturing overhead costs/estimated direct labor  cost=overhead rate: $1,200,000/$750,000=160% of DL Cost

c. Estimated manufacturing overhead costs/Estimated machine  hours=Overhead rate: $1,200,000/16,000=$75 per machine hr. 2. Job costing

3. Process Costing

4. Job Costing

5. Process costing

6. Job Costing

Chapter 4:

1. External failure

2. External failure

3. Prevention

4. Internal failure

5. Internal failure

6. Appraisal  

7. Appraisal  

8. Internal failure

9. Prevention

10.Prevention

11.

 _Activity cost allocation rate x Cost driver (actual use) =MOH Allocated Preparation ___25__________ x ___19____________= __475____ Crocheting ____25___________x____35___________=____875_____ Packaging __0.09___________x___15,000________=___1,350____ The total amount of MOH assigned to this order is $_2,700_

12.How much should be assigned to each bag?

MOH Allocated____________/__Number of units ___=MOH per Unit __2,700_________________/____15,000__________=___$0.18__

13.The direct materials and direct labor

14.Non-Value

15.Non-Value

16.Non-Value

17.Non-Value

18.Value

19.Non-Value

20.Value

21.Non-Value

22.Product  

23.Facility

24.Unit  

25.Batch

_Cutting dept. machine hours __x__Department overhead rate_=Cutting  Department Overhead

_________6_________________x_________9_______________=$__54______

_Finishing Dept. Direct Labor hr. _x Department Overhead Rate_=Finishing  Department Overhead

___9_______________________x______18_______________=$_162____

Total MOH for job 154 is $__216____

26.Assume that direct labor is paid at a rate of $26 per hour and job 154 uses  $2,550 of direct materials. What was the total manufacturing cost of job 154?

Direct materials _2,550_______ Direct Labor ___15____hours x _$26__ rate/hr. __390_______

MOH  

___216______

Total Job cost  

__$3,156_____

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