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CMA Part 1
Ethics for Mgmt Accountants
| Question | Answer |
|---|---|
| IMA Statement of Ethical Pro Practice's four overarhhing principles are? | mnemonic HFOR Honest, Fairness, Objectivity, Responsibility |
| IMA Statement of Ethical Pro Practice's four specific standards are? | mnemonic CCIC Competence, Confidentiality, Integrity, Credibility |
| Cost in _______ accounting is a monetary measurement of resources used for some purpose. | management |
| In management accounting the term cost can't be ____ without a term that defines purpose. What are the names of the terms? | operational The terms used are acquisition cost, incremental cost, and fixed cost |
| In ______ accounting cost is the price required to obtain goods or services. | Financial |
| When cost is used to refer to the valuation of a good or service acquired, it is an ______ | asset |
| When the asset expires it becomes an _____ | expense |
| A ____ _____ is any entity to which cost can be attached. | cost object |
| A ____ ____ is the measure of activity or direct cause-and-effect relationship w/production. | cost driver examples are machine hours, miles driven, flight hours, direct labor hours, etc.. |
| The first broad category of costs is manufacturing vs. ___-_______. | manufacturing, non-manufacturing |
| The costs of manufacturing can be assigned to direct materials, direct labor, and _____ _______. | manufacturing overhead |
| Direct ______ includes all raw materials that can be traced to the product. | materials |
| Direct ____ is all labor that can be traced to the product | labor |
| Manufacturing overhead is all _________ costs not included in direct materials or direct labor. Manufacturing overhead can be indirect materials, indirect labor, and _____ operating costs. | manufacturing, factory |
| An example of an _____ material would be a welding compound. | indirect |
| Some examples of ______ ____ would be the wages of supervisors and janitorial staff. | indirect labor |
| ____ cost = direct materials + direct labor _____ cost = direct labor + manufacturing overhead | Prime, Conversion (both are manufacturing costs) |
| ____-_______ costs include selling/marketing, and admin. | Non-manufacturing |
| ______/_____ costs are costs associated with getting the product from the factory to the consumer. | Selling/marketing examples: sales personnel, product transportation |
| One of the most important cost classifications a management accountant can make is to categorize costs as either ______ or _____. second broad category of cost classification | product, period |
| ____ costs aka inventoriable costs because they are a component of COGs. | Product, thus costs are recognized in finished goods inventory |
| _____ costs are costs that expensed when incurred and they are excluded from COGs | Period (would occur even if production is 0) |
| When _____ reporting on either product or period costs all manufacturing costs are treated as product costs and are not recognized until inventory is sold. | external (financial reports). with internal you may treat the fixed portion of manufacturing as period |
| The third broad category of cost is _____ vs. indirect. | direct. |
| Direct cost can be traced to a specific cost object wheras a ______ cost can't. | indirect |
| What are the three broad categories of cost? | direct vs. indirect, product vs. period, manufacturing vs. non-manufacturing |
| _____ ____ is the limit within a per-unit variable cost that remains constant and is determined by the efficiency of current manufacturing plants, agreements w/labor unions, and suppliers | relevant range synonymous w/short run |
| Total manufacturing costs are reported on a separate statement called the ____ __ _____ manufacturing statement | Cost of goods, three major elements: raw materials, direct labor, and factory overhead |
| cost classifications | |
| Controllable vs. Noncontrollable _______ costs are costs that are under the discretion of a manager | Controllable |
| ________ costs are costs that are committed by another level of organization. | Noncontrollable |
| ______ is determined at different levels of the organization. | Controllability; example is that the outlay for machinery might be controllable by the division VP, but noncontrollable to that plant manager |
| Avoidable vs. Committed _____ costs may be eliminated by not doing the activity or performing the activity more efficiently. | Avoidable; for example material cost can be saved by ceasing production |
| ______ costs are from holding property, plant, and equipment. | Committed (can't be reduced by lowering the short-term production); e.g. insurance, lease payments, depreciation |
| Incremental vs. Differential ______ cost is the additional cost from the decision. ______ cost is the difference in the total cost between two decisions. | Incremental, differential; these terms are used interchangeably |
| Engineered vs. Discretionary _____ costs are the direct, observable, or quantifiable cause-and-effect relationship between output and input. | Engineered; e.g. direct materials, direct labor |
| ________ costs are the costs characterized by uncertainty in causation between output and input. | Discretionary; e.g. advertising, R&D |
| Outlay vs. Opportunity ______ costs are costs that require cash disbursements (out-of-pocket costs) | Outlay (Explicit) |
| _______ cost is the maximum benefit forgone by using scarce resources for a given purpose. | Opportunity (Implicit) |
| _____ cost = explicit + implicit costs | Economic |
| _____ costs are a type of opportunity cost which result in bad decision making. | Imputed; e.g. profit lost from running out of product/service when the demand is still there. |
| Relevant vs. Sunk _____ costs are costs that are not relevant to future decisions. | Sunk |
| _____ costs are those that vary depending on action taken. | Relevant |
| _____ cost is a sunk cost that is the actual price paid for the asset; this type of cost isn't useful for decision making. | Historical |
| Joint vs. Separable _____ costs are those incurred before the split-off point. | Joint; i.e. not traceable to end products ; Split-off point is the point where products become separatley identifiable |
| ______ costs are incurred after the split-off point. | Separable |
| __-_____ are of small total value that are produced at the same time as joint products | By-products; 5:39 example of Joint vs Separable |
| _____ products are end products not meeting the standards of salability. | Rework |
| The decision to rework or discard is based on whether the _____ revenue gained from selling > marginal cost of additional effort. | marginal |
| ____ is raw material left over from production and can be used for other purposes. | Scrap |
| ____ is raw material left over from production and it has no value. | Waste |
| Other costs ____ costs are costs from holding inventory. | Carrying; e.g. cost of capital, insurance, breakage, obsolescence, warehousing. |
| _____-__ costs are those from a preceding department. | Transferred-in |
| ____-_____ costs are costs that can't be eliminated without reducing the quality/quantity of output. | Value-adding |
| Manufacturing Concepts | |
| _____ capacity is the long-term avg level of activity. | Normal; deviations in one year are offset in subsequent years |
| _____ capacity is the max level with efficient production. | Practical |
| _____ (____) capacity is the max capacity w/continuous operations (no holidays, downtime) | Theoretical (ideal) |
| Costing Techniques | |
| Absorption vs. Variable Costing _____ costing is only variable manufacturing costs included in product costs. ____ manufacturing costs are period costs. | Variable, Fixed; not allowed for external reporting but useful for internal decisions |
| _____ (___) costing considers all (variable and fixed) manufacturing costs product costs. | Absorption (full); req for external reporting |
| Absorption costing ____ margin (profit) = net sales of revenue-absorption COGs | Gross; this amt is the amt available to cover selling & admin expenses |
| Variable costing _______ margin = net of sales revenue, variable costs (manufacturing, selling, admin) | Contribution |
| Accounting for absorption vs. variable costing is ______ for variable production costs, fixed selling, admin expenses, but ______ for fixed production costs, variable selling, admin expenses | identical, different |
| Actual vs. Normal costing ____ costing charges actual direct materials and labor to a cost object and applies overhead based on budgeted (normalized) rates. | Normal |
| ______ normal costing is where the budgeted rates are used for the three major input categories. | Extended |
| _____ costing is the most accurate because it is recorded after production using actual costs for cost object and allocating indirect costs; large fluctuations happen from period to period because per-unit costs are based on the level of production. | Actual |
| Techniques for accumulating manufacturing costs ____-_______ is used when products have individual characteristics. | Job-order; e.g. custom products, ship building/sign shop |
| ____ _____ should be used when similar products are continuously produced. Costs are attached to specific depts/phases of production | Process costing |
| Process costing involves calculating avg cost for all units; the two methods for this are _____ and _____ | weighted avg, FIFO |
| _____-______ is where every production process has its own cost pool whereas ____-_____ costing is when all indirect costs are pooled together and is then allocated to production | Activity-based, volume-based |
| _____-____ costing is the cost to cover all costs incurred over the life of the product. This includes upstream costs or costs before production and downstream costs or costs after production. | Life-cycle |
| Standard costing, flexible budgeting, variance analysis ______ costing are predetermined, attainable unit costs; it can be used with job-order and process-costing systems. | Standard |
| _____ budgeting is the calculation of quantity and cost of inputs that have been used to achieve the level of production; it supplements the _____ budget which is a projection for levels of output for an upcoming period. | Flexible, Static |
| _____ is the differences between the static budget, flexible budget, and actual results. | Variance |
| Allocating joint costs; formulas are the costs applied to each product _____ ___ method is the simplest; the total joint given to separable products in proportion to a physical measure (vol/weight). Total joint costs*units of each product / Total units. | Physical unit |
| The ____-_____ at split-off method is the separable products' relative proportion of total sales value ultimately attributable to period's production; Total joint costs X Product's estimate selling price at split-off / Total selling price at split-off. | sales-value |
| The estimated ___ ______ ____ (NRV) method is the final selling price - additional processing costs - selling costs = (NRV). Total joint costs X Product NRV / Total NRV | net realizable value |
| The _____ gross-margin percentage NRV method uses the same g-m % for all products; it involves 3 steps: 1. Determine overall g-m % 2. Subtract appropriate g-m from final sales value of each product. 3. Subtract separable costs. answ = joint cost amt | constant |
| Allocating service dept. costs The ____ method is the simplest but least accurate; all service dept costs are allocated to production depts; no allocation of cost of services is rendered to other service depts. | direct |
| ____-____ method is where the service depts are ordered by the dept providing the most service to the dept providing the least; as each allocation is performed the costs are allocated to the remaining service and production depts. | Step-down |
| The ____ method is the most complex but most accurate method; here simultaneous equations are used to allocate each service depts costs among all other service and production depts. | reciprocal |
| Ethical section | |
| The four overarching principles contained in the Statement on Managemen Accounting 1C, IMA's statement of Ethical Professional Practice, are _____, _____, _____, and ________. | honesty, fairness, objectivity, responsibility |
| The four specific contained in Statement on Management Accounting 1C (Revised), IMA’s Statement of Ethical Professional Practice, are ______, ______, ______, and _______. | competence, confidentiality, integrity, credibility |
Created by:
nick0788