Accounting Midterm (Webster University)

Essay

1. Managers use management accounting information for strategic planning as well as the operation of an organization. Although management accounting has been traditionally considered as having an unyielding financial background, it has now begun to incorporate the methods and processes of its’ financial systems. Managers also use this information in accessing the performance of the company and how it can be increased. In short, management accounting information is used in order to make well-informed decisions that will ultimately increase profits.

2.

A) Period Costs- those costs related to non-manufacturing costs, including administrative and marketing costs.

B) Flexible Costs- the cost associated with flexible resources.

C) Product Costs- manufacturing costs incurred to produce the volume and mix of products made during the period.

D) Direct Manufacturing Costs- manufacturing costs costs that can be traced to a single cost object.

E) Indirect Manufacturing Costs- manufacturing costs that are related to more than one cost object.

F) Unit-related Costs- activities whose volume or level is proportional to the number of units produces or to other measures, such as direct labor hours and machine hours that are themselves proportional to the amount of work done.

G)

Period Costs

$100 Ad Agency

Depreciation

Flex Costs

$30 materials

Product Costs

$30 materials

Direct Manfact. Costs

$200 rental machinery

$35 surfboard completed

In-direct Manfact. Costs

$4,000 garage construction

$10,000 start-up

Unit-related Costs

$200 per board commission

Opportunity Costs

%6 interest rate

H) Product and Direct Manufacturing Costs should be considered over the long run because if these costs increase, profit margins will decrease.

3.

A) Yes, because after the initial construction of the pool, revenues will exceed expenses by $44,000.00...