ACCT 203 Lecture Notes - Lecture 7: Bicycle Tire, Management Accounting, Income Statement

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18 Jul 2016

School

George Mason University

Department

Accounting

Course

ACCT 203

Professor

Harley

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Document Summary

Management accounting is the process that provides financial and non-financial information to an organization"s managers and other internal decision makers. Management accounting provides financial and non-financial information to internal users because such users are demanding it in order to manage the company. There are no rules forcing them to publish anything. Planning and control are two fundamental concepts of management and management accounting is designed to provide whatever important information necessary to executive management to monitor its line management. At the most basic level, costs are either fixed or variable. Fixed costs do not change with changes in the volume of an activity (within what is called the relevant range). Variable costs change in proportion to changes in the volume of activity. For instance, a factory is a fixed cost. Whether you run your production in the factory at the maximum or the minimum, the cost of the factory is the same.

Related Questions

This question has five parents:

1. Variable costs in total increase or decrease in proportionwith changes in the level of business activity:

a. true b. false

2. Variable cost per unit remains constant when the number ofunits produced changes:

a. true b. false

3. Fixed cost per unit remains the same even though there is achange in the number of units produced:

a. true b. false

4. Managerial accounting stresses accounting concepts andprocedures that are relevant to preparing reports for:

a. investors and banks

b. internal users of accounting information

c. shareholders and creditors

d. the Security and Exchange Commission (SEC)

5. Kilwinâs Candies produced and sold 600 boxes of chocolatecovered popcorn last month and had total variable costs of $2,100that reflected the cost of chocolate and popcorn (ingredients).Each box of popcorn for $12.00. If production and sales areexpected to increase by 10% next month, which of the followingstatements are true?

a. Total variable costs are expected to be $1,785.

b. Variable cost per unit is expected to be $3.50.

c. Unit variable costs are expected to be $2.10.

d. Total fixed costs will be $150,000.

magentalocust842

Please help me answer the following questions:
1. Management accounting:
A) is both retrospective, providing feedback about past operations,and also prospective, incorporating forecasts and estimates aboutfuture events.
B) is primarily oriented to external stakeholders.
C) must be consistent with rules formulated by the FinancialAccounting Standards Board (FASB).
D) provides information that is generally available only on aquarterly or annual basis.

2. Management accounting information is BEST described as:
A) providing a signal that something is wrong.
B) identifying and helping to explain what is wrong.
C) simply summarizing information, but giving no indication thatanything is wrong.
D) measuring overall organizational performance.

3. Which of the following would be MOST helpful for a top managerof a company?
A) profitability report of the company
B) information to monitor hourly and daily operations
C) number of customer complaints
D) operating expense summary reported by department

4. The Balanced Scorecard is said to be "balanced" because itmeasures:
A) short-term and long-term objectives.
B) financial and nonfinancial objectives.
C) internal and external objectives.
D) All of the above are correct.

5. The ________ perspective of the Balanced Scorecard asks, "How issuccess measured by our shareholders?"
A) learning and growth
B) customer
C) financial
D) shareholder

6. Defect rates for products and yield percentages in manufacturingare measures of quality included in the ________ perspective of theBalanced Scorecard.
A) financial
B) production
C) process
D) internal

7. The purpose of the Balanced Scorecard is BEST described ashelping an organization:
A) develop customer relations.
B) mobilize employee skills for continuous improvements inprocessing capabilities, quality, and response times.
C) introduce innovative products and services desired by targetcustomers.
D) translate an organization's mission, vision, and strategy into aset of performance measures that help to implement thestrategy.

8. The FIRST step in developing strategic objectives for theBalanced Scorecard is:
A) defining the long-run financial objectives.
B) identifying the target customer.
C) articulating the organization's vision.
D) select objectives for the customer value proposition.

9. Identify the BEST description of the Balanced Scorecard'scustomer perspective. To achieve our firm's vision andstrategy:
A) How do we lower costs?
B) How do we motivate employees?
C) How can we obtain greater profits?
D) How does the company intend to attract, retain, and deepenrelationships with targeted customers by differentiating itselffrom competitors?

10. Fixed costs:
A) may be either direct or indirect costs.
B) vary with production or sales volume.
C) include parts and materials used to manufacture a product.
D) can be adjusted in the short run to meet actual demands.

11. Which of the following describes a variable cost?
A) Variable cost are always indirect costs.
B) Variable costs increase in total when the actual level ofactivity increases.
C) Variable costs include most personnel costs and depreciation onmachinery.
D) Variable costs can always be traced directly to the costobject.

12. Cost-volume-profit analysis is used PRIMARILY bymanagement:
A) as a planning tool.
B) for control purposes.
C) to establish a target net income for next year.
D) to attain extremely accurate financial results.

13. The break-even point is the level at which revenues:
A) equal fixed costs.
B) equal variable costs.
C) equal fixed costs minus flexible costs.
D) equal variable costs plus fixed costs.

14. Cost-volume-profit analysis assumes all of the followingEXCEPT:
A) all costs are purely variable or fixed.
B) units manufactured equal units sold.
C) total variable costs remain the same over the relevantrange.
D) total fixed costs remain the same over the relevant range.

Can somebody help me with my accounting project, here are theinstructions:

Complete the Critical Thinking Problem A6-74 "Cost Behavior inReal Companies"Note: You must choose a publicly traded company foryour analysis. You may not use Pearson or any other publishingcompany for this analysis.

Your essay must include a cover page, introduction, body,conclusion, and a reference page. Be sure to address all relevantparts of each question. Your response should be a minimum of 700words in length (not including the cover page and the referencepage). Cite all references you use. Note: You must use at leastthree references. Proper citation format for a reference includesthe name of the author(s), the title of the work, the date of thepublication, and the page number.

A6-74
Cost Behavior in Real Companies
Choose a company with which you are familiar that manufactures aproduct or provides a service. In this activity, you will be makingreasonable estimates of the costs and activities associated withthis company; companies do not typically publish internal cost orprocess information.

Basic Discussion Questions
1. Describe the company you selected and the products or servicesit provides.
2. List ten costs that this company would incur. Include costs froma variety of departments within the company, including humanresources, sales, accounting, production (if a manufacturer),service (if a service company), and others. Make sure that you haveat least one cost from each of the following categories: fixed,variable, and mixed.
3. Classify each of the costs you listed as either fixed, variable,or mixed. Justify why you classified each cost as you did.
4. Describe a potential cost driver for each of the variable andmixed costs you listed. Explain why each cost driver would beappropriate for its associated cost.
5. Discuss how easy or difficult it was for you to decide whethereach cost was fixed, variable, or mixed. Describe techniques acompany could use to determine whether a cost is fixed, variable,or mixed.

Thank you very much!!!

ACCT 203 Lecture Notes - Lecture 7: Bicycle Tire, Management Accounting, Income Statement

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