Exam 1: Cost Accounting: Information for Decision Making

In 2016,the Allen Company had consulting revenues of $1,000,000 while operating costs were $750,000.In 2017,Allen will be introducing a new service that will generate $150,000 in sales revenues and $60,000 in operating costs.Assuming no changes are expected for the other services,the differential revenue for 2017 will be

Respond to this comment: "Since cost accountants just prepare accounting data for internal management,cost accountants do not need to be concerned with GAAP or IFRS."

The owner of a small retail business asks,"Why do I need cost accountants? My CPA produces financial statements,which are sufficient for me to discover my costs.Look at my Income Statement.I expect sales to increase by 10% next year,so I am planning on a 10% increase in profits.I don't need a cost accountant to tell me that." Use your knowledge of the concept of differential costs and explain why a cost accountant would question the conclusion that a 10% increase in sales would yield a 10% increase in profit.

Advertising costs would be associated with which of the following value chain components?

Activity-based costing (ABC)is a management tool that focuses on the continuous improvement of all dimensions of a business.

The goals and objectives of establishing budgeting in an organization include all of the following except:

At the middle management level,where managers supervise work and make operating decisions,cost information highlights

According to the Institute of Management Accountants (IMA),the first step in resolving an ethical dilemma is to

(CMA adapted)A costing method that first assigns costs to activities and then assigns them to products based on the products' consumption of those activities is:

Budgeting is primarily used to determine year-end bonuses based on managerial and organizational performance.

Two alternatives,identified X and Y,are under consideration at Hayden Corporation.Costs associated with the alternatives are listed below: Altemative \times Altemative Material costs \ 44,000 \ 56,000 Processing costs 37,000 59,000 Building costs 14,000 14,000 Equipment rental 11,000 11,000 Are the materials costs and processing costs differential in the choice between alternatives X and Y? (Ignore the building costs and equipment rental in this question. )

Which of the following is not one of the basic standards of the Institute of Management Accountants (IMA)Code of Ethics?

The field of accounting that reports according to generally accepted accounting principles (GAAP)is called:

Traditionally,companies in the United States have employed a "push" manufacturing style.Studies in Activity Based Management and Quality Control have indicated that this approach is filled with many non-value-added activities,which increase overall costs and reduce profits.The "push" style is being replaced with a "pull" approach.Briefly describe the major differences between the push and pull approaches.What non-value added activities are eliminated in a pull manufacturing system?

Managers evaluate value-added activities to determine how they contribute to the final product's

Compliance with Sarbanes-Oxley does not mean that the manager has met all of his or her ethical responsibilities.

The Flamboyant Flirt is a small but prosperous hair cutting salon.Diane Stock,the manager of the salon,has been asked by several clients if she will ever offer other "hair related" services .The Flamboyant Flirt's income statement for the most recent year is presented below. a.Based on your financial analysis,should Diane Stock go ahead with the expansion? b.What other factors must Ms.Stock consider before making a final decision?

Which of the following is the best reason why cost accounting information does not need to be comparable to similar information in other organizations?

Ethical behavior depends more on a firm's code of conduct than the individual's personal beliefs.