Chapter 18 Review

Managerial accounting information:

• Is used mainly by external users.

• Involves gathering information about costs for planning and control decisions.

• Is generally the only accounting information available to managers.

• Can be used for control purposes but not for planning purposes.

• Has little to do with controlling costs.

An attitude of constantly seeking ways to improve company operations, including customer service, product quality, product features, the production process, and employee interactions, is called:

• Continuous improvement.

• Customer orientation.

• Just-in-time.

• Theory of constraints.

• Total quality measurement.

Continuous improvement:

• Encourages employees to maintain established business practices.

• Strives to preserve acceptable levels of performance.

• Rejects the notion of "good enough."

• Is not applicable to most businesses.

• Is possible only in service businesses.

A management concept based on an understanding of the changing wants and needs of customers, and which leads to flexible product designs and production processes, is called:

• Continuous improvement.

• Customer orientation.

• Just-in-time.

• Theory of constraints.

• Total quality management.

An approach to managing inventories and production operations such that units of materials and products are obtained and provided only as they are needed is called:

• Continuous improvement

• Customer orientation.

• Just-in-time manufacturing.

• Theory of constraints.

• Total quality management.

A direct cost is a cost that is:

• Identifiable as controllable.

• Traceable to the company as a whole.

• Does not change with the volume of activity.

• Traceable to a single cost object.

• Traceable to multiple cost objects.

A fixed cost:

• Requires the future outlay of cash and is relevant for future decision making.

• Does not change with changes in the volume of activity within the relevant range.

• Is directly traceable to a cost object.

• Changes with changes in the volume of activity within the relevant range.

• Is irrelevant for cost-volume-profit and short-term decision making.

Costs that are capitalized as inventory when they are incurred are called:

• Period costs.

• Product costs.

• General costs.

• Administrative costs.

• Fixed costs.

Costs that flow directly to the income statement as expenses are called:

• Period costs

• Product costs.

• General costs.

• Balance sheet costs.

• Capitalized costs.

Marshall Corporation incurred costs for materials and labor needed to manufacture its products. These costs are an example of:

• Period costs.

• Product costs.

• General costs.

• Balance sheet costs.

• Capitalized costs.