1. The focus of financial accounting is on an organization\'s projects, processe

ID: 2487613 • Letter: 1

Question

1. The focus of financial accounting is on an organization's projects, processes, and subdivisions, and the focus of managerial accounting is on the whole organization. True False 2. N investments considers the time value of money True False either the payback period nor the accounting rate of return methods of evaluating 3. Significant sunk costs are relevant to decisions about the future. True False . The accounting rate of return uses cash flows in its calculation. True False 4 5. Although direct labor and raw materials costs are treated as manufacturing costs and therefore make up part of the finished goods inventory cost, factory overhead is charged to expense as it is incurred because it is a period cost. True False 6. The decision to accept an additional volume of business should be based on a comparison of the revenue from the additional business with the sunk costs of producing that revenue. True False 7. Managerial accounting is an activity that provides financial and nonfinancial information to an organization's managers and other internal decision makers. True False 8. Capital budgeting is the process of analyzing alternative long-term investments and deciding which assets to acquire or sell. True False 9. All capital investment evaluation methods use the time value of money concept. True False (ver. # 1) 1

Explanation / Answer

Ans 1(F) The focus of financial accounting is on an organization’s projects ,processes , and subdivisions, and the focus of managerial accounting is on the whole organization.

Ans 2(T) Neither the payback period nor the accounting rate of return methods of evaluating investments considers the time value of money.

Ans 3(F) Significant sunk cost is that cost that a firm will continue to produce even when revenue does not cover total cost.

Ans 4( F ) the Accounting Rate of return does not uses cash flow in its calculations.

Ans 5)( F )Although direct labor and raw material costs are treated as manufacturing costs and therefore make up part of the finished goods inventory cost ,factory overhead is charged to expense as it is incurred because it is a product cost not a period cost.

Ans 6 (False)The Decision to accept additional business should be based on a comparison of the incremental cost not on the basis of sunk cost.

Ans 7) (True)Managerial Accounting is an activity that provides financial and non-financial information to the organization’s managers and other internal decision makers.

Ans 8)(True) Capital Budgeting is the process of analyzing alternative long term investment and deciding which assets should be acquire or sell.

Ans 9)(True) All capital Investment evaluation method use the time value of money concept.

Ans 10) Supervisor of an Assembly line is an Indirect Labor

Ans 11) A Direct cost is a cost that is traceable to a cost object.

Ans12 (a)

Sell as a Scrap

Sell units

1000

Selling price of defective units

4.00

Selling price of Rebuilt units

8.00

Material cost

1.00

Labor cost

2.00

Overhead cost

1.50

Sell as a scrap

4,000.00

Rework

3,500.00

13) An out-of-pocket cost is a potential future outlay of cash that management needs to decide whether or not to make. Said another way, it's an expense that requires a future disbursement of cash.