Fall, 2015
Copyright © J. T. Dallmus, School of Accountancy, ASU
1
Exam 1 will consist of multiple choice questions, many with calculations. The majority of
accounting cannot be memorized. It is a subject that is learned through practice. In order to be
successful on an accounting exam, you must understand the concepts so that you can apply
them in various scenarios. Note that this class tests learning rather than rote memorization. To
prepare for an exam, you should focus on the concepts covered in the lectures and
emphasized in the practice and homework assignments, progress assessments and quizzes.
This is an overview of what you are responsible for this first module (see weekly materials for
details):
1. Understand the general role of management accounting
a. The four primary responsibilities of a manager
b. Differences between management accounting and financial accounting
c. How management accountants fit into an organization’s structure
d. Skills required of management accountants
e. The role of the IMA
f. Ethical decision-making framework
g. The purpose and major provisions of the Sarbanes-Oxley Act
2. Understand general terminology and concepts
a. The difference between service companies, merchandising and manufacturing
companies and the types of inventories they have
b. The value-chain and its elements
c. Terms used to describe costs; Cost Objects, Direct Costs, and Indirect Costs
d. Inventoriable Costs (Direct Material, Direct Labor, and Manufacturing Overhead) versus
Period Costs
e. Prime Costs versus Conversion Costs
f. Controllable Costs versus Uncontrollable Costs
g. Relevant Costs versus Irrelevant Costs
h. Fixed Costs versus Variable Costs
i. Total average costs and how they respond to changes in volume
3. Understand concepts related to Job Costing
a. The difference between Process Costing and Job Costing
b. Inventory flow (raw materials to work-in-process to finished goods)
c. Documents used in a job cost system (production plan, bill of materials, raw materials
record, job cost record, materials requisition) and how they are used
d. Allocation of manufacturing overhead to jobs
e. Disposition of over and under allocated manufacturing overhead
f. Journal entries related to job costing:
i. Purchase of raw materials
ii. Use of direct and indirect materials
iii. Use of direct and indirect labor
iv. Incurring other manufacturing overhead costs
ACC241 - Exam I Study Guide
ACC241 - Exam I Study Guide
Fall, 2015
Copyright © J. T. Dallmus, School of Accountancy, ASU
2
v. Allocation of manufacturing overhead
vi. Completion of jobs
vii. Sale of units
viii. Incurring operating expenses
ix. Disposing of under / over applied manufacturing overhead.
4. Understand concepts related to Activity-Based Costing
a. Cost distortion that occurs with plant-wide and departmental overhead allocation
methods
b. Steps used to determine and use activity-based cost allocation rates
i. Activity selection and overhead cost pool estimation
ii. Allocation base selection and estimation of usage
iii. Calculation of activity cost allocation rates
iv. Allocation of manufacturing overhead to individual jobs
c. Elements of the cost hierarchy (unit, batch, product and facility level activities) and how
they behave
d. Activity-based management philosophy and how it is achieved
e. Value-added versus non-value-added activities
f. Benefits of adopting activity-based costing and / or activity-based management
g. Indications that an old system is distorting costs
5. Distinguish Lean Production from Traditional Production systems and its key characteristics:
a. Just-in-time inventory system
b. Self-contained manufacturing cells
c. Employee cross-training
d. Small batch sizes
e. Shortened set-up times and manufacturing times
f. Quality emphasis
g. Supply-chain management
6. Understand concepts related to Total Quality Management (TQM):
a. Cost of quality categories (prevention, appraisal internal failure, external failure)
b. Cost of quality reporting
What Materials to Study
1. Review the chapter lectures and related notes
2. Review the weekly homework assignments
3. Review Learning Self-Checks and Quizzes
a. Review your quizzes to see what you missed. Make sure you understand why the
correct answer is that answer.
b. You can review and re-do the Learning Self-Checks at any time.
ACC241 - Exam I Study Guide
Fall, 2015
Copyright © J. T. Dallmus, School of Accountancy, ASU
3
NOTE: The more you work through problems without having to refer to your notes or the
textbooks, the better prepared you will be for the exam
Time may be an issue for some students on the first exam for the following reasons:
1. “Spinning your wheels” on a few questions. If you can't figure out a question right away,
skip it and come back to it at after completing the rest of the exam questions. It is better to
not waste time on a question you don't know that is worth 5 points and end up missing
several questions that you do know!
2. Falling into the trap of just reviewing the answers to problems and thinking “yes, I
understand how that is done” without actually working through them with closed notes and
closed books (simulating exam conditions). This isn't a class where you can just memorize
facts or can get by with being familiar with the material. You need to be able to apply a
concept you learned to different problems and situations. If you try to just look through
your notes and memorize solutions, you will struggle when you are faced with a new
problem.
3. It is not uncommon for students to be successful in other classes with minimal preparation,
skimming notes and cramming for a few hours the night before exams. This is a class that
requires a greater level of preparation for success. It is imperative that you review and
practice applying the concepts covered in the course so that you are ready to do the same
during the exam. This is similar to athletic teams practicing before playing in a game. They
do not simply look over the playbook and then show up on game day and expect to perform
well. They spend hours on the practice field, preparing for success when the game is played.
It is also important to spread your study time out over several days so that you have greater
retention and recall of the material. Ten hours of study is more effective if done in blocks of
two hours over a five day consecutive period than ten straight hours the day / night before
an exam. This is akin to an athletic team practicing for twelve hours over a four day period
to prepare for a game instead of practicing for a twelve hour period the day before a game.
Preparing over the course of several days in both cases will yield better results when it is
time to perform.
Some Test Strategies for Multiple Choice Questions
1. Identify important words as you read the question / fact pattern;
2. First read the last sentence to see what the question is asking for – then go back and read
the details in the question (so you can read it knowing what you are trying to answer).
3. Identify obvious wrong answers;
5. For journal entries, ending balances, t-accounts, etc., write what you think the journal entry
is (or t-account) on scratch paper and then compare your answer to this.
6. Try not to skip around too much (you will end up wasting time)
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