Quiz 16: Managerial Accounting Concepts and Principles

Business

Ethics and Professional Conduct in Business The professional ethics encompass various standards set by the people best in business. It involves personal, social and ethical benchmarks being accepted globally. F.R., the cost accountant of H.J. Manufacturing Company did not behave in an ethical manner by ordering the lumber for making a desk for an employee of the company. The desk will not be used by the company but is being ordered on behalf of the company. Now the company is due for the lumber ordered by the employee. So, the company incurs loss for the amount it has to pay for the lumber that is not used by it. Mr. F. used company's funds in a manipulative manner which is a violation of professional and ethical code of conduct. In such a case, there shall be unwanted loss in the books. The company's management should, in this situation, impose a strict control over the employees of the company with regard to the manipulation of company's funds and accounting statements.

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Direct Cost is that cost which is directly used and plays a significant role in making finished goods. It is also known as product cost and manufacturing cost. It includes direct materials, direct labor and factory overhead. The cost or wages which directly related to finished goods are known as Direct Material and Direct labor respectively. The cost other than direct cost which does not relates to finished product and not significant portion i.e. known as Factory overheads. a. Factory Overhead as it does not relates to significant portion of finished product. b. Direct Material as it is directly relates to finished product. c. Direct Material as it is directly relates to finished product. d. Direct Material as it is directly relates to finished product. e. Factory Overhead as it does not relates to integral part of finished product. f. Direct Labor as payment of employees wages directly related to product. g. Factory Overhead as it does not relates to significant portion of finished product h. Direct Labor as payment of employees wages directly related to product.