ACTG 158 Ch. 01 Smartbook

Those who work directly on the product to convert raw materials into a finished product are known as

Direct labor

Activities that include finished goods are considered _________ activities

Sales

Which of the following are direct costs for a shoe manufacturer? (Check all that apply.)

Shoe laborers who make the shoes Leather used in the shoes

Managerial accounting information is normally provided to managers

as they request it.

A series of activities that add value to a company's products or services is called:

value chain

Major Manufacturing Company has direct materials used of $50,000, beginning raw materials inventory of $10,000 and ending raw materials inventory of $8,000. Compute the raw materials inventory turnover.

5.55

Minor Manufacturing Company has ending raw materials inventory of $15,000, raw materials used of $60,000. Calculate the days' sales in raw materials inventory.

91.25 Reason: $15,000/60,000 x 365 = 91.25.

FIFO LIFO Weighted Average Specific Identification

Assumes costs flow in the order incurred Assumes costs flow in the reverse order incurred Assumes costs flow at an average of the costs available Assumes costs flow can be specifically matched with the physical flow of items

True or false: Finished goods are products which are partially complete.

False

True or false: The main purpose of managerial accounting is to provide general-purpose financial statements.

False

What types of information does managerial accounting provide? (Check all that apply.)

Financial Information for managers Non-financial

Consider a company that manufactures picture frames. Which of the following costs would be considered direct costs? (Check all that apply.)

Glass used in the frame Oak wood used for frame Wages of assembly line worker

Expansion of competition which provides customers with many choices is called a ________ economy.

Global

Place the following ethical decision making steps in the correct order with the first step listed on the top:

Identify ethical concerns Analyze options Make ethical decisions

Managerial accounting has the following characteristics? (Check all that apply.)

Includes mostly monetary and some nonmonetary information focus is on internal users Emphasis is on projects, processes, and divisions

Which of the following are period costs for a manufacturer? (Check all that apply.)

Salary for administrative staff Rent on the office building Sales commissions

A process of analyzing data to identify meaningful relations and trends is called data __________.

analytics

The cost of goods sold for a manufacturer is computed as

beginning finished goods inventory plus cost of goods manufactured minus ending finished goods inventory

Ethics are defined as: (Check all that apply.)

beliefs that distinguish right from wrong. accepted standards of good and bad behavior.

The main difference between merchandising and manufacturing companies is that merchandising companies ____________ (buy/manufacture) goods ready for sale and manufacturing companies ______________ (buy/manufacture) products.

buy manufacture

Lean practices include those which are designed to eliminate waste while still satisfying the customer. Examples of lean practices include all of the following:

continuous improvement total quality management just-in-time manufacturing

The primary difference between the income statement for a merchandising company and a manufacturing company is in the _____ section.

cost of goods sold

Understanding the changing needs of customers is referred to as

customer orientation.

Costs which are crucial parts of the finished product are called

direct costs

Production activities include: (Check all that apply.)

factory overhead costs. production workers assembling products. direct materials used.

The triple bottom line focuses on three measures including:

financial social environmental

Inventory which is completed but not yet sold by a manufacturer is known as

finished goods inventory

Financial

Uses past performance using historical information

Which of the following summarizes the weighted average cost flow assumption?

Weighted average assumes that costs flow at an average of the costs available.

Partially complete units are known as __________ ___________ ___________ inventory.

Work in Process

The Institute of Management Accountants requires members to: (Check all that apply.)

act with integrity. be competent.

The cost of materials a company purchases to use in making products are

raw materials.

The Sustainability Accounting Standards Board was established to develop _____ standards for businesses' sustainability activities.

reporting

A manufacturing company reports the following items: Work in process inventory, beginning balance: $1,000 Work in process inventory, ending balance: $3,000 Direct materials: $5,000 Direct labor: $7,000 Factory overhead: $4,000 The cost of goods manufactured is $

$14,000

A manufacturing company reports the following items: Finished goods inventory, beginning balance: $1,000 Finish goods inventory, ending balance: $1,200 Cost of goods manufactured, $5,000 The cost of goods sold is $

$4,800

A company incurred manufacturing costs of $45,000. If the beginning balance in Work in process inventory is $10,000 and the ending balance is $15,000, then the cost of goods manufactured is $

$40,000

A company reported Cost of goods manufactured of $50,000 on the statement of cost of goods manufactured. If the beginning balance in Work in process inventory was $20,000 and the ending balance was $25,000, then the total manufacturing costs were $

$55,000

Recall the formula for figuring Days' Sales in Inventory.

(Ending inventory/Cost of goods sold) x 365

The formula for days' sales in raw materials inventory is:

(ending raw materials inventory / raw materials used) x 365

List the activities in the value chain in the order they occur for a cookie retailer, with the first activity on top.

Acquire raw materials Baking Sales Service

Managerial

Uses current performance and future projections

Managerial information:

allows estimates and projections

Direct materials costs for an automobile manufacturer would include all of the following:

bumpers steering wheels tires

Prime costs consists of:

direct labor and direct materials

Which of the following are included in Raw materials inventory? (Check all that apply).

direct materials

A trend whereby consumers expect to be able to purchase items electronically, whenever and wherever they want is known as __________.

e-commerce

Managerial accounting report both monetary and nonmonetary information. Examples of nonmonetary information include:

employee diversity. percentage of on-time deliveries. employee satisfaction data.

Managers use an internal control system to: (Check all that apply.)

ensure reliable accounting. promote efficiency. protect assets.

Conversion costs consist of:

factory overhead and direct labor

Managerial reporting systems are

flexible.

Expansion of competitive boundaries which allows customers many choices is called a:

global economy

Lean principles include all of the following except:

global economy

Digital manufacturing combines _____ to manufacture products. (Check all that apply.)

machines human control computers

Managerial accounting is different from financial accounting in that:

managerial accounting is used in planning and control decisions and financial accounting is used in making investment and credit decisions

Activities such as purchasing raw materials are considered _________ activities.

material

In addition to monetary information, managerial accounting reports ___________ information.

nonmonetary

The fraud triangle shows three factors that push a person to commit fraud and includes ___, pressure, and rationalization.

opportunity

An emphasis on the changing needs of customers is called customer ________.

orientation

data analytics data visualization

process of analyzing data to identify meaningful relations and trends graphical depiction of data to help people interpret their meaning

According to the fraud triangle, the three factors that must exist for a person to commit fraud include __________, ___________, and ___________.

rationalization pressure opportunity

The characteristics of the fraud triangle include: (Check all that apply.)

rationalization pressure opportunity

The triple threat of fraud involves:

rationalization pressure opportunity

Materials activities include: (Check all that apply.)

raw materials beginning inventory. purchasing materials.

Sparks Fireworks manufactures and sells fireworks. Their raw materials used is $71,500. Their beginning raw materials inventory was $5,000 and their ending raw materials inventory was $6,000. Sparks' raw materials inventory turnover is

13

A merchandising company usually has one inventory account while a manufacturing company usually has _____ inventory accounts.

3

List the items below in the correct order in which they would appear in the calculation of cost of goods sold for a manufacturing company.

Beginning finished goods inventory Plus Cost of goods manufactured Minus Ending finished goods inventory

The managerial accountant at XYZ Company told her friend that the company expects to announce a major recall in a few weeks. The friend promptly sells all her stock in XYZ. The accountant violated which IMA requirement? (Check all that apply.)

Confidentiality Integrity

A schedule of cost of goods manufactured has the following main sections: (Check all that apply.)

Cost of goods manufactured Overhead Direct labor Direct materials

The following items would be included in the overhead section of the schedule of cost of goods manufactured: (Check all that apply.)

Factory supplies used Factory utilities Factory insurance

Which of the following are product costs for a manufacturer? (Check all that apply.)

Depreciation on the factory equipment Direct materials

Consider a service company that provides carpet cleaning. Classify the cost of the hourly workers who clean carpets for customers.

Direct

The efforts of employees who work directly to convert direct materials into the finished product are referred to as _________ _________.

Direct labor

Which of the following are indirect costs for the finishing department of a furniture manufacturer? (Check all that apply.)

Electricity cost for the plant Rent on the manufacturing facility Plant manager's salary

Human (error/fraud) _____________is related to misjudgment or confusion. Human (error/fraud) ___________involves intent to defeat internal controls for personal gain.

Error Fraud

Financial accounting provides information for (internal/external) _________ users, while managerial accounting provides information for (internal/external) __________ decision makers.

External Internal

Consider a service company that provides carpet cleaning and uses straight-line depreciation. Classify the cost of the depreciation on the carpet cleaning machines.

Indirect

Recall the formula for computing a company's inventory turnover ratio.

Inventory turnover = Cost of goods sold/Average inventory

___________ accounting allows internal users to determine what information they need to make planning and control decisions and is not rules-based.

Managerial

List the following activities in the order in which they occur, with the first activity on top.

Materials activity Production Activity Sales Activity

Purchase materials Use materials Product sold

Materials activity Production activity Sales activity

An employee that is having trouble paying his personal bills might exhibit the following fraud factor:

Pressure

Activities such as using materials and labor to produce finished products are considered __________ activities.

Production

Which of the following statements correctly explains what the inventory turnover ratio assesses.

The inventory turnover ratio assesses whether management is doing a good job controlling the amount of inventory.

Review the statements below and select the ones that are correct regarding the days' sales in inventory ratio. (Check all that apply.)

The ratio reveals how much inventory is available in terms of the number of days' sales. The ratio is useful in evaluating how quickly inventory is being sold. The ratio estimates how many days it will take to convert inventory into accounts receivable or cash. The ratio is often viewed as a measure of the buffer against out-of-stock inventory.

Factory overhead includes all manufacturing costs except direct materials and direct labor.

True

Managerial accounting provides information to internal managerial and executive employees who are in charge of a company's business activities

True

The main purpose of managerial accounting is to provide relevant information to its managers.

True

Each of the following are examples of factory overhead: (Check all that apply.)

indirect labor indirect materials

Managerial accounting primarily provides information to

internal users.

Sales activities include: (Check all that apply.)

selling finished products. finished goods inventory.

All of the following are types of e-commerce:

smartphone sales activities text messaging sales activities online sales activities

A graphical presentation of data to help in understanding their significance is called data __________.

visualization

Inventory which is partially complete is known as

work in process