Chapter 10 SmartBook Questions

If a company incurs $4,000 in manufacturing costs to produce 200 units, the average cost per unit is ______. Multiple choice question. $4,000 $2,000 $20 $200

$20

If a company incurs $8,000 in manufacturing costs to produce 100 units, the average cost per unit is ______. Multiple choice question. $800 $80 $8,000 $4,000

$80

Which of the following would not be included in manufacturing overhead? Multiple select question. -Depreciation on manufacturing facilities -Indirect labor -Indirect materials -Direct materials -Rent on manufacturing facilities -Depreciation of selling and administrative facilities -Factory utilities -Direct labor -Selling and administrative costs

-Direct materials -Depreciation of selling and administrative facilities -Direct labor -Selling and administrative costs

Which of the following would be included in manufacturing overhead? Multiple select question. -Depreciation on manufacturing facilities -Indirect labor -Indirect materials -Direct materials -Rent on manufacturing facilities -Depreciation of selling and administrative facilities -Factory utilities -Direct labor -Selling and administrative costs

-Factory utilities -Indirect materials -Indirect labor -Rent on manufacturing facilities -Depreciation on manufacturing assets

Indirect costs ______. Multiple choice question. -should be expensed immediately on the income statement -cannot be cost-effectively traced to products and services -are not product costs -are not used to produce products

-cannot be cost-effectively traced to products and services

Recognizing depreciation on manufacturing equipment results in ______. Multiple select question. -an increase in liabilities -no change to the income statement -decreased cash -increased inventory

-no change to the income statement -increased inventory

Inventory holding costs include _______. Multiple select question. -obsolescence -financing -warehouse space -diminished motivation -product manufacturing cost -research and development

-obsolescence -financing -warehouse space -diminished motivation

Recognizing depreciation expense on selling and administrative assets affects ______. Multiple select question. -total assets on the balance sheet -expenses on the income statement -operating activities on the statement of flow statement -total liabilities on the balance sheet

-total assets on the balance sheet -expenses on the income statement

If a company incurs $2,000 in manufacturing costs to produce 1,000 units, the average cost per unit is $ _______

2

A company recorded a total of $1,200 in depreciation. If $900 is for manufacturing equipment and $300 is for office equipment, a total of $____________ will be recorded as an expense.

300

How do product costs flow through the financial statements? Multiple choice question. -Reported on the balance sheet after the inventory is sold. -Added to the inventory account when incurred and expensed on the income statement when the inventory is sold. -Expensed on the income statement immediately and then added to the inventory account after the inventory is sold.

Added to the inventory account when incurred and expensed on the income statement when the inventory is sold.

The primary organization responsible for developing accounting rules is the

FASB

Which organization is primarily responsible for developing accounting rules? Multiple choice question. -FASB -SEC -IRS -GAAP

FASB

The primary organization responsible for developing accounting rules is the:

FASB (Financial Accounting Standards Board)

Pronouncements and practices on how to report financial accounting information are known as ______. Multiple choice question. -ASB -FASB -SEC -GAAP

GAAP

The pronouncements and practices that guide accountants as to how to report financial information are referred to as:

GAAP

At what level is information aggregated in financial accounting?

Global on the company as a whole

At what level is information aggregated in managerial accounting? Multiple choice question. -Global on the company as a whole -Local on subunits of the organization

Local on subunits of the organization

Which of the following statements is correct? Multiple choice question. -All wages and salaries in a manufacturing company are recorded the same way. -Production wages are expensed as incurred and salaries to selling and administrative employees are treated as product costs. -Production wages are recorded as inventory and salaries to selling and administrative employees are expensed as incurred.

Production wages are recorded as inventory and salaries to selling and administrative employees are expensed as incurred.

What are the three categories of inventory for a manufacturing company? Multiple select question. Raw materials Work in process Finished goods Cost of goods sold

Raw materials Work in process Finished goods

The organization responsible for regulating financial reporting is the

SEC

Which organization has the authority to regulate public financial reporting practices? Multiple choice question. -IRS -GAAP -SEC -FASB

SEC

The organization responsible for regulating financial reporting is the:

SEC (Securities and Exchange Commission)

True or false: Salaries paid to selling and administrative employees are accounted for differently than wages paid to production workers. True false question. True False

True

Product costs are first recorded as ______. Multiple choice question. assets expenses

assets

Recording a cash payment for product costs decreases ______ Multiple choice question. -cash account and increases expenses -cash and increases inventory -both cash and inventory -inventory and increases expenses

cash and increases inventory

Recording a cash payment for product costs decreases ______ Multiple choice question. both cash and inventory cash account and increases expenses inventory and increases expenses cash and increases inventory

cash and increases inventory

Characteristics of financial accounting information include ______. Multiple select question. -timeliness -consistency -objectivity -reliability -relevance

consistency objectivity reliability

To help managers analyze manufacturing costs schedule of ________ is prepared. Multiple choice question. -cost of goods manufactured and sold -raw materials and work in process inventory -balance sheet and income statement accounts

cost of goods manufactured and sold

Financial accounting provides information used primarily by ______. Multiple select question. -creditors -investors -executives -employees

creditors investors

Managerial accounting information is ______. Multiple choice question. -reported periodically, normally at year end -delivered on a continuous basis

delivered on a continuous basis

Labor costs that can be easily and conveniently traced to products are called _________ labor.

direct

Raw materials that can be easily and conveniently traced to products are called ____________ raw materials.

direct

When a company records a cash payment for manufacturing costs, total assets _____. Multiple choice question. are decreased are increased do not change

do not change

Purchasing materials with cash ______. Multiple select question. does not affect liabilities decreases operating cash flow decreases stockholders' equity decreases cash increases inventory

does not affect liabilities decreases operating cash flow decreases cash increases inventory

Direct raw materials are ______. Multiple choice question. easily and conveniently traced to products the same thing as raw materials any materials used to create products

easily and conveniently traced to products

External users (outsiders) rely on ______ data. Multiple select question. -economic -financial -nonfinancial

economic financial

Managerial accounting provides information used primarily by ______. Multiple select question. -executives -employees -investors -creditors

executives employees

Goods are transferred to cost of goods sold from ______ inventory. Multiple choice question. raw materials finished goods work in process

finished goods

A schedule of cost of goods manufactured and sold is prepared to ______. Multiple choice question. -publish as part of required GAAP based financial statements -help managers analyze manufacturing costs

help managers analyze manufacturing costs

Diminished motivation, sloppy work and inattentive attitudes are all examples of hidden inventory _________ costs

holding

General operating costs and selling and administrative costs are generally expensed when ______. Multiple choice question. incurred the related products are sold

incurred

Costs that cannot be traced to a product or service in a cost-effective manner are called ______ costs. Multiple choice question. period direct indirect

indirect

What accounts are affected when a company pays cash for a manufacturing cost? Multiple select question. Inventory Expense Accounts Payable Cash Retained Earnings

inventory cash

Financial accounting provides information used primarily by ______. Multiple select question. -employees -investors -executives -creditors

investors creditors

Economic and financial data

investors and creditors

Management accounting information gathering and reporting ______. Multiple choice question. -has no restrictions -is only restricted by the value-added principle -cannot include forecasts which are prohibited by GAAP

is only restricted by the value-added principle

Reduced inventory holding costs and increased customer satisfaction can occur as a result of implementing ______. Multiple choice question. just in time reengineering customer repurchasing warehousing

just in time

Direct labor is ______. Multiple choice question. any labor cost used to create products labor cost that can be easily and conveniently traced to products labor costs that are indirectly related to the product any labor that is incurred in a company that manufactures products

labor cost that can be easily and conveniently traced to products

Indirect costs incurred to make a product, including indirect labor, indirect materials, factory utilities, rent on manufacturing facilities, and depreciation on manufacturing facilities are called ___________ ______________

manufacturing overhead

The three costs recognized by GAAP that are incurred in the process of making products are:

materials, labor, and overhead

Financial and nondfinancial data

middle managers

Just-in-time inventory ______. Multiple choice question. -reduces inventory holding cost, but creates more waste -reduces inventory holding cost by reducing customer customization -minimizes inventory holding costs by making products just in time for customer consumption -increases inventory holding costs

minimizes inventory holding costs by making products just in time for customer consumption

When compared to financial accounting, managerial accounting uses ______. Multiple choice question. -more estimates and facts -less estimates and more facts -more estimates and fewer facts -less estimates and fewer facts

more estimates and fewer facts

Purchasing materials with cash affects ______. Multiple choice question. -operating activities on the cash flow statement -total assets on the balance sheet -expenses on the income statement

operating activities on the cash flow statement

Purchasing materials with cash affects ______. Multiple choice question. expenses on the income statement operating activities on the cash flow statement total assets on the balance sheet

operating activities on the cash flow statement

Primarily nonfinancial data and some financial data

operating employees

Resources other than materials and labor that are used in manufacturing a product are called ______ costs. Multiple choice question. -nonmanufacturing -additional -overhead -incidental

overhead

Resources, such as equipment and utilities, consumed in the process of manufacturing a product are called:

overhead

Cost that are expensed as soon as they are incurred are called _______ costs.

period

Selling, general and administrative costs are sometimes called ______ costs. Multiple choice question. immediate period temporary product

period

Materials used to make products are usually called ______ materials. Multiple choice question. direct production building raw

raw

Materials used to make products are usually called __________ materials.

raw

Lumber, metals, paints, and chemicals that will be used to make the company's products are all part of ___________ _______________ inventory.

raw materials

Financial accounting information is ______. Multiple choice question. -delivered on a continuous basis -reported periodically, normally at year end

reported periodically, normally at year end

Which of the following costs are not included in the cost of manufacturing a product? Multiple select question. -Materials -Overhead -Research -Labor -Administrative -Marketing

research administrative marketing

Which organization has the authority to regulate public financial reporting practices? Multiple choice question. -GAAP -IRS -FASB -SEC

sec

Primarily financial data and some economic and nonfinancial data

senior executives

Product costs are expensed when products are ________. Multiple choice question. produced sold

sold

Characteristics of managerial accounting information include ______. Multiple select question. objectivity timeliness consistency reliability relevance

timeliness relevance

True or false: Initially classifying a cost as a product cost, delays but does not eliminate its recognition as an expense. True false question. True False

true

The only reporting restriction for managerial accounting is the _________-____________ principle.

value-added

As production occurs, materials used, labor and overhead are first accumulated in ______ inventory. Multiple choice question. finished goods raw materials work in process

work in progress

As production occurs, materials used, labor and overhead are first accumulated in ______ inventory. Multiple choice question. raw materials work in process finished goods

work in progress