Managerial Accounting: Exam 1

Lund Company applies manufacturing overhead to jobs using a predetermined overhead rate of 75% of direct labor cost. Any under or overapplied overhead is closed out to Cost of Goods Sold at the end of the calendar year. During March, the following transactions were recorded by the company: raw materials purchased during the moth - $27,00; raw materials used in production - $28,000; direct labor hours work during month - 2,500; direct labor cost incurred - $20,000; indirect labor cost incurred - $5,500; manufacturing overhead costs incurred - $17,000; raw material inventory, ending - $7,500; work in process inventory, beginning - $10,500; work in process inventory, ending - $14,000 (contains $5,000 of direct labor cost). The Cost of Goods Manufactured for March was: A) $66,500. B) $61,500. C) $59,500. D) $63,000.

C) $59,500.

Munos Publishing Company uses a job-order costing system to collect costs related to the manufacture of specialty publications for corporate training. What journal entry would Munos make to record the completion of Job KN668 as a total cost of $7,600? A) Work in Process______________7,600 ____Finished Goods_______________7,600 B) Cost of Goods Manufactured_____7,600 ___Work in Process_______________7,600 C) Finished Goods______________7,600 ___Work in Process_______________7,600 D) Cost of Goods Manufactured_____7,600 ___Finished Goods_______________7,600

C) Finished Goods______________7,600 ___Work in Process_______________7,600

Munos Publishing Company uses a job-order costing system to collect costs related to the manufacture of specialty publications for corporate training. What journal entry would Munos make to record $9,500 of depreciation on its printing presses? A)Work in Process____________9.500 ___Applied Manufacturing Overhead___9,500 B) Depreciation Expense________9,500 ___Accumulated Depreciation_______9,500 C) Manufacturing Overhead________9,500 ___Accumulated Depreciation__________9,500 D) Manufacturing Overhead________9,500 ___Depreciation Expense_____________9,500

C) Manufacturing Overhead________9,500 ___Accumulated Depreciation__________9,500

A proper journal entry is recorded issuing raw materials to be used on a job would be: A) Finished Goods XXXX _____Raw Materials XXXX B) Raw Materials XXXX _____Work in Process XXXX C) Work in Process XXXX _____Raw Materials XXXX D) Raw Materials XXXX _____Finished Goods XXXX

C) Work in Process XXXX _____Raw Materials XXXX

A sunk cost is: A) a cost that may be saved by not adopting an alternative. B) a cost that may be shifted to the future with little or no effect on current operations. C) a cost that cannot be avoided because it has already been incurred. D) a cost which does not entail any dollar outlay but which is relevant to the decision-making process.

C) a cost that cannot be avoided because it has already been incurred.

Which of the following would probably be the least appropriate allocation base for allocating overhead in a highly automated manufacturer of specialty valves. A) machine-hours. B) power consumption. C) direct labor-hours. D) machine setups.

C) direct labor-hours.

Management accounting primarily is concerned with providing: A) information to managers inside the organization as well as information to stockholders, creditors, & others outside the organization. B) information to stockholders, creditors, & others outside the organization. C) information to managers inside the organization. D) information to governmental regulatory agencies.

C) information to managers inside the organization.

In a manufacturing company, direct labor costs combined with direct materials costs are known as: A) period costs. B) conversion costs. C) prime costs. D) opportunity costs.

C) prime costs.

Direct materials costs is a: A) period cost. B) neither a period cost nor a product cost. C) product cost. D) period cost & product cost.

C) product cost.

Just-in-time purchasing requires: A) larger & less frequent purchase orders. B) smaller & less frequent purchase orders. C) smaller & more frequent purchase orders. D) larger & more frequent purchase orders.

C) smaller & more frequent purchase orders.

The balance in the Work in Process account equals: A) the balance in the Finished Goods inventory account. B) the balance in the Cost of Goods Sold account. C) the balances on the job cost sheets of uncompleted jobs. D) the balance in the Manufacturing Overhead account.

C) the balances on the job cost sheets of uncompleted jobs.

Which of the following would most likely be included as part of manufacturing overhead in the production of a wooden table? A) the amount paid to the individual who stains the table. B) the commission paid to the salesperson that sold the table. C) the cost of glue used in the table. D) the cost of the wood used in the table.

C) the cost of glue used in the table.

Lund Company applies manufacturing overhead to jobs using a predetermined overhead rate of 75% of direct labor cost. Any under or overapplied overhead is closed out to Cost of Goods Sold at the end of the calendar year. During March, the following transactions were recorded by the company: raw materials purchased during the moth - $27,00; raw materials used in production - $28,000; direct labor hours work during month - 2,500; direct labor cost incurred - $20,000; indirect labor cost incurred - $5,500; manufacturing overhead costs incurred - $17,000; raw material inventory, ending - $7,500; work in process inventory, beginning - $10,500; work in process inventory, ending - $14,000 (contains $5,000 of direct labor cost). The balance on March 1 in the Raw Materials inventory account was: A) $8,500. B) $6,500. C) $7,500. D) $9,500.

A) $8,500.

In a job order cost system, the use of indirect materials previously purchased is recorded as a decrease in: A) Raw Materials inventory. B) Work in Process inventory. C) Manufacturing Overhead. D) Finished Goods inventory.

A) Raw Materials inventory.

Munos Publishing Company uses a job-order costing system to collect costs related to the manufacture of specialty publications for corporate training. What journal entry would Munos make to record the application of $1,200 of manufacturing overhead to Job KN672? A) Work in Process____________1,200 ___Applied Manufacturing Overhead___1,200 B) Cost of Goods Manufactured_____1,200 ___Manufacturing Overhead_________1,200 C) Manufacturing Overhead________1,200 ___Work in Process_______________1,200 D) Cost of Goods Manufactured_____1,200 ___Work in Process_______________1,200

A) Work in Process____________1,200 ___Applied Manufacturing Overhead___1,200

_______ is an operation where the work required to be performed approaches or exceeds the available capacity. A) a bottleneck. B) a time driver. C) customer response time. D) a work station.

A) a bottleneck.

Property taxes on a manufacturing plant are an element of: A) conversion cost. B) conversion cost & period cost. C) period cost. D) neither conversion cost nor period cost.

A) conversion cost.

Businesses that are separated into two or more manageable units in which managers have authority & responsibility for operatiions are said to be. A) decentralized. B) consolidated. C) diversified. D) centralized.

A) decentralized.

Financial accounting: A) is required by regulatory bodies such as the SEC. B) has its primary emphasis on the future. C) provides data primarily for the internal uses by managers. D) is concerned primarily with the performance of segments of the organization.

A) is required by regulatory bodies such as the SEC.

A demand-pull system in which each componet in a production line is produced immediately as needed by the next step in the production lines is referred to as: A) just-in-time sequencing. B) materials requirements planning. C) relevant total costs. D) economic order quality.

A) just-in-time sequencing.

The best return on spending for quality conformance comes from: A) prevention costs. B) inspection costs. C) improving rework procedures. D) giving the customer better warranty coverage.

A) prevention costs.

The organization chart: A) shows lines of authority within an organization. B) shows whether or not the organization is decentralized. C) shows both formal & informal channels of communication between managers. D) shows the accounts in the general ledger.

A) shows lines of authority within an organization.

The following data (in thousands of dollars) have been taken from the accounting records of Karmint Corporation for the just completed year: sales - $830; raw materials inventory, beginning - $50, raw materials inventory, ending - $40; purchases of raw materials - $150; direct labor - $140: manufacturing overhead - $160; administrative expenses - $120; selling expenses - $150; work in process inventory, beginning - $30; work in process inventory, ending - $50; finished goods inventory, beginning - $80; finished goods inventory, ending - $100. The cost of the raw materials used in production during the year (in thousand of dollars) was: A) $190. B) $160. C) $140. D) $200.

B) $160.

Among the costs Kunee Company incurred during the month of August were the following: $15,000 - coolant used in the headquarters office air-conditioning system; $45,000 - property taxes on factory building; $10,000 - depreciation on trucks used to deliver products to customers; $2,000 - salary paid to a factory quality control inspector. The period costs from the above list total: A) $7,000. B) $25,000. C) $32,000. D) $30,000.

B) $25,000.

The following data (in thousands of dollars) have been taken from the accounting records of Karmint Corporation for the just completed year: sales - $830; raw materials inventory, beginning - $50, raw materials inventory, ending - $40; purchases of raw materials - $150; direct labor - $140: manufacturing overhead - $160; administrative expenses - $120; selling expenses - $150; work in process inventory, beginning - $30; work in process inventory, ending - $50; finished goods inventory, beginning - $80; finished goods inventory, ending - $100. The cost of goods sold for the year (in thousand of dollars) was: A) $540. B) $420. C) $460. D) $520.

B) $420.

The Work in Process inventory account of a manufacturing firm shows a balance of $3,000 at the end of an accounting period. The job cost sheets of the only two uncompleted jobs show charges of $500, & $300 for materials, & charges of $400 & $600 for direct labor. From this information, it appears that the company is using a predetermined overhead rate, as a percentage of direct labor costs, of: A) 83%. B) 120%. C) 40%. D) 300%.

B) 120%.

There are two acceptable methods for closing out any balances of under or overapplied overhead. One method involves allocation, whereas the other closes any balance (if immaterial in amount) directly to: A) Finished Goods inventory. B) Cost of Goods Sold. C) Cost of Goods Manufactured. D) Work in Process inventory.

B) Cost of Goods Sold.

In a job-order cost system, the application of manufacturing overhead usually would be recorded as a debit to: A) Cost of Goods Sold. B) Work in Process Inventory. C) Manufacturing Overhead. D) Finished Goods Inventory.

B) Work in Process Inventory.

Just-in-time processing is a business philosophy that focuses on reducing time & cost & eliminating poor quality. This is accomplished in manufacturing & non-manufacturing processes by: A) moving a product from process to process as each function is completed. B) combining processing functions into work centers & cross-training workers to perform more than one function. C) having production supervisors attempt to enter enough materials into manufacturing to keep all manufacturing departments operating. D) having workers typically perform one function on a continuous basis.

B) combining processing functions into work centers & cross-training workers to perform more than one function.

_______ is the term used to identify both the tracing of accumulated costs & the allocation of these costs to a cost object. A) costing materials. B) cost assignment. C) direct cost tracing. D) supervisory tracing.

B) cost assignment.

Anything for which a separate measurement of costs is desired is a: A) cost item. B) cost object. C) fixed cost item. D) variable cost object.

B) cost object.

Within the relevant range: A) variable cost per unit decreases as production decreases. B) fixed cost per unit increases as production decreases. C) fixed cost per unit decreases as production decreases. D) variable cost per unit increases as production decreases.

B) fixed cost per unit increases as production decreases.

When volume or level of activity decreases, variable costs will: A) increase per unit. B) increase in total. C) decrease in total. D) decrease per unit.

B) increase in total.

Which of the following costs could contain both variable & a fixed cost element with respect to the total output of the company? A) sales commissions. B) manufacturing overhead costs. C) direct material. D) administrative salaries.

B) manufacturing overhead costs.

All of the following costs would be found in a company's accounting records except: A) sunk cost. B) opportunity cost. C) indirect costs. D) direct costs.

B) opportunity cost.

The document authorizing the issuance of materials from the storeroom is the; A) materials requisition. B) purchase requisition. C) receiving report. D) purchase order.

B) purchase requisition.

All of the following can be differential costs except: A) variable costs. B) sunk costs. C) opportunity costs. D) fixed costs.

B) sunk costs.

The following data (in thousands of dollars) have been taken from the accounting records of Karmint Corporation for the just completed year: sales - $830; raw materials inventory, beginning - $50, raw materials inventory, ending - $40; purchases of raw materials - $150; direct labor - $140: manufacturing overhead - $160; administrative expenses - $120; selling expenses - $150; work in process inventory, beginning - $30; work in process inventory, ending - $50; finished goods inventory, beginning - $80; finished goods inventory, ending - $100. The net operating income for the year (in thousand of dollars) was: A) $140. B) $170. C) $110. D) $410.

A) $140.

Jameson Company uses a predetermine overhead rate based on direct labor hours to apply manufacturing overhead to jobs. The company has provided the following estimated costs for the next year: direct materials - $5,000; direct labor - $19,000; rent on factory building - $16,000; sales salaries - $24,000; depreciation on factory equipment - $7,000; indirect labor - $11,000; production supervisor's salary - $14,000. Jameson estimates that 24,000 direct labor hours will be worked during the year. The predetermined overhead rate per hour will be: A) $2.00. B) $2.79. C) $3.00. D) $4.00.

A) $2.00.

Galbraith Company applies overhead costs to jobs on the basis of 70% direct labor cost. If Job 201 shows $28,000 of manufacturing overhead applied, the direct labor cost on the job was: A) $40,000. B) $19,000. C) $28,000. D) $36,400.

A) $40,000.

Last month a manufacturing company had the following operating results: beginning finished goods inventory - $84,000; ending finished goods inventory - $71,000; sales - $505,000; gross margin - $63,000. What was the cost of goods manufactured for the month? A) $429,000. B) $492,000. C) $442,000. D) $455,000.

A) $429,000.

At a sales volume of 40,000 units, Lonnie Company's total fixed costs are $40,000 & total variable costs are $60,000. The relevant range is 30,000 to 50,000 units. If Lonnie were to sell 42,000 units, the total expected cost would be: A) $105,000. B) $100,000. C) $103,000. D) $102,000.

C) $103,000.

Lund Company applies manufacturing overhead to jobs using a predetermined overhead rate of 75% of direct labor cost. Any under or overapplied overhead is closed out to Cost of Goods Sold at the end of the calendar year. During March, the following transactions were recorded by the company: raw materials purchased during the moth - $27,00; raw materials used in production - $28,000; direct labor hours work during month - 2,500; direct labor cost incurred - $20,000; indirect labor cost incurred - $5,500; manufacturing overhead costs incurred - $17,000; raw material inventory, March 31 - $7,500; work in process inventory, March 1 - $10,500; work in process inventory, March 31 - $14,000 (contains $5,000 of direct labor cost). The amount of direct materials cost in the March 31 Work in Process inventory account was; A) $5,250. B) $3,500. C) $9,000. D) $8,750.

A) $5,250.

Noel Stewart bought a machine two years ago for $500. He must now replace the old machine by buying a new model 206 for $700 or a used model 204 for $650. Noel has decided to buy model 204. In making his decision, Noel should consider the differential cost to be: A) $50. B) $200. C) $150. D) $500.

A) $50.

The following debits (credits) appear in Axe Company's Work in Process inventory account for the month of March: balance - $2,000; direct materials - $12,000; direct labor - $8,000; manufacturing overhead - $6,400; to finished goods - ($24,000). Axe applies overhead to jobs at a predetermined rate of 80% of direct labor cost. Job No. 9, the only job still in process at the end of March, has been charged with direct labor of $1,000. The amount of direct materials charged to Job No. 9 was: A) $12,000. B) $4,400. C) $2,600. D) $1,500.

C) $2,600.

The following data (in thousands of dollars) have been taken from the accounting records of Karmint Corporation for the just completed year: sales - $830; raw materials inventory, beginning - $50, raw materials inventory, ending - $40; purchases of raw materials - $150; direct labor - $140: manufacturing overhead - $160; administrative expenses - $120; selling expenses - $150; work in process inventory, beginning - $30; work in process inventory, ending - $50; finished goods inventory, beginning - $80; finished goods inventory, ending - $100. The cost of goods manufactured (finished) for the year (in thousand of dollars) was: A) $480. B) $490. C) $440. D) $510.

C) $440.

During the month of March, Nale Co. used $300,000 of direct materials. At March 31, Nale's direct material inventory was $50,000 more than it was at March 1. Direct material purchases during the month of March amounted to: A) $0. B) $250,000. C) $300,000. D) $350,000.

D) $350,000.

Noel Stewart bought a machine two years ago for $500. He must now replace the old machine by buying a new model 206 for $700 or a used model 204 for $650. Noel has decided to buy model 204. In this decision, Noel would consider the sunk cost to be: A) $50. B) $650. C) $700. D) $500.

D) $500.

Which of the following entries or sets of entries would record sales of $200,000 for the month of July of goods costing $119,000? Assume a perpetual inventory system. A) Accounts Receivable____200,000 ______Sales____________200,000 B) Accounts Receivable____200,000 ______Sales____________200,000 Cost of Goods Sold______119,000 ______Work in Process_____119,000 C) Cost of Goods Sold____119,000 Net Operating Income____81,000 ______Sales___________200,000 D) Accounts Receivable___200,000 ______Sales___________200,000 Cost of Goods Sold_____119,000 ______Finished Goods_____119,000

D) Accounts Receivable___200,000 ______Sales___________200,000 Cost of Goods Sold_____119,000 ______Finished Goods_____119,000

Profession ethics for a certified management accountant in the United States were established by the: A) AICPA B) FASB C) SEC D) IMA

D) IMA

Examples of non-financial measures of quality include: A) percentage of defective units shipped to customers as a percentage of total units shipped. B) the number of customer complaints. C) percent of products that experience early or excessive failure. D) all of the above are non-financial measures of quality.

D) all of the above are non-financial measures of quality.

Delegating decisions to lower levels of management results in increased: A) profitability. B) centralization. C) control. D) decentralization.

D) decentralization.

______ is the fundamental rethinking & redesign of business processes to achieve improvement in critical measures of performance such as cost, quality, service speed, & customer satisfaction. A) strategy. B) customer perspective. C) learning & growth perspective. D) reengineering.

D) reengineering.

The manufacturing operation that would be most likely to use a job-order costing system is; A) golf ball manufacturing. B) candy bar manufacturing. C) crude oil refining. D) shipbuilding.

D) shipbuilding.

Nil Co. uses a predetermine overhead rate based on direct labor cost to apply manufacturing overhead to jobs. For the year ended December 31, Nil's estimated manufacturing overhead was $600,000, based on an estimated volume of 50,000 direct labor hours, at a direct labor rate of $6.00 per hour. Actual manufacturing overhead amounted to $620,000 with actual direct labor cost of $325,000 & 60,000 in actual direct labor hours. For the year, manufacturing overhead was: A) underapplied by $20,000. B) underapplied by $22,000. C) overapplied by $30,000. D) underapplied by $30,000.

a