Accounting exam prep

liquidity

Short-term creditors are typically most interested in analyzing a company's

False

Using vertical analysis of the income statement, a company's net income as a percentage of sales is 15%; therefore, the cost of goods sold as a percentage of sales must be 85%

Period costs

are operating costs that are expensed in the period in which the goods are sold.

Conversion cost

combination of direct labor cost and factory overhead cost.

On the variable costing income statement.

deduction of the variable cost of goods sold from sales yields manufacturing margin.

The statement of cost of goods manufactured

extension of the income statement for a manufacturing company.

Indirect labor

included in factory overhead.

Managerial accounting information

includes both historical and estimated data.

Depreciation expense on factory equipment

is part of factory overhead cost.

Current position analysis

is used by short-term creditors to assess how quickly they will be repaid.

Cost systems

measure, record, and report product costs.

The contribution margin ratio

same as the profit-volume ratio.

Materials

transferred from the storeroom to the factory in response to materials requisitions.

$175,000

(The following information is used for the next two questions.) Jensen Company reports the following: $345.000 Direct materials used Direct labor incurred 250,000 Factory overhead incurred 400,000 Operating expenses 175,000 Jensen Company's period costs are

Under variable costing, which of the following costs would be included in finished goods inventory?

-wages of machine operator -steel costs for a machine tool manufacturer -electricity used by factory machinery

Straight line

Because variable costs are assumed to change in direct proportion to changes in the activity level, the graph of the variable costs when plotted against the activity level appears

Overhead costs

Costs other than direct materials cost and direct labor cost incurred in the manufacturing process are classified

Work in Process 150,000 Wages Payable 150,000

During the period, labor costs incurred on account amounted to $175,000, including $150,000 for production orders and $25,000 for general factory use (indirect labor). In addition, factory overhead charged to production was $32,000. The journal entry for the direct labor costs is

Direct labor cost

For a construction contractor, the wages of carpenters would be classified as

$142,000

Given the following data: Cost of materials used $45,000 Direct labor costs 48,000 Factory overhead 39,000 Work in process, beginning 28,000 Work in process, ending 18,000 Finished goods, beginning 28,000 Finished goods, ending 18.000 What is cost of goods sold?

Overapllied.

If factory overhead applied exceeds the actual costs, overhead is said to be underapplied.

True

In horizontal analysis, the prior year is normally used as the base year.

Managerial accounting information is for

Internal users , Involves gathering information about costs for planning and control decision as.

variable selling and administrative expenses

On the variable costing income statement, the figure representing the difference between manufacturing margin and contribution margin is