ACCT 2 CH 1 QUIZ

Which one of the following costs would not be inventoriable?

Period costs

Dolan Company's accounting records reflect the following inventories: Dec.31, 2013 Dec.31, 2012 Raw materials inventory $310,000 $260,000 Work in process inventory 300,000 160,000 Finished goods inventory 190,000 150,000 During 2013, $600,000 of raw materials were purchased, direct labor costs amounted to $500,000, and manufacturing overhead incurred was $480,000. If Dolan Company's cost of goods manufactured for 2013 amounted to $1,390,000, its cost of goods sold for the year is

$1,350,000.

Dolan Company's accounting records reflect the following inventories: Dec.31, 2013 Dec.31, 2012 Raw materials inventory $310,000 $260,000 Work in process inventory 300,000 160,000 Finished goods inventory 190,000 150,000 During 2013, $600,000 of raw materials were purchased, direct labor costs amounted to $500,000, and manufacturing overhead incurred was $480,000. Dolan Company's total manufacturing costs incurred in 2013 amounted to

$1,530,000.

Barry's BarBQue incurred the following costs: $1,400 for ribs, 45 hours of labor to cook the ribs at $10 per hour, $50 for seasoning and sauce, $300 for signs to advertise the ribs, $150 to clean the grill after cooking the ribs, and $100 of administrative costs. How much are total product costs?

$2,050 ANSWER: Only manufacturing costs are included as product costs. Advertising and administrative are period costs which are not part of the cost of getting the product ready to sell. $1,400 + (45*$10) + $50 + $150 = $2,050.

Laflin Company reported the following year-end information: Beginning work in process inventory $1,080,000 Beginning raw materials inventory 300,000 Ending work in process inventory 900,000 Ending raw materials inventory 480,000 Raw materials purchased 960,000 Direct labor 800,000 Manufacturing overhead 720,000 Laflin Company's cost of goods manufactured for the year is

$2,480,000.

Penner Company reported total manufacturing costs of $410,000, manufacturing overhead totaling $78,000, and direct materials totaling $96,000. How much is direct labor cost?

$236,000

The work of factory employees that can be physically and directly associated with converting raw materials into finished goods is

direct labor.

Product costs consist of

direct materials, direct labor, and manufacturing overhead.

Managerial accounting applies to all types of businesses, including service, merchandising, and manufacturing, as well as to all forms of business organizations.

True

Manufacturing overhead consists of costs that are indirectly associated with the manufacture of the finished product.

True

Product costs are costs that are a necessary and integral part of producing the finished product.

True

Cost of goods manufactured is calculated as follows:

Beginning WIP + direct materials used + direct labor + manufacturing overhead - ending WIP.

On the costs of goods manufactured schedule, depreciation on factory equipment

appears in the manufacturing overhead section.

A manufacturing company calculates cost of goods sold as follows:

Beginning FG inventory + cost of goods manufactured - ending FG inventory.

Which of the following would you find on the income statement of a manufacturing company, but not on the income statement of a merchandising company?

Cost of goods manufactured

Indirect material costs are easily traced to products because of their physical association with the finished product.

False

Manufacturers compute cost of goods sold by adding the beginning finished goods inventory to the cost of goods purchased and subtracting the ending finished goods inventory.

False

Planning is the process of keeping the company's activities on track.

False

Which of the following statements is not true about managerial accounting?

It is highly aggregated.

A music company has these costs: Classify each cost as a period or a product cost. Within the product cost category, indicate if the cost is part of direct materials, direct labor, or manufacturing overhead. Advertising Blank CDs Depreciation of CD image burner Salary of factory manager Factory supplies used Paper inserts for CD cases CD plastic cases Salaries of sales representatives Salaries of factory maintenance employees Salaries of employees who burn music onto CDs

Period costs or Product costs Direct Materials Direct Labor Manufacturing Overhead N/A Period Cost N/A Product Cost DM Product Cost MO Product Cost MO Product Cost MO Product Cost DM Product Cost DM Period Cost N/A Product Cost MO Product Cost DL

Which of the following are considered to be management's three broad functions?

Planning, directing, and controlling

The product cost that is most difficult to associate with a product is

manufacturing overhead.