ACCt CH 10

ManCo Manufacturing Company paid cash for commissions paid to sales staff. Which of the following choices reflects how this event would affect the Company's balance sheet and income statement?

Assets: - Liab: n/a Equity: - Rev: n/a Exp: + NI: -

Mary's Manufacturing Company used supplies in its accounting department. Which of the following choices reflects how this event would affect the Company's balance sheet and income statement?

Assets: - Liab: n/a Equity: - Rev: n/a Exp: + NI: -

ManCo Manufacturing Company paid cash for wages of production workers. Which of the following choices reflects how this event would affect the Company's balance sheet and income statement?

Assets: -/+ Liab: n/a Equity: n/a Rev: n/a Exp: n/a NI: n/a

The Financial Accounting Standards Board (FASB) establishes standards for the preparation of financial accounting reports while the Securities and Exchange Commission (SEC) establishes standards for the preparation of managerial accounting reports. This statement is

False. The FASB and the SEC provide standards, rules, and guidance for financial reporting. Managerial accounting is largely unregulated.

Managerial accounting focuses on the needs of external users while financial accounting focuses on the needs of internal users. This statement is

False. relationships described in this statement are reversed.

Which of the following describes the flow of product costs in a manufacturing company? a. Product costs are first accumulated in an asset account (Inventory) and then transferred to an expense account (Cost of Goods Sold) when the products are sold. b. Product cost are first accumulated in an expense account (Cost of Goods Sold) and then transferred to an asset account (Inventory) When the goods are sold. c. Product costs are recorded in an expense account (Cost of Goods Sold) as the goods are being manufactured. d. Product costs are never expensed.

a. Product costs are first accumulated in an asset account (Inventory) and then transferred to an expense account (Cost of Goods Sold) when the products are sold.

Brock Company makes candy. During the most recent accounting period Brock paid $3,000 for raw materials, $4,000 for labor, and $2,000 for overhead costs that were incurred to make candy. Brock started and completed 10,000 units of candy of which 8,000 were sold. Based on this information the balance in the inventory account on Brock's balance sheet would be a. $1,800. b. $2,000. c. $9,000. d. None of the above.

a. $1,800. Materials $ 3,000 Labor $4,000 Overhead $2,000 Total product cost $ 9,000 ÷ 10,000 units = .90 cost per unit .90 x 2,000 units in inventory = $1,800 in inventory

Celestin Manufacturing Company incurred $5,000 of depreciation on its manufacturing equipment during its first year of operation. During this year the company made 2,500 units of product and sold 2,000 units of product. Based on this information alone the company would show a. $5,000 of depreciation expense on its income statement. b. $4,000 of cost of goods sold expense on its income statement. c. $5,000 of inventory on its balance sheet. d. $4,000 of inventory on its balance sheet.

b. $4,000 of cost of goods sold expense on its income statement. The cost of depreciation on manufacturing equipment is an overhead cost which is a product cost. The amount of the depreciation is first placed in the Inventory account and then transferred to the Cost of Goods Sold account when the units are sold. Since the company made 2,500 units of product and sold 2,000 of them, the amount of cost transferred to the Cost of Goods Sold account is $4,000 (5,000 depreciation / 2,500 units = $2 per unit; $2 per unit x 2,000 units sold = $4,000 cost of goods sold. The remaining $1,000 of depreciation would remain in the inventory account until the time the remaining goods are sold.

Which of the following branches of accounting focuses more on historical data? a. Managerial accounting. b. Financial accounting.

b. Financial accounting.

Calgary Manufacturing company makes chairs and desks. The following costs were incurred in making its products during its first year of operation. Direct Materials Chairs $4,000 Desks $6,000 Total $10,000 Direct Labor Chairs $12,000 Desks $8,000 Total $20,000 Also the company incurred $14,000 of employee benefits cost. Since these overhead costs are driven by the use of labor they are allocated to the products based on the direct labor dollars. Based on this information alone the total cost of making chairs is. a. $16,000. b. $30,000. c. $24,400. d. None of the answers is correct.

c. $24,400. Cost to be allocated / Allocation base = Allocation Rate $14,000 / $20,000 = $0.70 per labor dollar Overhead cost allocated to chairs $ 12,000 x .70 = $ 8,400 Overhead cost allocated to desks $ 8,000 x .70 = 5,600 Total overhead cost allocated $ 14,000 Total cost of making chairs = $4,000 materials + $12,000 labor + $8,400 overhead = $24,400

Brock Company makes candy. During the most recent accounting period Brock paid $3,000 for raw materials, $4,000 for labor, and $2,000 for overhead costs that were incurred to make candy. Brock started and completed 10,000 units of candy of which 8,000 were sold. Based on this information Brock would recognize which of the following amounts of expense on its income statement? a. $4,000. b. $9,000. c. $7,200. d. None of the above.

c. $7,200. Materials $ 3,000 Labor $ 4,000 Overhead $ 2,000 Total product cost $ 9,000 ÷ 10,000 units = .90 cost per unit .90 x 8,000 units sold = $7,200 cost of goods sold expense

Which of the following statements is true? a. Managerial accounting standards are established by the federal government. b. Managerial accounting data are prepared for external users. c. Managerial accounting reports are less regulated than financial accounting reports. d. Managerial accounting is characterized by its objectivity, reliability, consistency and historical nature.

c. Managerial accounting reports are less regulated than financial accounting reports.

The cost of manufacturing a product includes all of the following except a. materials. b. labor. c. advertising. d. overhead.

c. advertising.

Which of the following are characteristics of managerial accounting information? a. Provides information to the company's management team. b. Is future oriented. c. Is more willing to sacrifice reliability to gain relevance than is financial accounting. d. All of the answers describe characteristics of managerial accounting information.

d. All of the answers describe characteristics of managerial accounting information.

The cost of a small amount of glue used to manufacture a product may be called a. an overhead cost. b. a product cost. c. an indirect cost. d. All of the choices are terms that may be used describe small quantities of materials consumed in the process of making products.

d. All of the choices are terms that may be used describe small quantities of materials consumed in the process of making products.