Managerial Accounting Ch 2 (3 non-calculation questions)
Conversion Costs
Combination of DL and MOH
Prime Costs
combination of DM and DL
Which of the following would be classified as a prime cost? - cost of DM used - depreciation on factory equipment - salary of sales personnel - depreciation on the accounting office furniture
cost of DM used
Property taxes on corporate headquarters
period
Salary of a chief financial officer
period
Companies typically generate profit through one of three basic business models: (common business sectors)
- Service - Merchandising - Manufacturing
What costs are treated as inventoriable product costs under GAAP?
Service companies: no inventoriable product costs Merchandising companies: the cost of merchandise purchases for resale plus all of the costs of getting the merchandise to the company's place of business (for example, freight-in and import duties) Manufacturing companies: DM, DL, and MOH
Which of the following is true regarding period costs? - They are always recorded as expenses - They include MOH - They include DM - They are initially recorded as inventory
They are always recorded as expenses
Which of the following will be classified as a conversion cost? - cost of DM used - depreciation on factory equipment - salary of sales personnel - depreciation on the accounting office furniture
depreciation on factory equipment
Inventoriable product costs
include only the costs incurred during the "production and purchases" stage of the value chain. DM, DL, MOH
Period Costs are often referred to as
Selling, general, and administrative expenses AND Operating Expenses
The salary of a production shift supervisor
product, MOH
Which of the following is a calculated amount, rather than a general ledger amount? CGS Finished Goods Inventory Cost of Goods Manufactured Sales Revenue
Cost of Goods Manufactured
TRUE OR FALSE: Sales Revenue equals the product cost per unit times the number of units sold
FALSE; it is not multiplied by the product cost, it is multiplied by the price the unit sells for
How are inventoriable product costs treated on financial statements?
Inventoriable products costs are initially treated as assets (inventory) on the balance sheet. These costs are expensed (as CGS) on the income statement when the products are sold.
Marketing Costs
Period
Period Costs
Research and Development, Design, Marketing, Distribution, Customer Service
Goods that have been started in the manufacturing process but are not yet complete are included in the - Finished Goods Inventory Account - Work in Process Inventory Account - Raw Materials Inventory Account - Cost of Goods Sold Account
Work in Process Inventory Account
Which of the following is a part of MOH - cost of raw materials - wages of assembly line workers - factory insurance - depreciation on accounting office furniture
factory insurance
Sales Commissions
period
The cost of a flight recorder
product, DM
Adhesive used to build seat cushions
product, MOH
Depreciation on factory forklift trucks
product, MOH
Electrical costs to light the production facility
product, MOH
Manufacturing equipment depreciation
product, MOH
Merchandising
resell tangible products that they buy from suppliers examples: Walmart, Best Buy, Amazon
Service
sell intangible services examples: health care, insurance, banking, and consulting
Manufacturing
use labor, plant, and equipment to convert raw materials into new finished products. For example, Toyota converts steel, tires, and fabric into high performance vehicles using production labor and advanced manufacturing equipment. 3 types of inventory: 1. Raw Materials Inventory 2. Work in Process Inventory 3. Finished Goods Inventory
