Chapter 14

_____ costs are cost-effectively traced to a cost object. *Direct *Indirect

Direct Direct costs cost-effectively traced to a cost object. Indirect costs cannot be easily and cost-effectively traced to a single cost object.

Compute cost of goods sold using the following information. *Merchandise inventory, beginning $12,800 *Cost of merchandise purchased $85,800 *Merchandise inventory, ending $18,800

Merchandise inventory, beginning $12,800 Add: Cost of merchandise purchased $85,800 =Goods available for sale $98,600 Less: Merchandise inventory, ending $18,800 = Cost of goods sold $79,800

Service companies do not classify costs as product versus period costs because: *they do not have any product costs *they do not have any period costs *their services are not inventoried *it is difficult to efficiently classify these costs

their services are not invnetoried. A service company does not classify product versus period costs because their services are not inventoried so this type of classification is not relevant.

Assume that Speedboat Company has beginning finished goods inventory of $10,000; ending finished goods inventory of $150,000; goods available for sale of $210,000; and cost of goods manufactured of $200,000. What is its cost of goods sold?

$60,000 Goods available for sale includes beginning finished goods inventory and cost of goods purchased. As such, Cost of goods sold = goods available for sale of $210,000 - Ending Finished Goods Inventory of $150,000 = $60,000.

Which of the following are sections of the Schedule of Cost of Goods Manufactured? *Direct Labor *Direct Materials *Factory Overhead *Cost of Goods Manufactured *Cost of Goods Sold *Net Income

*Direct Labor *Direct Materials *Factory Overhead *Cost of Goods Manufactured

From the list below, select the items that are classified as a materials activity. *Raw materials used *Raw materials beginning inventory *Raw materials purchases *Work in process beginning inventory *Goods manufactured *Direct labor used *Factor overhead used

*Raw materials beginning inventory *Raw materials purchases Materials activities includes raw materials beginning inventory and raw materials purchases.

Determine the missing amount for each separate situation involving inventory cost flows. 1. *Cost of merchandise purchased _______ *Merchandise inventory, beginning $107,700 *Merchandise inventory, ending $83,700 *Cost of goods sold $206,700 2. *Cost of merchandise purchased $141,700 *Merchandise inventory, beginning _______ *Merchandise inventory, ending $34,700 *Cost of goods sold $129,700 3. *Cost of merchandise purchased $290,700 *Merchandise inventory, beginning $29,700 *Merchandise inventory, ending _________ *Cost of goods sold $268,700

1. $Cost of goods sold $206,700 + Merchandise inventory, ending $83,700 - Merchandise inventory, beginning $107,700 = Cost of merchandise purchased $182,700 2. Cost of goods sold $129,700 + Merchandise inventory, ending $34,700 - Cost of merchandise purchased $141,700 = Merchandise inventory, beginning $22,700 3. Cost of merchandise purchased $290,700 + Merchandise inventory, beginning $29,700 - Cost of goods sold $268,700 = Merchandise inventory, ending $51,700

A company manufactures tennis balls. Classify each of the following costs as either direct materials, direct labor, or factory overhead. 1. Rubber used to form the cores. 2. Factory maintenance. 3. Wages paid to assembly workers. 4. Glue used in binding rubber cores to felt covers. 5. Depreciation on Factory equipment. 6. Cans to package the balls.

1. Direct materials 2. factory overhead 3. Direct labor 4. Factory overhead 5. Factory overhead 6. Direct materials

A company manufactures tennis balls. Classify each of the following costs as either direct materials, direct labor, or factory overhead. 1. Factory electricity costs. 2. Glue used in binding rubber cores to felt covers. 3. Felt covering of tennis ball. 4. Cans to package the balls. 5. Factory rent. 6. Factory manager's salary.

1. Factory overhead 2. Factory overhead 3. Direct materials 4. Direct materials 5. Factory overhead 6. Factory overhead

A company manufactures guitars. Identify each of the following costs as either a prime cost, a conversion cost, or both. 1. Wood used to build the guitar body. 2. Glue used to bind the guitar wood. 3. Wages paid to assembly workers. 4. Depreciation on factory equipment. 5. Rent on factory building. 6. Wood to build the guitar bridge.

1. Prime cost 2. Conversion cost 3. Both 4. Conversion cost 5. Conversion cost 6. Prime cost

Classify each of the following costs as either a product cost or a period cost for a manufacturer. 1. Rent on a factory building. 2. Tax accountant salary. 3. Office manager salary. 4. Indirect labor used in making goods. 5. Depreciation on factory equipment. 6. Advertising. 7. Factory manager's salaray. 8. Administrative expenses.

1. Product Cost 2. Period Cost 3. Period Cost 4. Product Cost 5. Product Cost 6. Period Cost 7. Product Cost 8. Period Cost

Topeka Manufacturing reported sales of $750,000 during the current year. The company used $300,000 of raw materials to produce the units that were sold. Its raw materials inventory totaled $10,000 at the beginning of the year and $14,000 at the end of the year. What is the company's days' sales in raw materials inventory at the end of the current year?

17.03 days Days' sales in raw materials inventory = ending raw materials inventory of $14,000 / raw materials used of $300,000 X 365 = 17.03 days.

Topeka Manufacturing reported sales of $750,000 during the current year. The company used $300,000 of raw materials to produce the units that were sold. Its raw materials inventory totaled $10,000 at the beginning of the year and $14,000 at the end of the year. What is the company's raw materials inventory turnover?

25.0 Raw materials inventory turnover = raw materials used of $300,000 / average raw materials inventory of $12,000 (or $10,000 + $14,000 / 2) = 25.0

The main difference on the income statement between a manufacturer and a merchandiser includes: (A) Items making up cost of goods sold (B) Items making up raw materials inventory (C) selling and administrative expenses (D) Revenue

A The main difference on the income statement between a manufacturer and a merchandiser includes the items making up cost of goods sold. A merchandiser adds cost of goods purchased to beginning merchandise inventory and subtracts ending merchandise inventory. A manufacturer adds cost of goods manufactured to beginning finished goods inventory and subtracts ending finished goods inventory.

A focus on financial, social, and environmental measures is known as (A) Triple bottom line (B) Total quality management (C) Continuous improvement (D) Corporate social responsibilities

A The triple bottom line focuses on financial, social, and environmental measures.

Which is the lean principle where managers and employees seek to uncover waste in business activities including accounting activities such as payroll and disbursements? (A) Value chain (B) Total quality management (C) Continuous improvement (D) Just-in-time manufacturing

B Total quality management is the lean practice where managers and employees seek to uncover waste in business activities including accounting activities such as payroll and disbursements.

Prepare the current assets section of the balance sheet at December 31 for Bin Manufacturing using the following information. Hint: Not all information given is needed for the solution. *Cash $23,100 *Accounts Payable $3,100 *Raw materials inventory $9,100 *General and administrative expenses $43,100 *Accounts receivable, net $13,100 *Selling expenses $13,100 *Finished goods inventory $23,100 *Work in process inventory $19,100 *Prepaid insurance $5,100 *Cost of goods sold $34,100

Balance sheet: *Cash $23,100 *Raw materials inventory $9,100 *Accounts receivable, net $13,100 *Finished goods inventory $23,100 *Work in process inventory $19,100 *Prepaid insurance $5,100 Total current assets = $92,600

Completed products ready for sale are referred to as: (A) work in process inventory (B) raw materials inventory (C) finished goods inventory (D) cost of goods sold inventory

C Completed products which are ready to be sold are known as finished goods inventory.

What are price costs? (A) Direct Material + Direct Labor + Factory Overhead (B) Direct Material + Direct Labor (C) Direct Labor + Factory Overhead (D) Cost of obtaining the merchandise inventory

C Prime costs include the costs include the costs of direct materials and direct labor and are costs incurred in the process of converting raw materials to finished goods.

Cold Creed Kayaks, a manufacturing company, has beginning finished goods inventory of $25,000; cost of goods manufactured of $320,000; and ending finished goods inventory of $32,000. What is the cost of goods available for sale?

Cost of goods available for sale = 345,000 Beginning finished goods inventory of $25,000 + Cost of goods manufactured of $320,000 = Cost of goods available for sale of $345,000.

Which of these phrases describes the fact that employees understand the changing needs and wants of their customers and align their management and operating practices accordingly? (A) Global economy (B) Service economy (C) Value chain (D) Customer orientation (E) E-commerce

D Customer orientation describes the fact that employees understand the changing needs and wants of their customers and align their management and operating practices accordingly.

Compute cost of goods sold using the following information *Finished goods inventory, beginning $345,000 *Work in process inventory, beginning $83,000 *Work in process inventory, ending $72,000 *Cost of goods manufactured $918,000 *Finished goods inventory, ending $283,000

Finished goods inventory, beginning $345,000 Add: Cost of goods manufactured $918,000 = Goods available for sale $1,263,000 Less: Finished goods inventory, ending $283,000 = Cost of goods sold $980,000

Compute cost of goods sold using the following information *Finished goods inventory, beginning $362,000 *Work in process inventory, beginning $86,000 *Work in process inventory, ending $75,300 *Cost of goods manufactured $961,300 *Finished goods inventory, ending $316,000

Finished goods inventory, beginning $362,000 Add: Cost of goods manufactured $961,300 = Goods available for sale $1,323,300 Less: Finished goods inventory, ending $316,000 = Cost of goods sold $1,007,300

Compute cost of goods sold using the following information. *Finished goods inventory, beginning $500 *Cost of goods manufactured $4,000 *Finished goods inventory, ending $700

Finished goods inventory, beginning $500 Add: Cost of goods manufactured $4,000 = Goods available for sale $4,500 Less: Finished goods inventory, ending $700 = Cost of Goods Sold $3,800

Compute cost of goods sold using the following information. *Finished goods inventory, beginning $660 *Cost of goods manufactured $5,000 *Finished goods inventory, ending $1,150

Finished goods inventory, beginning $660 Add: Cost of goods manufactured $5,000 = Goods available for sale $5,660 Less: Finished goods inventory, ending $1,150 = Cost of Goods Sold $4,510

Match each concept with the correct accounting system. Item #1: Purpose is to assist managers in planning and control decisions. Item #2: Structured and follows GAAP. Activities: A - Managerial Accounting System B - Financial Accounting System

Item #1: Managerial Accounting System Managerial accounting information is provided to internal managers and employees who make and implement decisions about a company's business activities. This includes helping them plan and control the company's activities. Item #2: Financial Accounting System Financial accounting follows concepts and rules, called GAAP, which provides consistency and comparability of financial statements across companies.

______ is when a person commits fraud and feels a low risk of getting caught. *Pressure *Opportunity *Rationalization *Incentive

Opportunity Opportunity is when a person commits fraud and feels a low risk of getting caught. Pressure, or incentive, is when a person feels pressure or has an incentive to commit fraud. Rationalization is when a person justifies fraud or does not see its criminal nature.

Common examples of _____ costs included selling expenses and expenses and general office personell, advertising expenses, and depreciation of office equipment.

Period. Period costs refer to expenditures identified more with a time period than with finished products. Common examples of period costs include selling expenses, salaries of salespersons and general office personnel, advertising expenses, and depreciation on office equipment. Product costs refer to expenditures necessary and integral to finish products.

The purposes of managerial accounting are to provide useful information to aid in: *reviewing past activities. *determining cost of products and services. *determining costs of employee wages and salaries. *comparing actual to planned results.

The tree main purposes of managerial accounting are to provide useful information to aid in planning future activities, comparing actual to planned results, and determining costs of products and services.