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