Acc 200 ch10 video questions

Calgary Manufacturing company makes chairs and desks. The following costs were incurred in making its products during its first year of operation. ChairsDesksTotalDirect Materials$4,000 $6,000 $10,000 Direct Labor 12,000 8,000 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 $16,000. $30,000. $24,400. None of the answers is correct.

$24,400.

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 $5,000 of depreciation expense on its income statement. $4,000 of cost of goods sold expense on its income statement. $5,000 of inventory on its balance sheet. $4,000 of inventory on its balance sheet.

$4,000 of cost of goods sold expense on its income statement.

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? $4,000. $9,000. $7,200. None of the above.

$7,200.

The primary difference between cost classification for a manufacturing firm versus a merchandising firm is All costs for a merchandising firm are downstream costs for a manufacturing firm. All downstream costs for a merchandising firm are midstream costs for a manufacturing firm. All midstream costs for a merchandising firm are upstream cost for a manufacturing firm. All costs for a manufacturing firm are midstream costs for a merchandising firm.

All costs for a manufacturing firm are midstream costs for a merchandising firm.

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

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

Which of the following branches of accounting focuses more on historical data? A. Managerial accounting. B. Financial accounting.

B. Financial accounting. Explanation: Managerial accounting focuses more on current and future data while financial accounting focuses on reports that explain historical data. For example, financial accounting seeks to determine the amount of income that has been earned in the past while managerial accounting provides information that will facilitate the amount of income to be earned in the future.

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. Explanation: Managerial accounting focuses on preparing information for internal users. The types and quality of information are dictated by the management of the reporting entity and are not subject to regulatory requirements.

The cost of manufacturing a product includes all of the following except A. materials. B. labor. C. advertising. D. overhead.

C.advertising. Explanation Advertising is a cost of selling products as opposed to making them.

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.

Which of the following costs would not be included as part of manufacturing overhead? Insurance on sales vehicles Depreciation of production equipment Lubricants for production equipment Maintenance workers' salaries at the factory

Insurance on sales vehicles Explanation Insurance on sales vehicles is a cost incurred to sell a product rather than to make it. All other options are examples of product costs that would be classified as manufacturing overhead.

Product costs are placed in which financial statement account when incurred? Cost of goods sold Inventory Selling expense Property, plant, and equipment

Inventory Explanation When product costs are incurred, they are first placed into an inventory account on the balance sheet. These costs are not recognized as an expense on the income statement until the product is sold.

The primary difference between midstream costs incurred at a manufacturing firm versus a service firm is Inventory at a service company can be stored for future use as opposed to being immediately consumed at a manufacturing firm. Costs that would ordinarily be classified as upstream in a manufacturing firm would be classified as downstream in a service firm. Inventory at a service company is consumed immediately as opposed to being stored for future use at a manufacturing firm. Costs that would ordinarily be classified as upstream in a service firm would be classified as downstream in a manufacturing firm.

Inventory at a service company is consumed immediately as opposed to being stored for future use at a manufacturing firm.

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=Liability+Equity Revenue −Expense =Net Income A + − = n/a + n/a n/a − n/a = n/a B − = n/a + − n/a − + = − C − = n/a + − n/a − n/a = n/a D + − = n/a + n/a n/a − + = − Option A Option B Option C Option D

Option B Explanation Since the accounting department does not make products the cost of supplies used in the department is not a product cost. Instead, the cost of the used supplies is an administrative expense. Recognizing the expense causes assets and equity to decrease. On the income statement expenses increase and net income decreases. Had the supplies been used to produce a product the effects would have been different. Specifically, using manufacturing supplies is an asset exchange transaction that does not affect the income statement immediately. Instead, the income statement would be effected in a subsequent transaction when the goods are sold.

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=Liability+Equity Revenue −Expense =Net Income A + − = n/a + n/a n/a − n/a = n/a B − = n/a + − n/a − + = − C − = n/a + − n/a − n/a = n/a D + − = n/a + n/a n/a − + = − Option A Option B Option C Option D

Option B Explanation When ManCo pays cash to the sales staff the company is paying to sell the product. Selling expenses are downstream costs that are incurred after the product has been made. They are period costs as opposed product cost. Selling costs are expensed in the period they are incurred. As a result, the asset account (Cash) decreases and the expense recognition causes equity (Retained Earnings) to decrease. On the income statement expenses increase and net income decreases.

The wages of factory maintenance personnel would usually be considered as: Indirect Labor Manufacturing Overhead a) No Yes b) Yes No c) Yes Yes d) No No Option A Option B Option C Option D

Option C Explanation The wages of factory maintenance personnel would not be easily traceable to an individual product and therefore would be classified as indirect labor, which is a component of manufacturing overhead.

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=Liability+Equity Revenue −Expense =Net Income A + − = n/a + n/a n/a − + = − B − = n/a + − n/a − + = − C + − = n/a + n/a n/a − n/a = n/a D − = n/a + − n/a − n/a = n/a Option A Option B Option C Option D

Option C Explanation When ManCo pays cash for production workers the company is paying money to make inventory. As a result, one asset account (Cash) decreases and another asset account (Inventory) increases, the total amount of assets is not affected. The income statement is not affected until the time goods are sold.

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

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.

the cost of denim used to manufacture blue jeans would most likely be classified as a indirect material direct labor direct material manufacturing overhead

direct material Explanation Denim represents a material that is directly related to the manufacturing of blue jeans and would likely be easily traceable to the individual product. Material costs that are directly related and easily traceable to the product are classified as direct material.

The costs incurred to sell a product would be classified as upstream costs midstream costs downstream costs none of the above

downstream costs

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 true. false.

false. Explanation 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 Multiple Choice true. false. .

false. Explanation The relationships described in this statement are reversed. Specifically, managerial accounting focuses on internal users while financial accounting focuses on external users.

According to GAAP, which type of costs are classified as product cost? downstream costs midstream costs upstream costs both downstream and upstream costs

midstream costs

In a manufacturing firm, costs incurred to research a more fuel efficient engine would be classified as upstream costs midstream costs downstream costs both midstream and downstream costs

upstream costs