MBA 700 - Module 2

What is the amount of Cost of Goods Manufactured? Direct materials ........................................ $179,300 Direct labor .............................................. 200,000 Overhead ................................................. 324,700 Beginning Work In Process Inventory ............. 58,500 Ending Work In Process Inventory .................. 23,500 a. $82,000 b. $539,000 c. $739,000 d. $282,000

$739,000

Total costs for ABC Distributing are $250,000 when the activity level is 10,000 units. If variable costs are $5 per unit, what are their fixed costs? a.$240,000 b.Their fixed costs cannot be determined from the information presented. c.$200,000 d.$260,000

13. Total cost = Variable cost + Fixed cost 250,000 = (10,000*5) + Fixed cost Fixed cost = 250,000 - 50,000 = 200,000 Option C: $200k

In the cost equation Y = a + bx, Y represents which of the following?

C. fixed costs Fixed Cost in Cost Equation , Y = a + bX Y = a + bX is a mixed cost equation where y is the total cost a is the fixed cost per period b is the variable rate per unit of activity x is the number of units of activity

What year was the Sarbanes-Oxley Act enacted? a.2007 b.2002 c.1997 d.1992

b.2002

External users of accounting information would include ________. a.employees b.supervisors c.managers d.investors

d.investors

Which of the following is the primary source of revenue for a service business? a.providing intangible goods and services b.the production of products from raw materials c.the purchase and resale of finished products d.the sale of raw materials to manufacturing firms

a. providing intangible goods and services

Which of the following is correct about a merchandiser's inventory? a.A merchandiser only has one inventory: Merchandise Inventory. b.A merchandiser only has one inventory: Finished Goods Inventory. c.A merchandiser has three inventories: Raw Materials Inventory, Work In Process Inventory and Finished Goods Inventory. d.A merchandiser does not have any inventory.

a.A merchandiser only has one inventory: Merchandise Inventory.

Which of the following is false regarding strategic planning? a.It is the sole responsibility of supervisors. b.It should include both short-term and long-term goals. c.Strategic objectives will be diverse and vary from company to company. d.It will span many years.

a.It is the sole responsibility of supervisors.

The salary paid to the president of a company would be classified on the income statement as a(n): a.Selling, general & administrative expenses (SG&A). b.Material cost. c.Direct labor cost. d.Indirect labor cost.

a.Selling, general & administrative expenses (SG&A).

Which of the following represents the components of the income statement for a service business? a.Service Revenue - Operating Expenses = operating income b.Service Revenue - Cost of Goods Purchased = gross profit c.Sales Revenue - Cost of Goods Sold = gross profit d.Sales Revenue - Cost of Goods Manufactured = gross profit

a.Service Revenue - Operating Expenses = operating income

Which of the following is not considered a product cost? a.selling expense b.direct materials c.direct labor d.indirect materials

a.selling expense

A company's prime costs total $4,599,000 and its conversion costs total $5,610,000. If direct materials costs are $2,121,000 and direct labor costs are $2,478,000, calculate the overhead costs: a.$3,489,000 b.$3,132,000 c.$1,011,000 d.$2,121,000

b.$3,132,000

The law that specifically prohibits payments to foreign officials in order to attain business is knowns as ________. a.SOX b.FCPA c.IFRS d.AICPA

b.FCPA - Foreign Corrupt Policies Act

Which of the following is not an objective used in the balanced scorecard approach? a.Financial b.Learning and growth c.Vendor d.Customer

c.Vendor

An inventory system that organizations use to increase efficiency and decrease waste is ________. a.Lean Six Sigma b.total quality management c.just-in-time manufacturing d.corporate social responsibility

c.just-in-time manufacturing

Which of the following methods of cost estimation relies on only two data points? a.account analysis b.SWOT analysis. c.least-squares regression d.the high-low method

d.the high-low method

Which of the following is the primary source of revenue for a manufacturing business? a.the provision of intangible goods and services b.both the provision of services and the sale of finished goods c.the purchase and resale of finished products d.the production of products from raw materials

d.the production of products from raw materials

A partial listing of costs incurred during March at Febbo Corporation appears below: Factory supplies $ 9,000 Administrative wages and salaries $ 85,000 Direct materials $ 126,000 Sales staff salaries $ 30,000 Factory depreciation $ 33,000 Corporate headquarters building rent $ 43,000 Indirect labor $ 26,000 Marketing $ 65,000 Direct labor $ 99,000 The total of the period costs listed above for March is: a. $148,000 b. $291,000 c. $223,000 d. $293,000

Correct Option - d. $223,000 Calculation of total period Cost Administrative wages and salaries $85,000 Sales staff salaries $30,000 Corporate headquarters building rent $43,000 Marketing $65,000 Total Period costs $223,000

A manufacturing company has a beginning finished goods inventory of $15,000, raw material purchases of $18,400, cost of goods manufactured of $33,300, and an ending finished goods inventory of $18,200. The cost of goods sold for this company is: a.$30,100 b.$28,400 c.$48,300 d.$21,600

Cost of goods sold = cost of goods manufactured+Beginning finished goods inventory-Ending finished goods inventory= 33300+15000-18200= $30100

Which of the following statements is incorrect? a.Management accounting focuses mainly on the internal user. b.The practice of management accounting is fairly flexible. c.The information gathered from management accounting is not required by law. d.Reports produced using management accounting must follow GAAP.

Reports produced using management accounting must follow GAAP.

Use the cost information below for Ruiz Incorporated to determine the total manufacturing costs incurred during the year: Work in Process, beginning ........................... $ 54,000 Work in Process, ending ............................ 39,000 Raw Materials Inventory, beginning ..... 94,000 Raw Materials Inventory, ending .......... 25,000 Direct materials used .................................. $ 14,500 Total factory overhead .................................... 7,500 Direct labor used ......................................... 28,500 a. $15,000 b. $50,500 c. $97,000 d. $104,500

Total manufacturing cost=direct material+direct labor+factory overhead =$14,500 + $28,500 + $7,500 which is equal to =$50,500

Costs incurred from converting raw materials to finished goods are known as: a.Conversion costs b.Direct material costs c.Prime costs d.Material costs

a.Conversion costs

The three major costs of manufacturing a product are: a.Direct materials, direct labor, and factory overhead. b.Product costs, period costs, and factory overhead. c.Indirect labor, indirect materials, and factory overhead. d.Marketing, selling, and administrative costs.

a.Direct materials, direct labor, and factory overhead

What is the law that protects investors from fraudulent financial accounting activity? a.CPAS b.SACS c.SOX d.FASB

c.SOX - Sarbanes Oxley Act

The following information relates to the manufacturing operations of the JNR Company for the year: Beginning Ending Raw materials inventory $ 49,000 $ 52,000 Finished goods 60,000 52,000 The raw materials used in manufacturing during the year totaled $110,000. Raw materials purchased during the year amount to: a. $99,000 b. $118,000 c. $107,000 d. $113,000

Ending raw materials inventory=Beginning raw materials inventory+Raw materials purchases-Raw materials used during the year 52000=49000+Raw materials purchases-110,000 Raw materials purchases=(52000+110,000-49000) =$113,000

Which of the following is not true regarding continuous improvement? a.It can be applied only to improve processes and products but not services and practices. b.It is used to reduce performance costs. c.It applies to both service and manufacturing companies. d.It rejects the idea of "good enough."

a.It can be applied only to improve processes and products but not services and practices.

Which of the following are prime costs? a.direct labor and direct materials b.direct labor and indirect labor c.direct labor, indirect materials, and indirect labor d.indirect materials, indirect labor, and direct labor

a.direct labor and direct materials

The Certified Management Accountant (CMA) certification: a.includes a two-part exam, education requirements, and a work experience requirement b.requires an associate's degree and four years of work experience c.is offered to managers who take special courses in accounting d.signifies someone specializing in tax accounting

a.includes a two-part exam, education requirements, and a work experience requirement

The controller of a corporation: a.reports to the CFO and is in charge of the accounting side of the business b.reports to the CFO and is in charge of the finance side of the business c.reports to the board of directors d.reports to the CEO and implements all cash policies

a.reports to the CFO and is in charge of the accounting side of the business

Which of the following items does not represent a difference between financial and managerial accounting? a.Flexibility of reporting b.Inclusion of monetary information c.Users of the information d.Timeliness of information e.Focus of the information

b.Inclusion of monetary information

Which of the following represents the components of the income statement for a manufacturing business? a.Service Revenue - Cost of Goods Manufactured = gross profit b.Sales Revenue - Cost of Goods Sold = gross profit c.Service Revenue - Operating Expenses = gross profit d.Sales Revenue - Cost of Goods Manufactured = gross profit

b.Sales Revenue - Cost of Goods Sold = gross profit

When a representative of an organization gives money to another business official in order to gain favor and/or manipulate a business decision, this is known as ________. a.face value b.bribery c.whistleblowing d.buyer debits

b.bribery

Internal users of accounting information would not include ________. a.managers b.creditors c.officers d.employees

b.creditors

Which of the following would not be classified as manufacturing overhead? a.indirect labor b.direct labor c.indirect materials d.property taxes on factory

b.direct labor

Conversion costs include all of the following except: a.depreciation on factory equipment b.direct materials purchased c.factory utilities d.wages of production workers

b.direct materials purchased - these are treated as prime costs

A scatter graph is used to test the assumption that the relationship between cost and activity level is ________. a.unpredictable b.linear c.cyclical d.curvilinear

b.linear

Fixed costs are expenses that ________. a.the total will vary in response to changes in activity level b.remain constant in total regardless of activity level within a relevant range c.increase on a per-unit basis as activity increases d.remain constant on a per-unit basis

b.remain constant in total regardless of activity level within a relevant range

Management accountants help the management of an organization in their planning function through ________. a.analyzing profits b.strategic planning c.monitoring anti-theft systems d.evaluating costs

b.strategic planning

A company manufactures motorcycles. Compute the total amount of direct materials costs from the following costs. Cost item a. Tires, $11,000 b. Motorcycle seats, $18,000 c. Handlebars, $5,000 d. Factory accounting, $10,000 e. Factory equipment depreciation, $5,000 f. Assembly worker wages, $15,000 g. Factory rent, $60,000 h. Assembly worker benefits, $5,000 i. Bike frames, $14,000 a. $68,000 b. $108,000 c. $48,000 d. $63,000

c. $48,000 Tires, $11,000 + Motorcycle seats, $18,000 + Handlebars, $5,000 + bike frames, $14000 = $48,000

Which of the following statements is true regarding average fixed costs? a.Average fixed costs per unit remain fixed regardless of level of activity. b.Average fixed costs per unit rise as the level of activity rises. c.Average fixed costs per unit fall as the level of activity rises. d.Average fixed costs per unit cannot be determined.

c.Average fixed costs per unit fall as the level of activity rises.

During the control function, the measurements taken of the performance must be accurate enough to see ________. a.only the negative results b.the primary focus c.deviations and variances d.only positive results

c.deviations and variances Reason: Control is a function of management which helps to check errors in order to take corrective actions. This is done to minimize deviation from standards and ensure that the stated goals of the organization are achieved in a desired manner. This is why the measurements taken of the performance shall be such that they help in comparing the actuals with the budgets of an entity and finding out the deviations and variances so that appropriate measures can be taken in order to develop solutions for issues with meeting the standards and make changes to processes or behaviors.

Which of the following is the primary source of revenue for a merchandising business? a.the production of products from raw materials b.the sale of raw materials to manufacturing firms c.the purchase and resale of finished products d.the provision of intangible goods and services Clear my choice

c.the purchase and resale of finished products

Which of the following items appears only in a manufacturing company's financial statements and not in a merchandising company's financial statement? a.Inventory b.Cost of goods sold c.Gross profit d. cost of goods manufactured

d. cost of goods manufactured

Which of the following represents the components of the income statement for a merchandising business? a.Service Revenue - Operating Expenses = gross profit b.Service Revenue - Cost of Goods Purchased = gross profit c.Sales Revenue - Cost of Goods Manufactured = gross profit d.Sales Revenue - Cost of Goods Sold = gross profit

d.Sales Revenue - Cost of Goods Sold = gross profit

A Report that lists the types and amounts of costs incurred in manufacturing is a: a.Manufacturer income statement b.Manufacturer balance sheet c.Schedule of cost of goods sold d.Schedule of cost of goods manufactured

d.Schedule of cost of goods manufactured

For product costs associated with a product to be reported on the income statement: a.The product must be transferred to Finished Goods Inventory. b.The payment of the product must be received. c.The product may be in any of the manufacturer's inventory accounts. d.The product must be sold.

d.The product must be sold.

Which of the following is a primary aspect of the evaluating function within an organization? a.putting controls in place for the upcoming year b.setting goals c.reviewing only the quantitative or financial results of the company d.comparing actual results against expected results for products, departments, divisions, or the company as a whole

d.comparing actual results against expected results for products, departments, divisions, or the company as a whole

A company's attempts to utilize sustainable business practices with regard to its employees, the environment, and society are known as ________. a.a balanced scorecard b.total quality management c.value chain d.corporate social responsibility

d.corporate social responsibility

Management accounting: a.relates to the company as a whole b.is limited to strictly cost figures c.is controlled by GAAP d.emphasizes special-purpose information

d.emphasizes special-purpose information

The high-low method and least-squares regression are used by managers to ________. a.minimize corporate tax liability b.decide whether to make or buy a component part c.maximize output d.estimate costs

d.estimate costs

A process that is often linked to Six Sigma and is designed toward continuous improvement by eliminating waste is ________. a.total quality management b.value chain c.kamikaze d.kaizen

d.kaizen

The managers of an organization are responsible for performing several broad functions. They are ________. a.planning, evaluating, and manufacturing b.directing, controlling, and evaluating c.planning, controlling, and selling d.planning, controlling, and evaluating

d.planning, controlling, and evaluating

Variable costs are expenses that ________. a.remain constant on a per-unit basis and remain constant in total regardless of activity level b.remain constant in total regardless of activity level within a relevant range c.decrease on a per-unit basis as activity level increases d.remain constant on a per-unit basis but change in total based on activity level

d.remain constant on a per-unit basis but change in total based on activity level Exp : variable expenses remain constant on per unit but change in total based on activity level. If activity increased variable expenses increases and vice versa.

Managerial accounting produces information: a.that follows the rules of GAAP b.to meet the needs of external users c.to meet the needs of investors d.that is often focused on the future

d.that is often focused on the future