ACC201 Chapter 16
Which of the following is a period cost for a manufacturing company? A) office rent B) wages of factory janitor C) raw materials D) insurance cost of production equipment
A
Which of the following is a product cost for a manufacturing company? A) wages paid to factory janitor B) salary of administrative staff C) commissions paid to sales staff D) depreciation on corporate building
A
Which of the following is one of the key standards of ethical practice published by the Institute of Management Accountants (IMA)? A) confidentiality B) environmental sensitivity C) social responsibility D) technicality
A
What is a cost object?
A cost object is anything for which managers want a separate measurement of cost.
Which of the following would be considered a product cost for a manufacturing company? A) salaries of the accounting staff B) salary of the CEO C) salary of the sales manager D) salary of the production manager
D
What can be considered manufacturing overhead?
Indirect materials, Indirect labor, Factory costs for rent, utilities, insurance, etc.
Which ethical standard is violated here? You see others take home office supplies for personal use. As an intern, you do the same thing, assuming that this is a "perk"
Integrity
Which ethical standard is violated here? You do not provide top management with the detailed job descriptions they requested because you fear they may use this information to cut a position in your department.
Integrity and credibility
Which ethical standard is violated here? At a company-paid conference on e-commerce, you skip the afternoon session to go sightseeing
Integrity/Credibility
Indicate whether the following scenario is financial or managerial accounting: Helps in planning and controlling operations
Managerial Accounting
What is Strategic planning?
Strategic Planning involves developing long-term strategies to achieve a company's goals.
what is a merchandising company?
a business that resells products they've bought from suppliers
What is a service company?
a company that sells services- time, skills, and knowledge
What is a manufacturing company?
a company that uses labor, equipment, supplies, and facilities to convert raw materials
Which ethical standard is violated here? You failed to read the detailed specifications of a new accounting software package that you asked your company to purchase. After it is installed, you are surprised that it is not compatable with some of your company's older accounting software
competence
What is directing?
involves running the day-to-day operations of a business.
What are the three types of businesses?
service, merchandising, manufacturing
Goods that are produced by a manufacturing company and are ready to sell are recorded in the _______ account. A) Finished Goods Inventory B) Raw Materials Inventory C) Work-in-Process Inventory D) Manufacturing Overhead
A
Which of the following describes the cost of goods manufactured? A) the cost of those goods that were completed during the period B) the total costs in inventory at the end of the period C) the cost of the goods that were sold during the period D) the total cost of all goods that were completed, or partially completed during the period
A
What is a direct cost?
A direct cost is a cost that can be easily and cost-effectively traced to a cost object.
Belstone, Inc. is a merchandiser of stone ornaments. It sold 15,000 units during the year. The company has provided the following information: Sales Revenue $525,000 Purchases (excluding Freight In) 347,000 Selling and Administrative Expenses 36,500 Freight In 15,500 Beginning Merchandise Inventory 42,000 Ending Merchandise Inventory 55,500 How much is the gross profit for the year? A) $178,000 B) $176,000 C) $349,000 D) $212,500
B
Connie is analyzing the financial statements of MegaMart and Bullseye Company. She wants to invest in one of the companies and is trying to decide which company has the better past performance. Connie is examining ________. A) regulatory accounting information B) financial accounting information C) organizational accounting information D) managerial accounting information
B
Goods that have been started in the manufacturing process but are not yet complete are included in the ________. A) Raw Materials Inventory account B) Work-in-Process Inventory account C) Cost of Goods Sold account D) Finished Goods Inventory account
B
Mars Supplies Company provided the following information for the year: Beginning Balance Work-in-Process Inventory $24,000 Ending Balance Work-in-Process Inventory 58,000 Beginning Balance Direct Materials Inventory 85,000 Ending Balance Direct Materials Inventory 61,000 Purchases Direct Materials 359,000 Direct Labor 470,000 Indirect Labor 21,000 Depreciation on Factory Plant and Equipment 24,000 Plant Utilities and Insurance 268,000 What was the amount of the manufacturing overhead costs? A) $292,000 B) $313,000 C) $45,000 D) $491,000
B
Miguel, a manager for Sierra Company, is inspecting the reports provided by his company's accounting department. He wants to decide how to schedule his department's employees in production next week. Miguel is examining ________. A) regulatory accounting information B) managerial accounting information C) financial accounting information D) organizational accounting information
B
Selected data for Lemon Grass, Inc. for the year are provided below: Factory Utilities $1000 Indirect Materials Used 34,000 Direct Materials Used 292,000 Property Taxes on Factory Building 5900 Sales Commissions 85,000 Indirect Labor Incurred 22,000 Direct Labor Incurred 150,000 Depreciation on Factory Equipment 6800 What is the total manufacturing overhead? A) $56,000 B) $69,700 C) $13,700 D) $442,000
B
Which of the following is an example of a period cost for a manufacturing company? A) indirect materials B) advertising expense C) depreciation on factory equipment D) property taxes for the factory
B
Which of the following is an example of direct labor cost in a factory? A) salary of production manager B) wages of assembly line personnel C) wages of factory security guard D) salary of vice president of production
B
You did not understand what the term accrual meant and failed to accrue the interest due at the end of the year on the company's bonds. Which of the IMA standards appears to have been violated? A) objectivity B) competence C) confidentiality D) integrity
B
Castillo Corporation, a manufacturer, reports costs for the year as follows: Direct Materials Used $735,000 Wages to Line Workers 510,000 Office Rent 26,000 Indirect Materials Used 700,000 How much is the total period costs for Castillo? A) $735,000 B) $700,000 C) $26,000 D) $510,000
C
Which of the following is a prime cost and a conversion cost? A) selling expenses B) direct materials C) direct labor D) manufacturing overhead
C
Which of the following represents the combined sum of direct labor costs and manufacturing overhead costs? A) fixed costs B) period costs C) conversion costs D) prime costs
C
Which of the following statements is true of financial accounting? A) It focuses on detailed reports for parts of the company rather than the whole company. B) It focuses on planning, directing and controlling day-to-day operations. C) It provides information to investors needed for their investment decisions. D) It provides future focused information needed for managing and delegating operations.
C
Which of the following will be included in manufacturing overhead costs? A) salaries of salesmen B) delivery costs to ship goods to customers C) indirect labor and indirect materials used D) direct materials and direct labor
C
Which ethical standard is violated here? You tell your brother that your company will report earnings significantly above financial analysts' estimates
Confidentiality
What are the 4 ethical standards?
Confidentiality, Credibility, Competence, Integrity
What are conversion costs?
Conversion costs combine direct labor with manufacturing overhead.
What is cost of goods manufactured?
Cost of goods manufactured is the manufacturing costs of the goods that finished the production process in a given accounting period.
What is cost of goods sold?
Cost of goods sold represents the cost of the Finished Goods Inventory that has been sold.
What is an indirect cost?
Costs that cannot be easily or cost-effectively traced directly to a cost object are indirect costs.
Fontana Manufacturing provided the following information for the month ended March 31: Sales Revenue $26,000 Beginning Finished Goods Inventory 8000 Ending Finished Goods Inventory 13,500 Cost of Goods Manufactured 15,600 Compute cost of goods available for sale. A) $29,100 B) $10,100 C) $15,600 D) $23,600
D
Rios Corporation reports costs for the year as follows: Direct Materials Used $780,000 Wages to Line Workers 245,000 Office Rent 33,000 Indirect Materials Used 800,000 How much is the total product costs for the year? A) $1,858,000 B) $1,025,000 C) $800,000 D) $1,825,000
D
The income statement of a service company will most likely include ________. A) factory overhead B) cost of goods sold C) direct materials D) salaries expense
D
Which of the following is a focus of managerial accounting? A) to generate a company's financial statements for tax reporting B) to provide information to shareholders to assist them with their investment decisions C) to ensure that the reports produced for internal and external business purposes are GAAP compliant D) to provide information to business managers to assist them in controlling their businesses
D
What is direct labor?
Direct labor (DL) is labor of employees working on the products.
What are direct materials?
Direct materials (DM) are raw materials used in production.
What can be considered a product cost?
Direct materials, direct labor, and manufacturing overhead
Indicate whether the following scenario is financial or managerial accounting: Helps investors make investment decisions
Financial Accounting
Indicate whether the following scenario is financial or managerial accounting: Reports audited annually by independent certified public accountants.
Financial Accounting
Indicate whether the following scenario is financial or managerial accounting: Reports must follow Generally Accepted Accounting Principles
Financial Accounting
What is Finished Goods Inventory?
Finished Goods Inventory (FG) includes completed goods that have not yet been sold.
Indicate whether the following scenario is financial or managerial accounting: Provides detailed reports on parts of the company
Managerial Accounting
WHY IS MANAGERIAL ACCOUNTING IMPORTANT?
Managerial accounting focuses on providing information for internal decision makers.
What is manufacturing overhead?
Manufacturing overhead (MOH) is the indirect product costs associated with production, including:
What is Operational Planning?
Operational planning focuses on short-term actions dealing with a company's day-to-day operations.
What is a period cost?
Period costs are non-manufacturing costs.
What are prime costs?
Prime costs combine the direct costs of direct materials and direct labor.
What are product costs?
Product costs include the costs of purchasing or making a product.
What is Raw Materials Inventory?
Raw Materials Inventory (RM) includes materials used to make a product.
What are the three kinds of inventory?
Raw Materials Inventory (RM), Work-in-Process Inventory (WIP), and Finished Goods Inventory (FG)
What can be considered a period cost?
Selling and administrative expenses and other expenses such as taxes and interest
What is Work-in-Process Inventory?
Work-in-Process Inventory (WIP) includes goods that are in the manufacturing process but are not yet complete.
What is controlling?
the process of monitoring day-to-day operations and keeping the company on track.