Acct. Ch 19, accounting managerial midterm, Review Sheet 101-152

A company used $35,000 of direct materials, incurred $73,000 in direct labor cost, and had $114,000 in factory overhead costs during the period. If beginning and ending work in process inventories were $28,000 and $32,000, respectively, the cost of goods manufactured was a. $218,000 b. $226,000 c. $190,000 d. $222,000

$218,000

At the beginning of the current year, the Grant Company's work in process inventory account had a balance of $30,000. During the year, $68,000 of direct materials were used in production, and $66,000 of direct labor costs were incurred. Factory overhead for the year amounted to $90,000. Cost of goods manufactured is $230,000. The balance in work in process inventory on December 31 is a. $24,000 b. $44,000 c. $66,000 d. $36,000

$24,000

168. Zipee Inc.'s unit selling price is $90, the unit variable costs are $40.50, fixed costs are $170,000, and current sales are 12,000 units. How much will operating income change if sales increase by 5,000 units?

$247,500 increase

The current period statement of cash flows includes the following: Cash balance at the beginning of the period $310,000 Net cash flow from operating activities 185,000 Net cash flow used for investing activities 43,000 Net cash flow used for financing activities 97,000 The cash balance at the end of the period is a. $45,000 b. $635,000 c. $355,000 d. $125,000

$355,000

Compute conversion costs given the following data: direct materials, $347,500; direct labor, $196,300; factory overhead, $187,900; and selling expenses, $45,290. a. $543,800 b. $187,900 c. $731,700 d. $384,200

$384,200

171. If fixed costs are $750,000 and variable costs are 60% of sales, what is the break-even point in sales dollars?

$1,875,000

185. If sales are $400,000, variable costs are 80% of sales, and operating income is $40,000, what is the operating leverage?

2.0

170. If fixed costs are $250,000, the unit selling price is $125, and the unit variable costs are $73, what is the break-even sales (units)?

4,808 units

167. If sales are $820,000, variable costs are 55% of sales, and operating income is $260,000, what is the contribution margin ratio?

45%

The entries to record cost and sale of a finished good on account is a. debit Cost of Goods Sold, credit Finished Goods b. debit Cost of Goods Sold, credit Finished Goods, debit Accounts Receivable, credit Sales c. debit Sales Expense, credit Finished Goods, credit Cash, credit Accounts Receivable d. debit Work in Process, credit Finished Goods, debit Accounts Receivable, credit Sales

debit Cost of Goods Sold, credit Finished Goods, debit Accounts Receivable, credit Sales

161. As production increases, the fixed cost per unit

decreases

156. Which of the following describes the behavior of the fixed cost per unit?

decreases with increasing production

The cost of wages paid to employees directly involved in the manufacturing process in converting materials into finished products is classified as a. factory overhead cost b. direct labor cost c. miscellaneous costs d. direct materials cost

direct labor cost

Which of the following items would not be classified as part of factory overhead? a. direct labor used b. amortization of manufacturing patents c. production supervisors' salaries d. factory supplies used

direct labor used

Period costs include a. current assets on the balance sheet b. current liabilities on the balance sheet c. operating costs that are shown on the income statement when products are sold d. operating costs that are shown on the income statement in the period in which they are incurred

operating costs that are shown on the income statement in the period in which they are incurred

Which of the following is not a prime cost? a. plant janitor's wages b. direct labor wages c. machine operator wages d. assembly line wages

plant janitor's wages

Which of the following should be shown on a statement of cash flows under the financing activities section? a. the purchase of a long-term investment in the common stock of another company b. the payment of cash to retire a long-term note c. the proceeds from the sale of a building d. the issuance of a long-term note to acquire land

the payment of cash to retire a long-term note

166. The contribution margin ratio is

the same as the profit-volume ratio

175. Which of the following conditions would cause the break-even point to decrease?

unit variable cost decreases

The Thomlin Company forecasts that total overhead for the current year will be $15,000,000 with 300,000 total machine hours. Year to date, the actual overhead is $16,000,000 and the actual machine hours are 330,000 hours. If the Thomlin Company uses a predetermined overhead rate based on machine hours for applying overhead, as of this point in time (year to date), the overhead is a. $1,000,000 overapplied b. $1,000,000 underapplied c. $500,000 overapplied d. $500,000 underapplied

$500,000 overapplied

Work in process inventory on December 31 of the current year is $44,000. Work in process inventory increased by 60% during the year. Cost of goods manufactured amounts to $275,000. What are the total manufacturing costs incurred in the current year? a. $291,500 b. $302,000 c. $275,750 d. $233,750

$291,500

184. If a business had sales of $4,000,000 and a margin of safety of 25%, the break-even point was

$3,000,000

Cash dividends of $45,000 were declared during the year. Cash dividends payable were $10,000 at the beginning of the year and $15,000 at the end of the year. The amount of cash for the payment of dividends during the year is a. $50,000 b. $40,000 c. $55,000 d. $35,000

$40,000

The cost of goods sold during the year was $45,000. Inventories were $13,500 and $10,500 at the beginning and end of the year, respectively. Accounts payable (all owed to merchandise suppliers) were $7,000 and $5,000 at the beginning and end of the year, respectively. Using the direct method of reporting cash flows from operating activities, cash payments for merchandise total a. $46,000 b. $44,000 c. $50,000 d. $40,000

$44,000

28. Land costing $71,000 was sold for $50,000 cash. The loss on the sale was reported on the income statement as other expense. On the statement of cash flows, what amount should be reported as an investing activity from the sale of land? a. $50,000 b. $71,000 c. $121,000 d. $21,000

$50,000

Given the following data: Beginning raw materials inventory $30,000 Materials purchased 65,000 Ending raw materials inventory 40,000 What is the amount of raw materials used? a. $5,000 b. $55,000 c. $75,000 d. $30,000

$55,000

The Thomlin Company forecasts that total overhead for the current year will be $15,500,000 with 250,000 total machine hours. Year to date, the actual overhead is $16,000,000 and the actual machine hours are 330,000 hours. The predetermined overhead rate based on machine hours is a. $48 per machine hour b. $62 per machine hour c. $45 per machine hour d. $50 per machine hour

$62 per machine hour

Sales for the year were $600,000. Accounts receivable were $100,000 and $80,000 at the beginning and end of the year, respectively. Cash received from customers to be reported on the statement of cash flows using the direct method is a. $700,000 b. $600,000 c. $580,000 d. $620,000

$620,000

If a gain of $11,000 is realized in selling (for cash) office equipment having a book value of $55,000, the total amount reported in the cash flows from investing activities section of the statement of cash flows is a. $44,000 b. $11,000 c. $55,000 d. $66,000

$66,000

19. Accounts receivable from sales transactions were $51,000 at the beginning of the year and $64,000 at the end of the year. Net income reported on the income statement for the year was $105,000. Exclusive of the effect of other adjustments, the cash flows from operating activities to be reported on the statement of cash flows prepared by the indirect method is a. $105,000 b. $118,000 c. $92,000 d. $169,000

$92,000

172. If fixed costs are $1,200,000, the unit selling price is $240, and the unit variable costs are $110, what is the amount of sales required to realize an operating income of $200,000?

10,769 units

178. Piper Technology's fixed costs are $1,500,000, the unit selling price is $250, and the unit variable costs are $130, what is the amount of sales required to realize an operating income of $200,000?

14,167 units

177. O'Boyle Co.'s fixed costs are $256,000, the unit selling price is $36, and the unit variable costs are $20, what is the break-even sales (units)?

16,000 units

174. If fixed costs are $600,000 and the unit contribution margin is $40, what is the break-even point if fixed costs are increased by $90,000?

17,250

173. Reynold's Grocery has fixed costs of $350,000, the unit selling price is $29, and the unit variable costs are $20. What is the break-even sales (units) if the variable costs are decreased by $4?

26,923 units

169. Zeke Company sells 25,000 units at $21 per unit. Variable costs are $10 per unit, and fixed costs are $75,000. The contribution margin ratio and the unit contribution margin are

52% and $11 per unit

In a job order cost accounting system, the entry to record the flow of direct materials into production is to a. debit Work in Process, credit Materials b. debit Materials, credit Work in Process c. debit Factory Overhead, credit Materials d. debit Work in Process, credit Supplies

debit Work in Process, credit Materials

The order of presentation of activities on the statement of cash flows is a. operating, investing, and financing b. operating, financing, and investing c. financing, operating, and investing d. financing, investing, and operating

operating, investing, and financing

Which of the following would not be classified as an operating activity? a. interest expense b. income taxes c. payment of dividends d. selling expenses

payment of dividends

Managerial accounting reports are a. prepared according to GAAP b. prepared according to management needs c. prepared periodically only d. related to the entire business entity only

prepared according to management needs

Rent expense on a factory building would be treated as a(n) a. period cost b. product cost c. indirect cost d. direct material cost

product cost

Which of the following is the correct flow of manufacturing costs? a. raw materials, work in process, finished goods, cost of goods sold b. raw materials, finished goods, cost of goods sold, work in process c. work in process, finished goods, raw materials, cost of goods sold d. cost of goods sold, raw materials, work in process, finished goods

raw materials, work in process, finished goods, cost of goods sold

On the statement of cash flows, the cash flows from investing activities section would include a. receipts from the issuance of capital stock b. payments for dividends c. payments for retirement of bonds payable d. receipts from the sale of investments

receipts from the sale of investments

155. Which of the following costs is an example of a cost that remains the same in total as the number of units produced changes?

salary of a factory supervisor

. Cash paid to purchase long-term investments would be reported in the statement of cash flows in a. the cash flows from operating activities section b. the cash flows from financing activities section c. the cash flows from investing activities section d. a separate schedule

the cash flows from investing activities section

Depreciation on factory equipment would be reported in the statement of cash flows prepared by the indirect method in a. the cash flows from financing activities section b. the cash flows from investing activities section c. a separate schedule d. the cash flows from operating activities section

the cash flows from operating activities section

165. Contribution margin is

the excess of sales revenue over variable cost

The amount of time spent by an employee in the factory is usually recorded on a. time tickets b. job order cost sheets c. employees' earnings records d. statement of owners' equity

time tickets

Goods that are partially completed by a manufacturer are a. merchandise inventory b. work in process inventory c. finished goods inventory d. materials inventory

work in process inventory

Recording jobs shipped and customers billed would include a debit to a. Accounts Payable b. Cash c. Finished Goods d. Cost of Goods Sold

Cost of Goods Sold

The recording of the application of factory overhead costs to jobs would include a credit to a. Factory Overhead b. Wages Payable c. Work in Process d. Cost of Goods Sold

Factory Overhead

The recording of the factory labor incurred for general factory use would include a debit to a. Factory Overhead b. Wages Payable c. Wages Expense d. Cost of Goods Sold

Factory Overhead

The recording of the jobs completed would include a debit to a. Factory Overhead b. Finished Goods c. Work in Process d. Cost of Goods Sold

Finished Goods

Which of the following is not true in regards to direct materials for a bakery? a. Flour and sugar would probably be direct materials. b. Eggs would probably be a direct material. c. Oil to lubricate factory machines would not be a direct material. d. Paper cupcake liners, that become part of the product, must be accounted for as direct materials.

Paper cupcake liners, that become part of the product, must be accounted for as direct materials.

Which of the following should be deducted from net income in calculating net cash flow from operating activities using the indirect method? a. a decrease in inventory b. a decrease in accounts payable c. preferred dividends declared and paid d. a decrease in accounts receivable

a decrease in accounts payable

Which of the following should be added to net income in calculating net cash flow from operating activities using the indirect method? a. an increase in inventory b. a decrease in accounts payable c. preferred dividends declared and paid d. a decrease in accounts receivable

a decrease in accounts receivable

A business issues 20-year bonds payable in exchange for preferred stock. This transaction would be reported on the statement of cash flows in a. a separate schedule b. the cash flows from financing activities section c. the cash flows from investing activities section d. the cash flows from operating activities section

a separate schedule

Preferred stock issued in exchange for land would be reported in the statement of cash flows in a. the cash flows from financing activities section b. the cash flows from investing activities section c. a separate schedule d. the cash flows from operating activities section

a separate schedule

36. For each of the following, identify whether it would be disclosed as an operating (O), financing (F), or investing (I) activity on the statement of cash flows under the indirect method. a. purchased buildings b. sold patents c. net income d. issued common stock e. paid cash dividends f. depreciation expense

a. I purchased buildings b. I sold patents c. O net income d. F issued common stock e. F paid cash dividends f. O depreciation expense

When Job 117 was completed, direct materials totaled $4,400; direct labor, $5,600; and factory overhead, $2,400. A total of 1,000 units were produced at a per-unit cost of a. $12,400 b. $1,240 c. $124 d. $12.40

$12.40

The following information is available from the current period financial statements: Net income $165,000 Depreciation expense 28,000 Increase in accounts receivable 16,000 Decrease in accounts payable 21,000 The net cash flow from operating activities using the indirect method is a. $230,000 b. $188,000 c. $198,000 d. $156,000

$156,000

25. Land costing $140,000 was sold for $173,000 cash. The gain on the sale was reported on the income statement as other income. On the statement of cash flows, what amount should be reported as an investing activity from the sale of land? a. $173,000 b. $140,000 c. $313,000 d. $33,000

$173,000

Which of the following should be added to net income in calculating net cash flow from operating activities using the indirect method? a. a gain on the sale of land b. a decrease in accounts payable c. an increase in accrued liabilities d. dividends paid on common stock

an increase in accrued liabilities

A building with a book value of $54,000 is sold for $63,000 cash. Using the indirect method, this transaction should be shown on the statement of cash flows as follows: a. an increase of $54,000 from investing activities b. an increase of $63,000 from investing activities and a deduction from net income of $9,000 c. an increase of $9,000 from investing activities d. an increase of $54,000 from investing activities and an addition to net income of $9,000

an increase of $63,000 from investing activities and a deduction from net income of $9,000

A plant manager's salary is a. a direct cost and an indirect cost b. a direct cost c. an indirect cost d. a period cost

an indirect cost

Product costs a. appear only on the balance sheet b. appear only on the income statement c. are expensed as costs are incurred for direct labor, direct material, and factory overhead d. appear on both the income statement and balance sheet

appear on both the income statement and balance sheet

Finished goods inventory is reported on the a. income statement as a period cost b. balance sheet as a long-term asset c. balance sheet as a current asset d. income statement as revenue

balance sheet as a current asset

Which of the following increases cash? a. depreciation expense b. acquisition of treasury stock c. borrowing money by issuing a six-month note d. the declaration of a cash dividend

borrowing money by issuing a six-month note

Which of the following is an example of direct labor cost for a cell phone manufacturer? a. cost of oil lubricants for factory machinery b. cost of wages of assembly worker c. salary of plant supervisor d. cost of phone components

cost of wages of assembly worker

176. Charlotte Co. has budgeted salary increases to factory supervisors totaling 9%. If selling prices and all other cost relationships are held constant, next year's break-even point

cannot be determined from the data given

Free cash flow is a. all cash in the bank b. cash from operations c. cash from financing less cash used to purchase fixed assets to maintain productive capacity and cash used for dividends d. cash flow from operations less cash used to purchase fixed assets to maintain productive capacity

cash flow from operations less cash used to purchase fixed assets to maintain productive capacity

On the statement of cash flows, the cash flows from operating activities section would include a. receipts from the issuance of capital stock b. receipts from the sale of investments c. payments for the acquisition of investments d. cash receipts from sales activities

cash receipts from sales activities

What term is used to describe the process of monitoring operating results and comparing actual results with the expected results? a. improving b. controlling c. directing d. planning

controlling

Job order costing and process costing are a. pricing systems b. cost accounting systems c. cost flow systems d. inventory tracking systems

cost accounting systems

Which of the following is an example of direct materials cost for an automobile manufacturer? a. cost of oil lubricants for factory machinery b. cost of wages of assembly worker c. salary of production supervisor d. cost of interior upholstery

cost of interior upholstery

On the statement of cash flows prepared by the indirect method, a $50,000 gain on the sale of investments would be a. deducted from net income in converting the net income reported on the income statement to cash flows from operating activities b. added to net income in converting the net income reported on the income statement to cash flows from operating activities c. added to dividends declared in converting the dividends declared to the cash flows from financing activities related to dividends d. deducted from dividends declared in converting the dividends declared to the cash flows from financing activities related to dividends

deducted from net income in converting the net income reported on the income statement to cash flows from operating activities

The cost of a manufactured product generally consists of which of the following costs? a. direct materials cost and factory overhead cost only b. direct labor cost and factory overhead cost only c. direct labor cost, direct materials cost, and factory overhead cost d. direct materials cost and direct labor cost only

direct labor cost, direct materials cost, and factory overhead cost

Prime costs are a. direct materials and factory overhead b. direct materials and direct labor c. direct labor and factory overhead d. period costs and factory overhead

direct materials and direct labor

157. Which of the following is an example of a cost that varies in total as the number of units produced changes?

direct materials cost

Which of the following is an example of a factory overhead cost? a. repair and maintenance cost on the administrative building b. factory heating and lighting cost c. insurance premiums on salespersons' automobiles d. president's salary

factory heating and lighting cost

All of the following would be reported on the balance sheet as a current asset except a. factory overhead b. materials inventory c. finished goods inventory d. work in process inventory

factory overhead

61. Indirect labor and indirect materials are classified as a. factory overhead and product costs b. factory overhead and period costs c. operating costs and period costs d. operating costs and product costs

factory overhead and product costs

Costs other than direct materials cost and direct labor cost incurred in the manufacturing process are classified as a. factory overhead cost b. miscellaneous expense c. product costs d. period cost

factory overhead cost

If the cost of a direct material is a small portion of total production cost, it may be classified as part of a. direct labor cost b. selling and administrative costs c. miscellaneous costs d. factory overhead cost

factory overhead cost

A ten-year bond was issued at par for $250,000 cash. This transaction should be shown on a statement of cash flows under a. investing activities b. financing activities c. noncash investing and financing activities d. operating activities

financing activities

Cash paid for preferred stock dividends should be shown on the statement of cash flows under a. investing activities b. financing activities c. noncash investing and financing activities d. operating activities

financing activities

Cash receipts received from the issuance of a mortgage notes payable would be classified as a(n) a. investing activity b. operating activity c. noncash investing and financing activity d. financing activity

financing activity

154. Costs that remain constant in total dollar amount as the level of activity changes are called

fixed costs

153. The three most common cost behavior classifications are

fixed costs, variable costs, and mixed costs

Which of the following should be deducted from net income in calculating net cash flow from operating activities using the indirect method? a. depreciation expense b. gain on sale of land c. a loss on the sale of equipment d. dividends declared and paid

gain on sale of land

All of the following could be considered a direct material except a. steel b. fabric c. glue d. lumber

glue

At the end of the year, overhead applied was $42,000,000. Actual overhead was $40,300,000. Closing over/underapplied overhead into Cost of Goods Sold would cause net income to a. increase by $1,700,000 b. decrease by $1,700,000 c. increase by $3,400,000 d. decrease by $3,400,000

increase by $1,700,000

A company purchases equipment for $32,000 cash. This transaction should be shown on the statement of cash flows under a. investing activities b. financing activities c. noncash investing and financing activities d. operating activities

investing activities

Which of the following is a noncash investing and financing activity? a. payment of a cash dividend b. payment of a six-month note payable c. purchase of inventory on account d. issuance of common stock to acquire land

issuance of common stock to acquire land

Which of the following represents an inflow of cash and therefore would be reported on the statement of cash flows? a. retirement of bond payable b. acquisition of treasury stock c. declaration of stock dividends d. issuance of long-term debt

issuance of long-term debt

Financing activities include a. lending money b. acquiring investments c. issuing debt d. acquiring long-lived assets

issuing debt

The primary goal of managerial accounting is to provide information to a. investors b. creditors c. management d. external auditors

management

Accounting designed to meet the needs of decision makers inside the business is a. general accounting b. financial accounting c. managerial accounting d. external accounting

managerial accounting

The document authorizing the issuance of materials from the storeroom is a a. materials requisition b. purchase requisition c. receiving report d. purchase order

materials requisition

158. A cost that has characteristics of both a variable cost and a fixed cost is called a

mixed cost