Chapter 14 Managerial Accounting Concepts & Principles

A company incurred manufacturing costs of $45,000. If the beginning balance in Work in processs inventory is $10,000 and the ending balance is $15,000 then the cost of goods manufactured is __________

$10,000 - $15,000 + $45,000 = $40,000

Major Manufacturing Company has direct materials used of $50,000, beginning raw materials inventory of $10,000 and ending raw materials inventory $8,000. Compute the raw materials inventory turnover.

$50,000/($10,000+$8,000/2) = 5.55

formula for days' sales in raw materials inventory is :

(Ending raw materials inventory/ Raw materials Used) X 365

Consider the production department of a manufacturer of laptop computers, Classify the cost of the processor chips

1) Product 2) Variable 3) Direct

A triple bottom line focuses on three measures including....

1) Profits/Financial 2) Social 3) Environmental

The characteristics of the fraud triangle include :

1) Rationalization 2) Financial pressure 3) opportunity

Which of the following are indirect costs for the finishing department of a furniture manufacturing plant?

1) Rent on the manufacturing facility 2) Plant manager's salary 3) Electricity cost for the plant

What are direct costs for a shoe manufacturer?

1) Shoe laborers who make the shoes 2) Leather used in the shoes

Lean practices include those which are designed to eliminate waste while still satisfying the customer, examples of lean practices include :

1) Total quality management 2) Just-in-time manufacturing 3) Continuous improvment

What are characteristics of managerial accounting?

1) Used to make planning and control decisions 2) Many projections and estimates

production activities include :

1) incurring overhead costs 2) production workers assembling products 3) using materials

Materials Activity includes :

1) store materials 2) purchasing materials

Calculate the cost of goods sold : beginning balance : $ 1,000 finished goods inventory : $1,200 ending balance : $5,000

1000 + 5000 = 6,000 - 1200 = $4,800

E-commerce

A trend whereby consumers expect to be able to purchase items electronically, whenever and wherever they want

Classify the cost of the factory maintenance manager's salary

1) Indirect 2) Fixed 3)Product

Activities such as using materials and labor to produce finished products are considered ________________ activities

Activities such as using materials and labor to produce finished products are considered production activities

Calculation of Cost of Goods Sold

Beginning Finished Goods Inventory + Cost of Goods Manufactured = Cost of Goods Available for Sale - Ending Finished Goods Inventory = Cost of Goods Sold

What type is commerce is the following? 1) Text message sales activities 2) Online Sales activities 3) Smartphone sales activities

E-Commerce

Is straight-line depreciation a Indirect or variable cost?

Indirect Cost

Finished goods inventory

consists of completed products ready for sale

direct materials

costs which are tangible components of the finished product

The focus of managerial accounting is on Lebel os success achieved by

department

prime costs consists of

direct labor and direct materials

Costs which are tangible components of the finished product are called

direct materials

Direct labor

effort provided by workers who are directly involved in the manufacture of a product

global economy

expansions of competitive countries which allows customers many choices

Managerial reporting systems are

flexible

the main focus of managerial accounting is providing

information on specific activities or divisions

finished good inventory

inventory which is completed but not yet sold by a manufacturer

Direct and indirect materials are known as

raw materials

The Sustainability Accounting Standards Board was established to developed ______ standards for businesses' sustainability activities

reporting standards

partially complete units are known as _______________ inventory

work in process

Expansions of competition which provides customers with many choices is called a _________________ economy

Expansions of competition which provides customers with many choices is called a global economy

What types of information does managerial accounting provide?

Financial, Information for internal decisions makers, and Non-financial

___________ Accounting allows internal users to determine what information they need to make planning and control decisions

Managerial Accounting

How is managerial accounting is different from financial accounting

Managerial accounting is used in planning and control decisions, while financial accounting is used in making investment and credit decisions

managerial accounting is uses...

Managerial accounting uses many projections and estimates with some historical information

A merchandising company has one inventory account while a manufacturing company usually has _____ inventory accounts

Manufacturing companies usually have 3 inventory accounts ; Raw materials, Work in process, and finished goods

the main purpose of managerial accounting is

providing useful information to internal managers

Managerial accounting information is normally provided to managers

quickly when needed

A company began the year with $500 in raw materials and purchased $10,250 more during the year. If the company has $725 raw materials at the end of the year, then the direct materials would be $_________ on the schedule of cost of goods manufactured.

$500 + $10,250 - $725 = $10,025

A company reported Cost of goods manufactured of $50,000 on the statement of cost of goods manufactured. If the beginning balance in Work in process inventory was $20,000 and the ending balance was $25,000, then the total manufacturing costs was _________

$55,000

A company reported Cost of goods manufactured : $55,000 Beginning balance in Work in process inventory : $5,000 Total manufacturing Cost : $60,000 Ending Balance : ?

$60,000 + $5,000 = $65,000 - $55,000

Consider a service company that provides carpet cleaning. Classify the cost of the hourly workers who clean the carpets for customers

1) Direct 2) Variable

Conversion costs

1) Direct Labor + Manufacturing Overhead 2) Cost incurred in the process of converting raw materials to finished goods.

A schedule of cost of goods manufactured has the following main selections:

1) Direct materials 2) Direct labor 3) factory overhead 4) Cost of goods manufactured

What items would be included in the overhead section of the schedule of cost of goods manufactured?

1) Factory insurance 2) Factory utilities 3) Factory supplies used

Consider a service company that provides carpet cleaning and uses straight-line depreciation. Classify the cost of the depreciation on the carpet cleaning machines.

1) Fixed 2) Indirect

Consider the production department of a manufacture of laptop computers. Classify the cost of the factory maintenance manager's salary

1) Fixed 2) Indirect 3) Product

What are the characteristics of Managerial Accounting?

1) Made for internal users 2) Emphasis on projects, processes, and divisions 3) Monetary and non monetary information

Describe the flow of manufacturing

1) Materials activity 2) Production activity 3) Sales activity

Which of the following are the variable costs relative to number of units produced and sold?

1) Materials used in production 2) Commissions based on sales

Which of the following are period costs for a manufacturer? Sales Commissions Utilities for the manufacturing plant Rent on the office building Wages for administrative staff

1) Sales Commissions 2) Rent on the office building 3) Wages for administrative staff

Sales activities include

1) Storing finished products 2) Selling finished products

What are fixed costs relative to the number of units produced and sold?

1) Straight-line depreciation 2) Manager's Salary 3) Building rent

Sparks Firework manufactures and sells fireworks. Their raw materials used is $71,500. Their beginning raw materials inventory was $5,000 and their ending raw materials inventory was $6,000. The raw materials inventory turnover is _______

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A manufacturing company reports the following items to calculate the cost of goods manufactured : Beginning balance : $1,000 Ending balance : $3,000 Direct Materials : $5,000 Direct Labor : $7,000 Factory Over head : $4,000

Beginning balance + (Factory Overhead + Direct Materials + Direct Labor) = total - Ending balance = Cost of goods manufactured

Raw Materials Inventory includes

Direct and indirect materials

True or false : Managerial accounting provides information to internal managers who make decisions about a company's business activities.

True

True or false : The main purpose of both financial and managerial accounting is similar in that both aim to provide relevant information to its users.

True

Customer orientation

Understanding the changing needs of customers

who uses financial accounting information?

Used by Creditors

Managerial information

allows estimates and projections

Direct materials costs for an automobile manufacturer would include:

bumpers, tires, and steering wheels

Fraud is described as the use of one's job for personal gain through the deliberate misuse of

the employer's assets

What is the main difference between the income statement of a manufacturer vs a merchandiser?

manufacturers have different items making up cost of goods sold

Raw materials inventory turnover

raw materials used/average raw materials inventory

Value chain

series of activities that add value to a company's products or services