FINAL EXAM

Department E had 4,000 units in Work in Process that were 40% completed at the beginning of the period at a cost of $12,500. There were 14,000 units of direct materials added during the period at a cost of $28,700. There were 15,000 units completed during the period, and 3,000 units were 75% completed at the end of the period. All materials are added at the beginning of the process, and the average cost method is used to cost inventories. Direct labor was $32,450, and factory overhead was $18,710. The total (whole) units to account for during production is

15,650

Profitability analysis

Focuses on a company's ability to generate future earnings

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?

$55,000

A company manufactured 50,000 units of a product at a cost of $450,000. It sold 45,000 units at $15 each. The gross profit is

$270,000

The controller's staff often consists of several management accountants. All of the following would most likely be on the controller's staff except

investments and shareholder relations managers

Financing activities include

issuing debt

Which of the following would use a process cost system?

lumber mill

What is the primary criterion for the preparation of managerial accounting reports?

manager needs

Costs that are treated as assets until the product is sold are

product costs

Which of the following is not an example of a sustainable business activity?

reduction of employee idle time

The ability of a business to pay its debts as they come due and to earn a reasonable net income includes

solvency and profitability

Cash dividends paid on common stock would be reported on the statement of cash flows in

the Cash Flows from (used for) Financing Activities section

Cash paid for equipment would be reported on the statement of cash flows in

the Cash Flows from (used for) Investing Activities section

Job order cost system

Typically used by companies that make custom products

Cost of goods sold for a manufacturer equals cost of goods manufactured plus

beginning finished goods inventory less ending finished goods inventory

A loss due to a discontinued operation should be reported on the income statement

below income from continuing operations

Which of the following increases cash?

borrowing money by issuing a 6-month note

Which of the following is not an unusual item?

corporate income tax being paid

Job order costing and process costing are

cost accounting systems

Which of the following will not be found on the balance sheet of a manufacturing company?

cost of goods sold

In a process cost system, the cost of completed production in Department A is transferred to Department B by which of the following journal entries?

debit Work in Process—Dept. B; credit Work in Process—Dept. A

Given the following data: ​ Work in process, beginning $14,000 Work in process, ending 20,000 Direct labor costs 4,000 Cost of goods manufactured 8,000 Factory overhead 8,000 ​ Direct materials used is

$2,000

Firefly Inc. sold land for $225,000 cash. The land had been purchased 5 years earlier for $275,000. The loss on the sale was reported on the income statement. On the statement of cash flows, what amount should Firefly report as an investing activity from the sale of the land?

$225,000

Reynolds Manufacturers Inc. has estimated total factory overhead costs of $95,000 and expected direct labor hours of 9,500 for the current fiscal year. If Job 117 incurs 2,300 direct labor hours, Work in Process will be debited and Factory Overhead will be credited for

$23,000

Compute conversion costs given the following data: direct materials, $347,500; direct labor, $196,300; factory overhead, $187,900; and selling expenses, $45,290.

$384,200

Rogers Company reported net income of $35,000 for the year. During the year, accounts receivable increased by $7,000, accounts payable decreased by $3,000, and depreciation expense of $8,000 was recorded. Net cash flows from operating activities under the indirect method for the year is

$53,000

Underapplied overhead

Applied overhead is less than actual overhead incurred

Overapplied overhead

Applied overhead is more than actual overhead incurred

Which of the following is not a characteristic of a process cost system?

The system measures costs for each completed job.

Materials must have which two qualities in order to be classified as direct materials?

They must be an integral part of the finished product and a significant portion of the total product cost.

Process cost system

Typically used by companies whose products are indistinguishable from each other

Common-sized financial statements

Useful for comparing one company to another or to industry averages

Leverage

Using debt to increase the return on an investment

The independent auditor's report

gives the auditor's opinion regarding the fairness of the financial statements

Which of the following systems provides for a separate record of the cost of each particular quantity of product that passes through the factory?

job order cost system

Costs on the income statement for both a merchandiser and a manufacturer would be

operating expenses

Indirect costs incurred in a manufacturing environment that are not traced directly to a product are treated as

period costs and expensed when the goods are sold

In process cost accounting, the costs of direct materials and direct labor are charged directly to

processing departments

Which of the following costs incurred by a tool manufacturer would not be included in conversion costs?

raw steel

The cost of production of completed and transferred goods during the period amounted to $540,000, and the finished products shipped to customers had total production costs of $375,000. The journal entry for the transfer of costs from work in process to finished goods is

Finished Goods 540,000 Work in Process 540,000

Mocha Company manufactures a single product by a continuous process, involving three production departments. The records indicate that direct materials, direct labor, and applied factory overhead for Department 1 were $100,000, $125,000, and $150,000, respectively. The records further indicate that direct materials, direct labor, and applied factory overhead for Department 2 were $55,000, $65,000, and $80,000, respectively. In addition, work in process at the beginning of the period for Department 1 totaled $75,000, and work in process at the end of the period totaled $60,000. ​ The journal entry for the flow of costs into Department 1 during the period for direct materials is

Work in Process—Department 1 100,000 Materials 100,000

Which of the following is an example of direct materials cost for an automobile manufacturer?

cost of interior upholstery

Which of the following is an example of direct labor cost for a cell phone manufacturer?

cost of wages of assembly worker

The two categories of cost comprising conversion costs are

direct labor and factory overhead

Managers use managerial accounting information for all of the following except to

evaluate the company's stock performance

Cash received from the issuance of a mortgage note payable would be classified as a(n)

financing activity

All of the following are typically included in the Management's Discussion and Analysis in annual reports except

journal entries

What term is used to describe the process of developing the organization's objectives and translating those into courses of action?

planning

Which of the following ratios provides a solvency measure that shows the margin of safety of bondholders and also gives an indication of the potential ability of the business to borrow additional funds on a long-term basis?

ratio of fixed assets to long-term liabilities

All of the following would be reported on the balance sheet as a current asset except

factory overhead

Conversion costs are

factory overhead and direct labor

Which of the following would appear as an unusual item on the income statement?

gain resulting from the disposal of a segment of the business

On the statement of cash flows prepared by the indirect method, the operating activities section would include

gains or losses on fixed assets

All of the following could be considered a direct material except

glue

Which of the following items appear on the corporate income statement before income from continuing operations?

income tax expense

Equipment with an original cost of $75,000 and accumulated depreciation of $20,000 was sold at a loss of $7,000. As a result of this transaction, cash would

increase by $48,000

Which of the following would be most likely to use a process cost system?

lawn fertilizer manufacturer

One reason that a common-sized statement is a useful tool in financial analysis is that it enables the user to

make a better comparison of two companies of different sizes in the same industry

Accounting designed to meet the needs of decision makers inside the business is

managerial accounting

Which of the following would not be found in a schedule of noncash investing and financing activities reported at the bottom of a statement of cash flows?

purchase of treasury stock for cash

On the statement of cash flows, the financing activities section would include

receipts from the issuance of capital stock

The materials requisition is used to

release materials from the storeroom to production

In a vertical analysis of an income statement, the base for computing the cost of merchandise sold percentage is

sales

What term is used to describe the process of monitoring operating results and comparing actual results with the expected results?

controlling

Which of the following would not be on the statement of cash flows?

cash flows from contingent activities

Which of the following can be found on the statement of cash flows?

cash flows from operating activities

Which of the following items would not be classified as part of factory overhead?

direct labor used

A product cost is

expensed in the period the product is sold

Who are the individuals charged with the responsibility for directing the day-to-day operations of a business?

managers

Which of the following manufacturing costs is an indirect cost of producing a product?

oil lubricants used for factory machinery

A loss on disposal of a segment would be reported on the income statement as a(n)

deduction from income from continuing operations

Horizontal analysis of comparative financial statements includes

computation of dollar amount changes and percentage changes from the previous to the current year

If a company uses a process cost system to account for the costs in its five production departments, how many work in process accounts will it use?

5

Solvency

A company's ability to make interest payments and repay debt at maturity

Horizontal analysis

A percentage analysis of increases and decreases in related items on comparative financial statements

Materials ledger

A subsidiary ledger that maintains a separate account for each type of material

Activity-based costing

A system that uses a different overhead rate for each activity

In most business organizations, the chief management accountant is called the

controller

A difference in quantity of materials used on two comparable jobs may be caused by

All of these choices inadequately trained employees poor quality materials improperly maintained tools

Current position analysis

An analysis of a company's ability to pay its current liabilities

The recording of the application of factory overhead costs to jobs would include a credit to

Factory Overhead

When journalizing indirect labor in a job order cost system, the debit is charged to

Factory Overhead

Which of the following are controlling accounts for a manufacturing business, each with its own subsidiary ledger

Materials, Work in Process, and Finished Goods

Times interest earned

Measures the risk that interest payments will not be made if earnings decrease

Vertical analysis

The percentage analysis of the relationship of each component in a financial statement to a total within the statement

Finished goods ledger

The stock ledger

During the period, labor costs incurred amounted to $175,000, including $150,000 for production orders and $25,000 for general factory use. Factory overhead applied to production was $23,000. The journal entry for the factory overhead applied to production is

Work in Process 23,000 Factory Overhead 23,000

The journal entry for the transfer of 1,600 units of Part No. 1177, with a value of $2.50 each, to work in process is

Work in Process 4,000 Materials 4,000

Which of the following entries would not be found on the books of a service provider?

a debit to Work in Process and a credit to Materials

Which of the following is not a characteristic of useful managerial accounting reports?

adhere to GAAP

Which of the following costs incurred by a paper manufacturer would be included in the group of costs referred to as conversion costs?

assembly labor's wages

The beginning and ending balances of Accounts Receivable for the year are $40,000 and $31,000, respectively. Income reported on the income statement for the year is $120,000. Exclusive of the effect of other adjustments, the net cash flows from operating activities to be reported on the statement of cash flows using the indirect method is

$129,000

A manufacturing company applies factory overhead based on direct labor hours. At the beginning of the year, it estimated that total factory overhead costs would be $360,000 and direct labor hours would be 30,000. Actual manufacturing overhead costs incurred were $377,200, and actual direct labor hours were 36,000. What is the predetermined factory overhead rate per direct labor hour?

$12.00

Work in process inventory increased by $20,000 during the current year. Cost of goods manufactured was $180,000. Total manufacturing costs incurred are

$200,000

The cost of goods sold for Michaels Manufacturing in the current year was $233,000. The January 1 finished goods inventory balance was $31,600, and the December 31 finished goods inventory balance was $24,200. Cost of goods manufactured during the period was

$225,600

Use the information provided for Darwin Company to answer the questions that follow. ​ Darwin Company Sales $76,500 Direct materials used 7,300 Depreciation on factory equipment 4,700 Indirect labor 5,900 Direct labor 10,500 Factory rent 4,200 Factory utilities 1,200 Sales salaries expense 15,600 Office salaries expense 8,900 Indirect materials 1,200 Darwin Company's product costs are

$35,000

Use the information provided for Privett Company to answer the questions that follow. ​ Privett Company Accounts payable $ 30,000 Accounts receivable 35,000 Accrued liabilities 7,000 Cash 25,000 Intangible assets 40,000 Inventory 72,000 Long-term investments 100,000 Long-term liabilities 75,000 Notes payable (short-term) 20,000 Property, plant, and equipment 400,000 Prepaid expenses 2,000 Temporary investments 36,000 Based on the data for Privett Company, what is the amount of quick assets?

$96,000

Which of the following should be added to net income in computing net cash flows from operating activities using the indirect method?

an increase in accrued liabilities

A balance sheet that displays only component percentages is a

common-sized balance sheet

Which of the following is the most useful in analyzing companies of different sizes?

common-sized financial statements