Chapter 10 LO's

Celestin Manufacturing Company incurred $5,000 of depreciation on its manufacturing equipment during its first year of operation. During this year the company made 2,500 units of product and sold 2,000 units of product. Based on this information alone the company would show

$4,000 of cost of goods sold expense on its income statement $4,000 (5,000 depreciation / 2,500 units = $2 per unit; $2 per unit × 2,000 units sold = $4,000 cost of goods sold. The remaining $1,000 of depreciation would remain in the inventory account until the time the remaining goods are sold

Brock Company makes candy. During the most recent accounting period Brock paid $3,000 for raw materials, $4,000 for labor, and $2,000 for overhead costs that were incurred to make candy. Brock started and completed 10,000 units of candy of which 8,000 were sold. Based on this information the balance in the inventory account on Brock's balance sheet would be

3000+4000+2000 = 9000 9000 / 10000= 0.9 0.9 * 2000 = 1800

Brock Company makes candy. During the most recent accounting period Brock paid $3,000 for raw materials, $4,000 for labor, and $2,000 for overhead costs that were incurred to make candy. Brock started and completed 10,000 units of candy of which 8,000 were sold. Based on this information Brock would recognize which of the following amounts of expense on its income statement?

3000+4000+2000 = 9000 9000 / 10000= 0.9 0.9 * 8000 = 7200

Jack Manufacturing Company had beginning work in process inventory of $8,000. During the period, Jack transferred $34,000 of raw materials to work in process. Labor costs amounted to $41,000 and overhead amounted to $36,000. If the ending balance in work in process inventory was $12,000, what was the amount transferred to finished goods inventory?

34000 + 41000 + 36000 = 111000 total manufacturing costs 111000 + 8000 Beginning work in process inventory = 119,000 Total work in process - 12000 Ending work in process = $107,000 Cost of goods manufactured

The primary difference between cost classification for a manufacturing firm versus a merchandising firm is

All costs for a manufacturing firm are midstream costs for a merchandising firm

ManCo Manufacturing Company paid cash for wages of production workers. Which of the following choices reflects how this event would affect the Company's balance sheet and income statement?

Assets: + and - ===== Liabilities: NA Equity: NA ===== Revenue: NA Expense: NA ==== Net Income: NA

ManCo Manufacturing Company paid cash for commissions paid to sales staff. Which of the following choices reflects how this event would affect the Company's balance sheet and income statement?

Assets: - ===== Liabilities: NA Equity: - ===== Revenue: NA Expense: + ==== Net Income: -

Mary's Manufacturing Company used supplies in its accounting department. Which of the following choices reflects how this event would affect the Company's balance sheet and income statement?

Assets: - ===== Liabilities: NA Equity: - ===== Revenue: NA Expense: + ==== Net Income: -

the "Credibility" standard contained in IMA's Statement of Professional Ethical Standards?

Communicate information fairly and objectively. Communicate all information (favorable or unfavorable) that could reasonably be expected to affect a user's understanding of reports, analysis or recommendations. Disclose delays or deficiencies in information.

At the beginning of the current accounting period Blazer Company had a $40,000 balance in its Finished Goods Inventory account. During the period cost of goods manufactured amounted to $280,000. The ending balance in the Finished Goods Inventory account was $42,000. Based on this information the amount of cost of goods sold is

Cost of Goods Manufactured $280,000 + Beginning Finished Goods Inventory 40,000 = Cost of Goods Available for Sale 320,000 - Ending Finished Goods Inventory (42,000) = Cost of Goods Sold $278,000

Certified management accountants are ethically bound by rules of "Confidentiality" that include restricting testimony in a court of law. This statement is

False

The estimated amount of manufacturing overhead appears on the schedule of cost of goods manufactured and sold. This statement is

False

Upstream costs are included in the determination of cost of goods sold but downstream costs are not included. This statement is

False

The Financial Accounting Standards Board (FASB) establishes standards for the preparation of financial accounting reports while the Securities and Exchange Commission (SEC) establishes standards for the preparation of managerial accounting reports. This statement is

False The FASB and the SEC provide standards, rules, and guidance for financial reporting. Managerial accounting is largely unregulated.

Managerial accounting focuses on the needs of external users while financial accounting focuses on the needs of internal users. This statement is

False The relationships described in this statement are reversed. Specifically, managerial accounting focuses on internal users while financial accounting focuses on external users.

Which of the following branches of accounting focuses more on historical data?

Financial accounting

The wages of factory maintenance personnel would usually be considered as:

Indirect Labor and Manufacturing Overhead

Which of the following costs would not be included as part of manufacturing overhead?

Insurance on sales vehicles

Product costs are placed in which financial statement account when incurred?

Inventory

The primary difference between midstream costs incurred at a manufacturing firm versus a service firm is

Inventory at a service company is consumed immediately as opposed to being stored for future use at a manufacturing firm.

Which of the following statements is true?

Managerial accounting reports are less regulated than financial accounting reports.

Which of the following is not identified as an overreaching principle of ethical conduct in the Institute of Management Accountants' (IMA) Statement of Professional Ethical Standards?

Opportunity

Which of the following items is not a feature of the "Integrity" standard contained in IMA's Statement of Professional Ethical Standards?

Perform duties in accordance with relevant laws, regulations, and technical standards.

Which of the following describes the flow of product costs in a manufacturing company?

Product costs are first accumulated in an asset account (Inventory) and then transferred to an expense account (Cost of Goods Sold) when the products are sold

Which of the following are characteristics of managerial accounting information?

Provides information to the company's management team Is future oriented Is more willing to sacrifice reliability to gain relevance than is financial accounting

Number of boats to be sold 500 Upstream costs $5,000,000 Direct materials per boat $50,000 Direct labor per boat $30,000 Overhead per boat $20,000 Downstream costs $2,000,000 Assume the company wants to sell each boat for 20% more than the cost to produce the boat. Which of the following would be the sales price under GAAP and for internal decision purposes?

Sales price under GAAP = ($50,000 + $30,000 + $20,000) × 1.20 = $120,000 Sales price for internal decision = ([$5,000,000/500] + $50,000 + $30,000 + $20,000 + [$2,000,000 / 500]) × 1.20 = $136,800

Which of the following statements regarding the schedule of cost of goods manufactured and sold is true?

The cost of goods sold is determined by subtracting the ending balance in the finished goods inventory account from the amount of the finished goods available for sale

Certified management accountants cannot plead ignorance as a defense for unethical behavior. This statement is

True

In an attempt to resolve an ethical conflict, a CMA is permitted to bypass the chain of command if his supervisory authorities are involved in the conflict. This statement is

True

The schedule of cost of goods manufactured and sold is not part of the income statement that appears in a company's public financial statements.

True

The cost of manufacturing a product includes all of the following except

advertisement

The cost of a small amount of glue used to manufacture a product may be called

an overhead, product, or indirect costs

The cost of denim used to manufacture blue jeans would most likely be classified as a

direct material

The costs incurred to sell a product would be classified as

downstream costs

According to GAAP, which type of costs are classified as product cost?

midstream costs

In a manufacturing firm, costs incurred to research a more fuel efficient engine would be classified as

upstream costs