Managerial Accounting Exam 1 Q/A, Chapter 2, Accounting Test 3

Which of the following entries correctly reflects the entry for recording the wages of all Factory workers? A) Wage expense work-in-process inventory B) work-in-process inventory manufacturing overhead wages payable C) work-in-process inventory wages expense cash D) direct labor expense indirect labor expense wages payable

B)

Service firms generally include which of the following as product or job costs:

B) Direct Labor Wages

Which of the following entries correctly reflects the entry for the requisition of materials (direct and indirect) for use in production? A) Materials inventory Direct materials Indirect materials B) Materials inventory Accounts payable C) work in process inventory Manufacturing overhead Materials inventory D) Materials inventory Work in process inventory Manufacturing overhead

C)

If production increases within a given range, fixed cost per unit will: A) Increase B) stay constant C) decrease D) very depending on the source of the fixed costs E) none of the above

C) decrease

Which of the following is not a column shown on a period end worksheet? A) balance sheet B) income statement C) adjusted trial balance D) statement of cash flows E) adjustments

D) statement of cash flows

When recording depreciation on factory equipment which of the following accounts would be credited?

D.) Accumulated Depreciation-Equipment

Which of the following types of costs are not allocated to production departments?

D.) Selling Department Costs

Which of the following would be considered a direct cost for a unit of production?

D.) Wages paid to assembly line workers

Which of the following entries correctly reflects the accumulation of manufacturing overhead? A) manufacturing overhead cash B) indirect labor manufacturing overhead C) manufacturing overhead accumulated depreciation ---Factory equipment D) manufacturing overhead materials inventory E) A,C, and D

E)

Which of the following is not a role that can be filled by someone with an accounting degree? A. Treasurer B. Internal auditor C. Budget analyst D. CFO E. All of the above are roles that are filled by accountants.

E. All of the above are roles that are filled by accountants.

Which of the following is NOT a role that can be filled by someone with an accounting degree?

E.) All of the above are roles that are filled by accountants (Treasurer, Internal Auditor, Budget analyst, CFO)

Which of the following would not appear on a job-order cost sheet?

E.) All of the above would appear on the job order cost sheet (Direct Labor, Direct Materials, Overhead, Total Cost)

Which of the following types of production would most likely use job-order costing?

E.) Both B and C (Construction of custom homes and manufacturing of heavy duty machinery)

Cost of Goods Manufactured = Ending Work-in-Process + Beginning Work in Process - Total Manufacturing Costs. True or False

False Reason: Cost of Goods Manufactured = Beginning Work in Process + Total Manufacturing Costs - Ending Work-in-Process.

Companies are required to disclose a Schedule of Cost of Goods Manufactured as part of their financial statements. True or False

False Reason: This is not a required financial statement disclosure.

Managerial Accounting provides information which is primarily useful for:

Helping managers plan, manage, and make strategic decisions regarding the growth and profitability of the company

All of the following are examples of a service firms except:

Online Retailers

Management Accountants provide information that is:

Timely, Relevant, Useful for making decisions, Easily accessible to management

Because customers can so quickly compare prices, a business cannot simply raise their prices, but must be able to control costs in order to realize a reasonable profit. True or False

True

Cost of Goods Manufactured is the cost of items transferred from Work in Process Inventory to Finished Goods Inventory. True or False

True

Finished Goods Inventory includes all items that have been completed but have not yet been sold to customers. True or False

True

The total of all debits and all credits must be equal in the adjusted trial balance. True or false

True

Total Manufacturing costs include all direct materials used, all direct labor, and all manufacturing overhead. True or False

True

Service firms typically do not have a Finished Goods Inventory. True or False

True Reason: Because completed projects are billed to the customer immediately upon completion, there is no need for a finished goods inventory.

The journal entry to record indirect labor includes a debit to manufacturing overhead. True or false

True Reason: the entry is as follows: Manufacturing Overhead Wages Payable

A job-order costing system does which of the following?

C.) Allocated manufacturing costs to individual jobs to determine unit costs

If production increases within a given range, fixed costs per unit will:

C.) Decrease

Which of the following is an example of a manufacturing firm?

C.) General Motors

Which of the following entries correctly reflects the entry for the requisition of materials (Direct and Indirect) for the use of production?

C.) Work in Process Manufacturing Overhead Materials inventory

Which of the following would not be considered product costs? A) wages paid to assembly line workers B) electricity bill for a manufacturing facility C) salary of a factory supervisor D) cleaning supplies for an administration building E) parts used in the production of an automobile

D cleaning supplies for an administration building

Which of the following entries would a manufacturing firm record at the completion of a product for sale? A) cost of goods sold work-in-process inventory B) work-in-process inventory cost of goods sold C) work-in-process inventory finished goods inventory D) finished goods inventory work-in-process inventory

D)

What is the correct order of the flow of product costs through the inventory system? A) work in process, finished goods, materials inventory, cost of goods sold B) cost of goods sold, work in process, materials inventory, finished goods C) Materials inventory, work in process, cost of goods sold, finished goods D) Materials inventory, work in process, finished goods, cost of goods sold

D) Materials inventory, work in process, finished goods, cost of good sold

Which of the following are not included in the work in process inventory: A) Direct materials that have been put into production B) Direct labor incurred in production C) manufacturing overhead allocated to units of production D) all of the above are included in work in process inventory

D) all of the above are included in work in process inventory

Cost of goods sold can be calculated in the following manner: A) beginning work in process + cost of goods manufactured - ending work in process B) ending materials inventory + ending work in process + ending finished goods C)ending finished goods - beginning finished goods - manufacturing overhead D) beginning finished goods + cost of goods manufactured - ending finished goods

D) beginning finished goods + cost of goods manufactured - ending finished goods

Which of the following would be considered a direct cost for a unit of production? A) depreciation on production facilities B) salary paid to factory general supervisor C) indirect materials used in the production process D) wages paid to assembly line workers E) none of the above

D) wages paid to assembly line workers Reason: all other costs are indirect, in that they are difficult or costly to assign to the cost object of a unit produced

Which of the following correctly explains what should be done with any under- or over-applied overhead?

D.) At year end, if there is a significant amount of under- or over-applied overhead, it should be allocated proportionally to Work In Process, Finished Goods, and Cost of Goods Sold.

Which of the following would NOT be considered a product cost?

D.) Cleaning supplies for an administration building

Which of the following entries would a manufacturing firm record at the completion of a product for sale?

D.) Finished Goods Invetory Work in Process Inventory

Which of the following would be the most appropriate measure of overhead allocation for a department that is highly automated?

D.) Machine Hour Used

What is the correct order of the flow of product costs through the inventory system?

D.)Materials inventory, Work in process, Finished Goods, Cost of Goods Sold

The schedule of cost of goods manufactured includes all the following except: A)total manufacturing cost for the B) beginning work in process inventory C)cost of goods manufactured D) manufacturing overhead for the period E)all of these are included in the schedule of cost of goods manufactured

E) all of these are included in the schedule of cost of goods manufactured

Which of the following is not an example of manufacturing overhead? A) factory supervisor salary B) production facility rent expense C) cleaning supplies for factory floor D) manufacturing equipment depreciation E) electricity bill for administration building

E) electricity bill for administration building

Which of the following types of firms normally carry inventory?

E.) A and C only (Manufacturing and merchandising firms)

Using a cost accounting system to track product costs is needed for:

E.) All of The Above (Managerial decision making, Financial statements, setting product prices)

Because the cost of Indirect materials is included in Manufacturing Overhead, these materials are not included in Materials Inventory. True or False

False Reason: All materials are included in the Materials Inventory when purchased, whether they will be used as Direct or Indirect Materials.

When goods are sold, the costs associated with those goods are transferred from work in process to cost of goods sold. True or false

False Reason: The costs are transferred out of finished goods inventory. The entry is as follows: Cost of goods sold Finished goods inventory

The adjusted trial balance reflects the effects of all the closing entries. True or false

False Reason: and adjusted trial balance reflects the effect of adjusting entries; the balance sheet reflects the effects of closing entries

Indirect Materials flow directly from the Materials Inventory to Work-in-Process Inventory. True or False

False Reason: costs associated with indirect materials are accumulated in the manufacturing overhead account, and then applied to work in process

Most businesses still use a simple worksheet to prepare their financial statements at the end of the period. True or false

False Reason: most companies use accounting software to prepare their financial statements, and no longer employ an actual worksheet. The worksheet simply demonstrates what goes on in the software.

Manufacturing firms and merchandising firms generally include all the same expenses as product costs. True or False

False Reason: Manufacturing firms typically include labor and factory overhead as product costs, while merchandising firms generally only include the cost of inventory as product costs.

A variable cost is one that varies both in total (with respect to the amount of items produced) and per unit. True or False

False, Reason: A variable cost is one that varies in total, but is fixed per unit (within a given range of production).

Period costs are assumed to provide benefit to the company in the period in which the product is sold. True or False

False, Reason: the benefits associated with period costs are assumed to expire in the period in which the costs are incurred.

All of the following are benefits of outsourcing except:

Significantly faster service and higher quality of products and services

When a product is completed, the costs associated with production are debited to the Finished goods inventory. True or false

True Reason: the entry is as follows: Finished goods inventory Work in process inventory

Which of the following is not a source of information used by Management Accountants?

Upper management Line employees Financial results of the company's operations All of these are sources of managerial accounting information

Revenues, expenses, and cost of goods sold are closed to which of the following accounts? A) income summary B) retained earnings C) other income D) dividends E) none of the above

A) income summary

Total manufacturing cost for the period include: A) total direct labor B)total materials purchased C)total cost of goods sold D)administrative and selling expenses E)all of the above

A) total direct labor

Service firms generally include which of the following as product or job costs: A) supervisor salaries B) Direct labor wages C) Utilities D) Service firms do not track job costs

B) Direct labor wages Reason: Service firms track the costs of that services that they provide

Just-in-time (JIT) inventory systems are designed to reduce which of the following:

B.) Costs of carrying inventory

If a company uses a perpetual inventory system, what journal entry would correctly record a purchase on account of materials to be eventually used in production?

B.) Materials Inventory Accounts Payable

When calculating the pre-determined overhead rate, which of the following is typically used?

B.) Yearly Budgeted Overhead

As part of its typical year-end accounting procedures, a manufacturing firm would prepare a worksheet showing all the debit and credit balances of all general ledger accounts. True or false

True