Managerial Accounting Review

Cash outflow - financing activity

Declaration and payment of a cash dividend

Added in determining cash receipts from customers

Decrease in accounts rec

Deducted in determining cash payments to suppliers

Decrease in inventory

Which of the following costs would a computer manufacturer include in manufacturing OH

Depreciation on testing equipment

materials that can be physically and directly related to the product

Direct Materials

the function of coordinating activities to ensure a smooth running operation

Directing

In computing equivalent units using the weighted average method, the beginning work in process is part of the equivalent units of production formula.

False

Process cost system is used when a company manufactures a large volume of unique products.

False

The cost of beginning work in process plus the total manufacturing costs for the current period is the cost of goods manufactured.

False

primarily concerned with external users

Financial Accounting

How are cash dividends paid to stockholders classified on the statement of cash flows?

Financing activities

What type of activity is the purchase of equipment for cash?

Investing Activity

Constitute a subsidiary ledger for Work in Process Inventory

Job cost sheets

primarily concerned with internal users

Managerial Accounting

indirect costs of manufacturing a product

Manufacturing Overhead

During the introductory phase of a company's life cycle, which financial statement would users expect to see?

Negative cash from operations, negative cash from investing, positive cash from financing

Which activities are reported on the statement of cash flows?

Operating, Investing, Financing

costs that are noninventorable

Period Costs

the function of setting goals and objectives

Planning

Used to apply manufacturing overhead to jobs

Predetermined overhead rate

The final step in preparing a production cost report is to

Prepare a cost reconciliation schedule

Cash outflow - investing activity

Purchase of Land for cash

Cash inflow - investing activity

Sale of equipment for cash

Which of the following is not an element of manufacturing OH

Sales managers salary

Cost reconciliation schedule

Shows that the total costs accounted for equal the total costs to be accounted for

Walker Company applies manufacturing overhead based on direct labor hours. Information concerning manufacturing overhead and labor for the year as follows: Actual manufacturing overhead: $163,800 Estimated manufacturing overhead: $158, 600 Direct labor incurred: 2,500 hours @ $22 = $55,000 Est. Labor: 2,600 hours @ $21 = $54,600 What is the underapplied at year end? $11,300

Solve: $158,600 / 2,600 = $61 $61 x 2,500 hours = $152, 500 Now, $163,800 - $152, 500 = 11,300

Units transferred out

Total units accounted for minus units in ending work in process

Equivalent units of production are used to determine the cost per unit of completed products.

True

Managerial Accounting internal reports are prepared more frequently than are classified financial statements.

True

Manufacturing OH consists of costs that are indirectly associated with the manufacturing of the finished product

True

Significant Non-cash activities are part of the statement of cash flows.

True

Solvency is the ability of a company to survive over the long term.

True

The primary purpose of the statement of cash flows is to provide info about a company's cash receipts and cash payments during an accounting period.

True

Under applied OH means that the overhead assigned to work in process is less than OH incurred.

True, actual OH > OH applied = underapplied

Total manufacturing cost per unit

Unit material costs plus unit conversion cost

Total units accounted for

Units transferred out during the period plus units ending work in process

all business processes associated with providing a product or a service

Value Chain

Equivalent units of production

Work done during a period expressed in fully completed units

The cost of the products that are partially complete

Work in Process Inventory

When the company assigns factory labor costs to jobs, the direct labor cost is debited to

Work in process inventory

In computing equivalent units using the weighted average method, _______________________ is NOT part of of the equivalent units of production formula. a) beginning work in process b) units transferred out c) ending work in process d) none of the choices are correct

a) beginning work in process

The total costs accounted for in a production cost report are equal to the a) cost of units completed and transferred out plus the cost of ending work in process b) cost of units started into production c) cost of units completed and put into production d) cost of beginning work in process plus the cost of units completed and transferred out

a) cost of units completed and transferred out plus the cost of ending work in process.

Under the indirect method, which of the following is deducted from net income in the operating section? a) Gain on sale of land b) Amortization expense c) Decrease in inventory d) increase in wages payable

a) gain on sale of land

Cost accounting involves the measuring, recording, and reporting of ___________ a) product costs b) manufacturing processes c) future costs d) manufacturing decisions

a) product costs

Job cost sheets constitute the subsidiary ledger for a) Work in process inventory b) cost of goods sold c) fnished goods inventory d) manufacturing overhead

a) work in process inventory

When a company assigns factory labor costs to jobs, the direct labor is debited to .. a) Work in process inventory b) direct labor c) manufacturing overhead d) factory labor

a) work in process inventory

Conversion costs are the sum of a) labor costs and overhead costs b) fixed and variable overhead costs c) direct labor and indirect labor costs d) direct material costs and overhead costs

a) labor costs and overhead costs

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Production cost repair

A summary of both production quantity and the cost data for a production department.

Physical Units

Actual units to be accounted for during period, irrespective of any work performed.

Which of the following is not a manufacturing cost

Advertising cost

the function of keeping activities in accordance to plans

Controlling

Unit production cost

Cost expressed in terms of equivalent units of production

In a process cost system, costs are assigned only to a) work in process, finished goods, and cost of goods sold b) one work in process account c) work in process accounts d) work in process and finished goods inventory

a) work in process, finished goods, and cost of goods sold

Fortner Company has no beginning work in process; 9,000 units are transferred out and 3,000 units in ending work in process are one-third finished as to conversion costs and fully complete as to materials costs. If total materials cost is $60,000, the unit materials cost is a) $6.00 b) $5.00 c) $6.67 rounded d) none of these choices are correct

b) 5.00 Solve: $60,000 / 12,000 units = 5.00

Harry Carey Hats shows the following data: Work in process, physical units April 1: 7,000 Completed and transferred out units: 72,000 Work in process, physical units, April 30: 8,000 Materials are added at the beginning of the process. Conversion costs are added evenly throughout the process. The incomplete units are 30% completed as to conversion costs. What is the total number of equivalent units for conversion costs during April using the weighted-average method? a) 83,000 b) 74,400 c) 21,600 d) 24,000

b) 74,400 Solve: .30% x 8,000 = 2,400 72,000 + 2,400 = 74,400.

If the amount of underapplied overhead is immaterial, companies will debit underapplied overhead to a) Work in process inventory b) Cost of goods sold c) manufacturing overhead d) finished goods inventory

b) cost of goods sold

Which one of the following transactions causes the Manufacturing Overhead account to be debited in a job order cost accounting system? a) completed products during the period b) used indirect materials c) purchased raw materials on account d) incurred direct labor

b) used indirect materials

Manufacturing overhead is underapplied if a) the predetermined rate equals the actual rate b) actual overhead equals applied overhead c) actual overhead is greater than applied overhead d) acutal overhead is less than applied

c) actual overhead is greater than applied

The cost reconciliation schedule shows that the total a) costs accounted for equal the units accounted for b) units to be accounted for equal the total units accounted for c) costs accounted for equal the total costs to be accounted for d) units to be accounted for equal the total costs accounted for

c) costs accounted for equal the total costs to be accounted for.

Which of the following is an operating activity? a. Sale of equipment for land b. Making a loan to another entity c. Payment of interest d. payment of cash dividend

c. Payment of interest

Significant noncash activity

conversion of bonds payable into common stock

measures, records, and reports product costs

cost accounting

Manufacturing cost accounts are fully integrated into the general ledger

cost accounting system

the entry when direct labor is assigned to jobs is a debit to a) Factory Labor and a credit to Work in Process Inventory. b) Manufacturing Overhead and a credit to Factory Labor. c) Factory Labor and a credit to Manufacturing Overhead. d) Work in Process Inventory and a credit to Factory Labor.

d) Work in process inventory and a credit to factory labor

In process cost accounting, the first step in preparing a production cost report is to a) prepare a cost reconciliation schedule b) compute unit production costs c) compute equivalent units of production d) compute the physical unit flow

d) compute the physical unit flow

Which one of the following causes the work in process account to increase in a job order cost accounting system? a) incurred direct labor b) incurred and paid indirect labor c) completed products during a period d) requisitioned direct materials from the storeroom

d) requisitioned direct materials from the storeroom

Added in determining cash payments to suppliers

decrease in accounts payable

Under the indirect method, which of the following is added to net income in operating activities? a) Depreciation expense b) increase in accounts receivable c) decrease in accounts payable d) gain on sale of equipment

depreciation expense

Cash inflow - financing activity

issuance of preferred stock for cash

Under the indirect method, how is an increase in accounts receivable handled?

it is deducted from net income

appropriate when products have distignuishing and unique traits

job order

Deducted in determining cash receipts from customers

loss on sale of plant asset

source document which authroizes the issuance of raw materials into production

materials requisition slip

when actual manufacturing overhead costs are less than overhead applied to products

overapplied overhead

Appropriate when products are very similar and produced in large quantity

process cost system

Indicates the number of hours worked by employees and the account to charge it to

time ticket

when acutal manufacutring overhead costs are greater than overhead applied to products

underapplied overhead