Chapter 18 Managerial Accounting Concepts – Test Bank | 24th Edition

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Fundamental Accounting Principles, 24e (Wild)

Chapter 18 Managerial Accounting Concepts and Principles

1) Managerial accounting is an activity that helps managers determine costs of products and services, plan future activities, and compare actual to planned results.

2) Control is the process of setting goals and determining ways to achieve them.

3) Control is the process of monitoring planning decisions and evaluating an organization's activities and employees.

4) Managerial accounting provides financial and nonfinancial information to an organization's managers and other internal decision makers.

5) One of the usual differences between financial and managerial accounting is the timeliness of the information reported.

6) Managerial accounting information can be forwarded to the managers of a company quickly since external auditors do not have to review it, and estimates and projections are acceptable.

7) Marketing managers can use managerial accounting information to decide whether to advertise on social media.

8) Managerial accounting reports and information are used by external users and financial accounting by internal users.

9) Both financial and managerial accounting rely on accepted principles that are enforced through an extensive set of rules and guidelines.

10) Both financial and managerial accounting report monetary information; managerial accounting also reports considerable nonmonetary information.

11) Both financial and managerial accounting affect user's decisions and actions.

12) The focus of managerial accounting information is on the organization as a whole.

13) Planning is the process of setting goals and making plans to achieve them.

14) Feedback provided by the control function allows managers to revise their plans.

15) An important managerial accounting report is the budget, which predicts revenues and expenses.

16) The concept of total quality management focuses on quality improvement.

17) Just-in-time manufacturing is a system that acquires inventory and produces product only when needed for an order.

18) When the attitude of continuous improvement exists throughout an organization, every manager and employee is challenged to continuously experiment with new and improved business practices.

19) The main goal of the lean business model is the elimination of waste while satisfying the customer and providing a positive return to the company.

20) The management concept of customer orientation motivates a company to spend large amounts on advertising to convince customers to buy the company's standard products.

21) The management concept of customer orientation encourages a company to set up its production system to produce large quantities of the same product for all customers.

22) Total quality management and just-in-time manufacturing focus on quality improvement as well as on time customer deliveries.

23) Under a just-in-time manufacturing system, large quantities of inventory are accumulated throughout the factory to be certain that components are available each time that they are needed.

24) The balanced scorecard aids in continuous improvement by augmenting financial measures with information on the drivers or indicators of future financial performance.

25) Adopting a lean business model should have no effect on cost in a modern manufacturing environment.

26) The Institute of Management Accountants (IMA) Statement of Ethical Professional Practice requires that management accountants be competent and act with integrity.

27) An employee overstates his reimbursable expenses in one period in order to receive needed additional cash. Since he intends to reduce his expenses the next period by the current overstatement, this act is not considered fraudulent.

28) Direct materials are not easily traced to a product.

29) Costs may be classified by many different cost classifications.

30) Straight-line depreciation, rent, and manager salaries are examples of variable costs.

31) Cost concepts such as variable, fixed, mixed, direct, and indirect apply only to manufacturers and not to service companies.

32) Total variable costs change in proportion to changes in the volume of activity. 

33) Total fixed costs change in proportion to changes in the volume of activity.

34) Direct costs can be traced to more than one cost object.

35) Indirect costs cannot be easily and cost-beneficially traced to a single cost object.

36) Product costs can refer to expenditures necessary to manufacture products and to administrative support during the time period.

37) Period costs can refer to expenditures necessary to manufacture products during the time period.

38) Product costs are capitalized as inventory on the balance sheet and period costs are expensed on the income statement.

39) The sales commission incurred based on units of product sold during the month is an example of a product cost.

40) Period costs are incurred by manufacturing finished goods.

41) Product costs can be classified as one of three types: direct materials, direct labor, or factory overhead.

42) Product costs are expenditures necessary to manufacture finished products.

43) Selling and administrative expenses are normally period costs.

44) The cost of partially completed products is included in the balance of the Work in Process Inventory account.

45) Manufacturers usually have three inventories: raw materials, work in process, and finished goods.

46) The main difference between the cost of goods sold of a manufacturer and a merchandiser is that the merchandiser includes cost of goods manufactured rather than cost of goods purchased.

47) The main difference between the cost of goods sold of a manufacturer and a merchandiser is that the manufacturer includes cost of goods manufactured rather than cost of goods purchased.

48) Raw materials that become part of a product and are identified with specific units or batches of a product are called direct materials.

49) Raw materials inventory should not include indirect materials.

50) The Work in Process Inventory account is found only in the ledgers of merchandising companies.

51) The Work in Process Inventory account is found only in the ledgers of manufacturing companies.

52) Raw materials purchased plus beginning raw materials inventory equals the ending balance of raw materials inventory.

53) Four factors come together in production activity: beginning work in process inventory, direct materials, direct labor, and factory overhead.

54) Newly completed units are combined with beginning finished goods inventory to make up total ending work in process inventory.

55) Beginning finished goods inventory plus cost of goods manufactured equals cost of goods sold.

56) Beginning finished goods inventory plus cost of goods manufactured equals cost of goods available for sale.

57) Beginning finished goods inventory plus cost of goods manufactured minus ending finished goods inventory equals cost of goods sold.

58) The series of activities that add value to a company's products or services is called a value chain.

59) The triple bottom line focuses on three measures: financial, social, and environmental.

60) A lean business model aims to eliminate waste while satisfying the customer and providing a positive return to the company.

61) Total quality management (TQM) focuses on quality improvement to business activities.

62) Just-in-time manufacturing (JIT) focuses on quality improvement and applies this standard to all aspects of business activities.

63) Just-in-time manufacturing (JIT) is a system that acquires inventory and produces only when needed.

64) Total quality management (TQM) is a system that acquires inventory and produces only when needed.

65) The raw materials inventory turnover ratio is raw materials purchased divided by the average raw materials inventory.

66) A manufacturer's cost of goods manufactured is the sum of direct materials, direct labor, and factory overhead costs incurred in producing products.

67) Indirect materials are accounted for as factory overhead because they are not clearly identified with specific product units.

68) Indirect labor refers to the cost of workers who assist or supervise manufacturing, but they are not clearly identified with specific product units.

69) Direct labor refers to employees who physically convert materials to finished product.

70) Factory overhead is charged to expense as it is incurred because it is a period cost.

71) Factory overhead includes selling and administrative expenses because they are indirect costs of a product.

72) Prime costs consist of direct labor and factory overhead.

73) Prime costs consist of direct materials and direct labor.

74) The schedule of cost of goods manufactured is also known as a manufacturing statement.

75) The schedule of cost of goods manufactured must be prepared monthly as it is a required general-purpose financial statement.

76) Managerial accounting information:

A) Is used mainly by external users.

B) Involves gathering information about costs for planning and control decisions.

C) Is generally the only accounting information available to managers.

D) Can be used for control purposes but not for planning purposes.

E) Has little to do with controlling costs.

77) Managerial accounting is different from financial accounting in that:

A) Managerial accounting is more focused on the organization as a whole and financial accounting is more focused on subdivisions of the organization.

B) Managerial accounting never includes nonmonetary information.

C) Managerial accounting includes many projections and estimates whereas financial accounting has a minimum of predictions.

D) Managerial accounting is used extensively by investors, whereas financial accounting is used only by creditors.

E) Managerial accounting is mainly used to set stock prices.

78) Flexibility of practice when applied to managerial accounting means that:

A) The information must be presented in electronic format so that it is easily changed.

B) Managers must be willing to accept the information as the accountants present it to them, rather than in the format they ask for.

C) Managerial accountants must be on call twenty-four hours a day.

D) Managerial accounting systems differ across companies depending on the nature of the business and the arrangement of its internal operations.

E) Managers must be flexible with information provided in varying forms and using inconsistent measures.

79) Which of the following items does not represent a difference between financial and managerial accounting?

A) Users of the information.

B) Flexibility of reporting. 

C) Timeliness of information.

D) Focus of the information.

E) Managerial accounting does not use the financial information from the financial accounting system.

80) Which of the following items is not a management concept that was created to improve company performance?

A) Just-in-time manufacturing.

B) GAAP constraints and guidelines.

C) Total quality management.

D) Continuous improvement.

E) Customer orientation.

81) A National Quality Award that encourages an emphasis on quality was established by:

A) The United Nations.

B) The U.S. Chamber of Commerce.

C) The Malcolm Baldrige Foundation.

D) The U.S. Congress.

E) The SEC.

82) Continuous improvement:

A) Encourages employees to maintain established business practices.

B) Strives to preserve acceptable levels of performance.

C) Rejects the notion of "good enough."

D) Is not applicable to most businesses.

E) Is possible only in service businesses.

83) An attitude of constantly seeking ways to improve company operations, including customer service, product quality, product features, the production process, and employee interactions, is called:

A) Continuous improvement.

B) Customer orientation.

C) Just-in-time.

D) Theory of constraints.

E) Total quality measurement.

84) A management concept based on an understanding of the changing wants and needs of customers, and which leads to flexible product designs and production processes, is called:

A) Continuous improvement.

B) Customer orientation.

C) Just-in-time.

D) Theory of constraints.

E) Total quality management.

85) An approach to managing inventories and production operations such that units of materials and products are obtained and provided only as they are needed is called:

A) Continuous improvement.

B) Customer orientation.

C) Just-in-time manufacturing.

D) Theory of constraints.

E) Total quality management.

86) A management concept that seeks to uncover and eliminate waste in business activities is called:

A) Continuous operations.

B) Customer orientation.

C) Just-in-time.

D) Theory of constraints.

E) Lean business model.

87) Goals of a lean business model include all of the following except:

A) Eliminate waste.

B) Better inventory control.

C) Continuous improvement.

D) Consistent production levels.

E) Fewer product defects.

88) The model whose goal is to eliminate waste while satisfying the customer and providing a positive return to the company is:

A) Just-in-time manufacturing model.

B) Managerial accounting model.

C) Corporate social responsibility model.

D) Continuous improvement model.

E) Lean business model.

89) Jenny, an employee of Toucan Company, used company assets for her own personal gain. This is an example of:

A) employee advance.

B) fraud.

C) internal control.

D) ethics.

E) employment perks.

90) An employee is dissatisfied with the resolution of an ethical conflict with his supervisor at his place of employment. According to the Institute of Management Accountants, the employee's next step should be to:

A) contact the IMA.

B) contact the next level of management who is not involved in the ethical conflict.

C) make the president of the company aware of the ethical conflict.

D) report the incident to the State Board of Accountancy.

E) resign from the company.

91) A direct cost is a cost that is:

A) Identifiable as controllable.

B) Traceable to the company as a whole.

C) Does not change with the volume of activity.

D) Traceable to a single cost object.

E) Traceable to multiple cost objects.

92) Classifying costs by behavior with changes in volume of activity involves:

A) Identifying fixed costs and variable cost.

B) Identifying cost of goods sold and operating costs.

C) Identifying costs as financial or managerial.

D) Identifying costs in a physical manner.

E) Identifying both quantitative and qualitative cost factors.

93) A classification of costs that determines whether a cost is expensed to the income statement or capitalized to inventory is:

A) Fixed versus variable.

B) Direct versus indirect.

C) Financial versus managerial.

D) Service versus manufacturing.

E) Product versus period.

94) A fixed cost:

A) Requires the future outlay of cash and is relevant for future decision making.

B) Does not change with changes in the volume of activity within the relevant range.

C) Is directly traceable to a cost object.

D) Changes with changes in the volume of activity within the relevant range.

E) Is irrelevant for managers' decision making.

95) Wesson Company sold 10,000 units of its only product in the first half of the year. If sales increase by 12% in the second half of the year, which cost will increase?

A) Depreciation on equipment.

B) Wages of administrative staff.

C) Office rent.

D) Direct materials.

E) Property insurance.

96) Wesson Company sold 10,000 units of its only product in the first half of the year. If sales decrease by 15% in the second half of the year, which cost will not change?

A) Direct materials.

B) Direct labor.

C) Sales commissions.

D) Factory supplies.

E) Depreciation on equipment.

97) Gordon Company sold 2,000 more units than budgeted of its only product. How will total fixed cost be affected?

A) Remain constant.

B) Decrease by same percentage as sales increase.

C) Increase by same percentage as sales increase.

D) Decrease $2,000.

E) Increase $2,000.

98) Which of the following is not a direct cost for a scooter manufacturer?

A) Office rent.

B) Wheels.

C) Handle bars.

D) Brakes.

E) Grip tape.

99) Which of the following is an indirect cost of manufacturing scooters?

A) Scooter assembly wages.

B) Wheels.

C) Supervisor salary.

D) Brakes

E) Assembly worker employee benefits.

100) Flash Company produces lamps. All of the following are direct costs except:

A) Wages for assembly.

B) Electrical cord.

C) Factory rent.

D) Lamp shade.

E) Switch.

101) Period costs for a manufacturing company flow directly to:

A) The income statement as an expense.

B) Factory overhead.

C) The balance sheet as inventory.

D) Cost of goods sold on the income statement.

E) The current schedule of cost of goods manufactured.

102) For product costs associated with a particular product to be reported on the income statement:

A) The product must be transferred to Finished Goods Inventory.

B) The product must still be in Work in Process Inventory.

C) The product must be sold.

D) The product may be in any of the manufacturer's inventory accounts.

E) The company must expect to sell the product during the next twelve months.

103) Costs that are capitalized as inventory when they are incurred are called:

A) Period costs.

B) Product costs.

C) General costs.

D) Administrative costs.

E) Fixed costs.

104) Costs that flow directly to the income statement as expenses are called:

A) Period costs.

B) Product costs.

C) General costs.

D) Balance sheet costs.

E) Capitalized costs.

105) Marshall Corporation incurred costs for materials and labor needed to manufacture its products. These costs are examples of:

A) Period costs.

B) Product costs.

C) General costs.

D) Balance sheet costs.

E) Capitalized costs.

106) Product costs:

A) Are expenditures necessary and integral to finished products.

B) Are expenditures identified more with a time period rather than with units of product.

C) Include selling and administrative expenses.

D) Are expensed on the income statement when incurred.

E) Are moved to the income statement for any unsold inventory at the end of the year.

107) Products that have been completed and are ready to be sold by the manufacturer are called:

A) Finished goods inventory.

B) Work in process inventory.

C) Raw materials inventory.

D) Cost of goods sold.

E) Factory supplies.

108) Materials a company acquires to use in making products are called:

A) Cost of goods sold.

B) Raw materials inventory.

C) Finished goods inventory.

D) Work in process inventory.

E) Conversion costs.

109) Products that are in the process of being manufactured but are not yet complete are called:

A) Raw materials inventory.

B) Conversion costs.

C) Cost of goods sold.

D) Work in process inventory.

E) Finished goods inventory.

110) Which of the following is the correct formula for calculating raw materials inventory turnover for a manufacturer?

A) Raw materials purchased/Average raw materials inventory.

B) Average raw materials inventory/Raw materials used.

C) Raw materials used/Average raw materials inventory.

D) Ending raw materials/Raw materials used × 365.

E) Raw materials used/Beginning raw materials inventory × 365.

111) Which of the following is the correct formula for calculating days' sales in raw materials inventory for a manufacturer?

A) Raw materials purchased/Average raw materials inventory.

B) Average raw materials inventory/Raw materials used.

C) Raw materials used/Average raw materials inventory.

D) Ending raw materials inventory/Raw materials used × 365.

E) Raw materials used/Beginning raw materials inventory × 365.

112) Which of the following statements is correct concerning the days' sales in raw materials inventory ratio?

A) It measures how long it takes raw materials to be used in production.

B) The ratio is not useful for a manufacturer.

C) Reveals how many times a company turns over its raw materials inventory in a period.

D) Most companies generally prefer a higher number of days' sales in raw materials inventory.

E) Is calculated by taking the Raw materials used/Average raw materials inventory.

113) The cost of workers who assist in, or supervise, the manufacturing process, not linked to specific units of product is called:

A) Unspecified labor.

B) Direct labor.

C) Indirect labor.

D) Basic labor.

E) Joint labor.

114) Factory overhead costs may include all of the following except:

A) Indirect labor costs.

B) Indirect material costs.

C) Selling costs.

D) Assembly supplies.

E) Factory rent.

115) Labor costs that are clearly associated with specific units of product because the labor is used to convert raw materials into finished products are called:

A) Contracted labor.

B) Direct labor.

C) Indirect labor.

D) Finished labor.

E) All labor.

116) Manufacturing costs other than direct materials and direct labor, and are not readily traceable to specific units or batches of production are called:

A) Administrative expenses.

B) Nonmanufacturing costs.

C) Prime costs.

D) Factory overhead.

E) Preproduction costs.

117) Materials that are used in manufacturing but are not clearly identified with specific product units are called:

A) Secondary materials.

B) General materials.

C) Direct materials.

D) Indirect materials.

E) Materials inventory.

118) The salary paid to the assembly line supervisor would normally be classified as:

A) Direct labor.

B) Indirect labor.

C) A period cost.

D) A general cost.

E) An assembly cost.

119) Which of the following items appears only in a manufacturing company's financial statements?

A) Cost of goods sold.

B) Cost of goods manufactured.

C) Goods available for sale.

D) Gross profit.

E) Net income.

120) Which of the following costs is not included in factory overhead?

A) Payroll taxes on the wages of factory supervisors.

B) Indirect labor.

C) Depreciation of manufacturing equipment.

D) Manufacturing supplies used.

E) Direct materials.

121) Which of the following should not be included in direct materials costs for a bike manufacturer?

A) Tires.

B) Machine lubrication oil.

C) Seats.

D) Pedals.

E) Handlebars.

122) Raw materials that are tangible components of the finished product and can be separately and readily traced through the manufacturing process are called:

A) Raw materials sold.

B) Chargeable materials.

C) Work in process.

D) Indirect materials.

E) Direct materials.

123) The three major cost of manufacturing a product are:

A) Marketing, selling, and administrative costs.

B) Indirect labor, indirect materials, and fixed expenses.

C) Direct materials, direct labor, and factory overhead.

D) Product costs, period costs, and variable costs.

E) General, selling, and administrative costs.

124) Which of the following costs would not be classified as factory overhead?

A) Property taxes on maintenance machinery.

B) Insurance on factory building.

C) Wages of the factory janitor.

D) Rubber for the soles of shoes produced.

E) Small tools used in production.

125) A manufacturer's total cost of making and finishing products in the period is called:

A) Ending finished goods inventory.

B) Total manufacturing costs.

C) Ending work in process inventory.

D) Cost of goods manufactured.

E) Cost of goods sold.

126) A manufacturing firm's cost of goods manufactured is equivalent to a merchandising firm's:

A) Cost of goods sold.

B) Cost of goods purchased.

C) Cost of goods available.

D) Beginning merchandise inventory.

E) Ending merchandise inventory.

127) Which one of the following items is not a manufacturing cost?

A) Direct materials.

B) Factory overhead.

C) General and administrative expenses.

D) Direct labor.

E) Conversion cost.

128) Which of the following is not part of the materials activity in the flow of manufacturing activities?

A) Beginning raw materials.

B) Beginning work in process.

C) Raw materials purchases.

D) Raw materials available for use.

E) Ending raw materials.

129) Which of the following is not part of the production activity in the flow of manufacturing activities?

A) Beginning Work in Process Inventory.

B) Cost of goods manufactured.

C) Direct labor.

D) Factory overhead.

E) Total finished goods available for sale.

130) Which of the following is not part of the sales activity in the flow of manufacturing activities?

A) Beginning Finished Goods Inventory.

B) Cost of Goods Manufactured.

C) Total Finished Goods available for sale.

D) Ending Work in Process Inventory.

E) Cost of Goods Sold.

131) A manufacturing company has a beginning finished goods inventory of $14,600, raw material purchases of $18,000, cost of goods manufactured of $32,500, and an ending finished goods inventory of $17,800. The cost of goods sold for this company is:

A) $21,200.

B) $29,300.

C) $32,500.

D) $47,100.

E) $27,600.

132) A manufacturing company has a beginning finished goods inventory of $28,300, cost of goods manufactured of $58,500, and an ending finished goods inventory of $27,600. The cost of goods sold for this company is:

A) $114,400.

B) $57,800.

C) $2,600.

D) $86,100.

E) $59,200.

133) Romeo Corporation reports the following for the year:

The cost of goods manufactured for the year is:

A) $21,400.

B) $11,000.

C) $15,000.

D) $17,400.

E) $10,200.

134) Mustang Corporation reports the following for the month of April:

The cost of goods sold for April is:

A) $169,300.

B) $108,900.

C) $59,700.

D) $120,100.

E) $144,700.

135) A company's prime costs total $3,000,000 and its conversion costs total $7,000,000. If direct materials are $1,000,000 and factory overhead is $5,000,000, then direct labor is:

A) $4,000,000.

B) $14,000,000.

C) $2,000,000.

D) $1,000,000.

E) $3,000,000.

136) Craigmont Company's direct materials costs are $3,000,000, its direct labor costs total $7,000,000, and its factory overhead costs total $5,000,000. Its prime costs total:

A) $10,000,000.

B) $8,000,000.

C) $12,000,000.

D) $5,000,000.

E) $15,000,000.

137) Craigmont Company's direct materials costs are $3,000,000, its direct labor costs total $7,000,000, and its factory overhead costs total $5,000,000. Its conversion costs total:

A) $10,000,000.

B) $8,000,000.

C) $12,000,000.

D) $5,000,000.

E) $15,000,000.

138) A schedule of cost of goods manufactured is also known as a:

A) Raw materials processed schedule.

B) Factory supplies used schedule.

C) Manufacturing statement.

D) Total finished goods statement.

E) Cost of goods sold schedule.

139) The following information relates to the manufacturing operations of the JNR Printing Company for the year:

The raw materials used in manufacturing during the year totaled $118,000. Raw materials purchased during the year amount to:

A) $107,000.

B) $115,000.

C) $118,000.

D) $121,000.

E) $126,000.

140) The following information relates to the manufacturing operations of the Abbra Publishing Company for the year:

The raw materials used in manufacturing during the year totaled $1,018,000. Raw materials purchased during the year amount to:

A) $955,000.

B) $892,000.

C) $1,565,000.

D) $408,000.

E) $1,081,000.

141) Comet Company accumulated the following account information for the year:

Using the above information, total factory overhead costs equal:

A) $9,800.

B) $16,800.

C) $15,800.

D) $13,000.

E) $7,800.

142) Asteroid Industries accumulated the following cost information for the year:

Using the above information, total factory overhead costs equal:

A) $78,300.

B) $25,300.

C) $12,800.

D) $16,800.

E) $53,000.

143) The following information is available for the year ended December 31:

The amount of raw materials used in production for the year is:

A) $76,400.

B) $95,500.

C) $72,500.

D) $74,900.

E) $70,100.

144) The following information is available for the year ended December 31:

The amount of raw materials used in production for the year is:

A) $87,500.

B) $85,700.

C) $86,900.

D) $85,400.

E) $86,600.

145) A financial report that summarizes the amounts and types of costs that were incurred in the manufacturing process during the period is a:

A) Materials statement.

B) Managerial statement.

C) Schedule of cost of goods manufactured.

D) Merchandise schedule.

E) General-purpose statement.

146) If beginning and ending work in process inventories are $5,000 and $15,000, respectively, and cost of goods manufactured is $170,000, what is the total manufacturing cost for the period?

A) $180,000.

B) $155,000.

C) $160,000.

D) $175,000.

E) $165,000.

147) Use the cost information below for Ruiz Inc. to determine the total manufacturing costs incurred during the year:

A) $13,000.

B) $44,500.

C) $57,500.

D) $94,500.

E) $89,000.

148) Use the cost information below for Ruiz, Inc. to determine cost of goods manufactured for the year:

A) $13,000.

B) $44,500.

C) $57,500.

D) $94,500.

E) $52,000.

149) Use the cost information below for Laurels Company to determine the manufacturing costs added during the current year:

A) $12,000.

B) $16,100.

C) $17,100.

D) $18,100.

E) $13,600.

150) Use the cost information below for Laurels Company to determine the cost of goods manufactured during the current year:

A) $12,000.

B) $16,100.

C) $17,100.

D) $18,100.

E) $13,600.

151) Use the cost information below for Sundar Company to determine the total manufacturing costs added during the current year:

A) $98,600.

B) $43,500.

C) $98,000.

D) $42,900.

E) $79,000.

152) Use the cost information below for Sundar Company to determine the cost of goods manufactured during the current year:

A) $98,600.

B) $43,500.

C) $98,000.

D) $42,900.

E) $79,000.

153) Total manufacturing costs incurred during the year do not include:

A) Direct materials used.

B) Factory supplies used.

C) Work in Process inventory, beginning balance.

D) Direct labor.

E) Depreciation of factory machinery.

154) Which of the following accounts would not appear on a schedule of cost of goods manufactured?

A) Wages payable.

B) Raw materials inventory.

C) Depreciation on factory equipment.

D) Indirect labor.

E) Factory insurance expired.

155) Which of the following is the correct formula for calculating cost of goods manufactured?

A) Direct materials used + direct labor + factory overhead + beginning work in process + ending work in process.

B) Direct materials used + direct labor + factory overhead + beginning work in process − ending work in process.

C) Direct materials used + direct labor + factory overhead − beginning work in process + ending work in process.

D) Direct materials used + direct labor + factory overhead − beginning work in process − ending work in process.

E) Direct materials used + direct labor − factory overhead + beginning work in process − ending work in process.

156) Current information for the Healey Company follows:

All raw materials used were traceable to specific units of product. Healey Company's direct materials used for the year is:

A) $58,600.

B) $60,000.

C) $75,200.

D) $76,600.

E) $61,400.

157) Current information for the Healey Company follows:

All raw materials used were traceable to specific units of product. Healey Company's total manufacturing costs for the year are:

A) $125,800.

B) $128,600.

C) $131,400.

D) $137,000.

E) $139,000.

158) Current information for the Healey Company follows:

All raw materials used were traceable to specific units of product. Healey Company's cost of goods manufactured for the year is:

A) $125,800.

B) $128,600.

C) $131,400.

D) $137,000.

E) $139,000.

159) Xia Co. manufactures a single product.  All raw materials used are traceable to specific units of product.  Current information for company follows:

The company's cost of direct materials used, cost of goods manufactured and cost of goods sold is:

A)

B)

C)

D)

E)

160) Richards Company manufactures a single product. All raw materials used are traceable to specific units of product. Current information for the company follows:

The company's cost of direct materials used, cost of goods manufactured and cost of goods sold is:

A)

B)

C)

D)

E)

161) Current information for the Stellar Corporation follows:

Stellar Corporation's cost of goods manufactured for the year is:

A) $295,100.

B) $296,500.

C) $313,000.

D) $275,800.

E) $293,700.

162) Use the following data to determine the cost of goods manufactured:

A) $102,000.

B) $110,100.

C) $96,600.

D) $113,700.

E) $100,200.

163) Use the following data to compute total factory overhead costs for the month:

A) $141,100.

B) $125,300.

C) $45,200.

D) $84,800.

E) $58,300.

164) Use the following data to compute total manufacturing costs for the month:

A) $141,100.

B) $125,300.

C) $45,200.

D) $84,800.

E) $58,300.

165) Use the following information to compute the cost of goods manufactured. Assume that all raw materials used were traceable to specific units of product:

A) $36,650.

B) $30,950.

C) $30,650.

D) $30,350.

E) $31,650.

166) Use the following data to calculate the cost of goods sold for the period:

A) $250,000.

B) $290,000.

C) $242,000.

D) $258,000.

E) $246,000.

167) Use the following information to calculate the cost of goods sold for the period:

A) $164,300.

B) $126,800.

C) $125,300.

D) $146,300.

E) $128,300.

168) Using the information below, calculate the cost of goods manufactured for the period:

A) $553,000.

B) $536,000.

C) $549,000.

D) $527,000.

E) $525,000.

169) Using the information below, calculate gross profit for the period:

A) $714,000.

B) $482,000.

C) $1,022,000.

D) $187,000.

E) $727,000.

170) Using the information below, calculate cost of goods sold for the period:

A) $774,000.

B) $769,000.

C) $530,000.

D) $535,000.

E) $448,000.

171) Using the information below, calculate gross profit for the period:

A) $774,000.

B) $769,000.

C) $530,000.

D) $535,000.

E) $448,000.

172) Using the information below, calculate net income for the period:

A) $774,000.

B) $769,000.

C) $530,000.

D) $535,000.

E) $448,000.

173) An internal control system consists of the policies and procedures managers use to do all of the following except:

A) Urge adherence to company policies.

B) Promote efficient operations.

C) Ensure reliable accounting.

D) Determine pricing for products.

E) Protect assets.

174) The schedule of cost of goods manufactured is divided into four parts consisting of all of the following except:

A) Direct materials.

B) Computation of cost of goods sold.

C) Overhead.

D) Computation of cost of goods manufactured.

E) Direct labor.

175) All of the following statements regarding manufacturing costs are true except:

A) Direct material costs are traceable to products.

B) The reporting of fixed and variable costs separately is not helpful to managers in analyzing cost behavior.

C) When overhead costs vary with production, they are called variable overhead.

D) When overhead costs don't vary with production, they are called fixed overhead.

E) Overhead can be both variable and fixed.

176) Using the information below, compute the raw materials inventory turnover:

A) 11.02.

B) 382.02.

C) 10.06.

D) 9.94.

E) 9.50.

177) Using the information below, compute the days' sales in raw materials inventory:

A) 11.02.

B) 36.3.

C) 10.06.

D) 9.94.

E) 38.4.

178) Using the information below, compute the raw materials inventory turnover:

A) 6.76.

B) 6.02.

C) 54.0.

D) 60.6.

E) 6.37.

179) Using the information below, compute the days' sales in raw materials inventory:

A) 6.76.

B) 6.02.

C) 54.0.

D) 60.6.

E) 6.37.

180) Just-in-time manufacturing techniques can be useful in ________ days' sales in raw materials inventory.

A) keeping constant.

B) changing upward.

C) adding to.

D) lowering.

E) increasing.

181) Which of the following statements is true regarding product and period costs?

A) Office salaries expense and factory maintenance are both product costs.

B) Office rent is a product cost and supervisors' salaries expense is a period cost.

C) Factory rent is a product cost and advertising expense is a period cost.

D) Delivery expense is a product cost and indirect materials is a period cost.

E) Sales commissions and indirect labor are both period costs.

182) A company's prime costs total $4,500,000 and its conversion costs total $5,500,000. If direct materials costs are $2,000,000, calculate the overhead costs:

A) $2,500,000.

B) $3,500,000.

C) $2,000,000.

D) $1,000,000.

E) $3,000,000.

183) If the cost of the beginning work in process inventory is $60,000, costs of goods manufactured is $890,000, direct materials cost is $330,000, direct labor cost is $210,000, and overhead cost is $315,000, calculate the ending work in process inventory.

A) $35,000.

B) $25,000.

C) $45,000.

D) $350,000.

E) $355,000.

184) If the cost of the beginning work in process inventory is $60,000, direct materials cost is $350,000, direct labor cost is $216,000, and overhead cost is $319,000, and the ending work in process inventory is $55,000, calculate the cost of goods manufactured.

A) $1,000,000.

B) $571,000.

C) $885,000.

D) $890,000.

E) $945,000.

185) Calculate the cost of goods manufactured using the following information:

A) $680,500.

B) $701,900.

C) $687,100.

D) $674,600.

E) $772,600.

186) Calculate the cost of goods sold using the following information:

A) $680,500.

B) $701,900.

C) $687,100.

D) $674,600.

E) $772,600.

187) Match each of the following terms with the appropriate definition.

________ (1) Direct materials

________ (2) Indirect costs

________ (3) Product costs

________ (4) Prime costs

________ (5) Fixed costs

________ (6) Direct labor

________ (7) Period costs

________ (8) Conversion costs

________ (9) Factory overhead

________ (10) Variable costs

(a) Costs that are expensed to the income statement in the period incurred..

(b) Costs that change in proportion to changes in volume of activity.

(c) The efforts of employees who physically convert materials to finished products.

(d) Manufacturing costs that cannot be separately or readily traced to finished goods.

(e) Costs necessary to create a product..

(f) Costs incurred in the process of converting raw materials to finished products; include direct labor and factory overhead.

(g) Tangible components of a finished product separately and readily traced through the manufacturing process.

(h) Costs directly associated with the manufacture of finished products; include direct materials and direct labor.

(i) Costs that do not change in total with changes in the volume of activity.

(j) Costs that cannot be easily and cost-beneficially traced to a single cost object.

188) Match each of the following terms to the appropriate definitions.

________ (1) Prime costs

________ (2) Continuous improvement

________ (3) Raw materials inventory

________ (4) Corporate social responsibility

________ (5) Just-in-time manufacturing

________ (6) Work in Process inventory

________ (7) Lean business model

________ (8) Customer orientation

________ (9) Managerial accounting

________(10) Raw materials inventory turnover

(a) An idea that rejects the notions of "good enough" or "acceptable" and challenges

employees and managers to continually experiment with new and improved business

practices.

(b) Materials a company acquires to use in making products.

(c) Reveals how many times a company uses its raw materials inventory in production during a period.

(d) A system that acquires inventory and produces only when needed.

(e) A concept that considers the demands of diverse stakeholders, including employees, suppliers, and society.

(f) Costs directly associated with the manufacture of finished goods; includes direct materials and direct labor.

(g) The idea that managers and employees understand the changing needs and wants of their

customers and align their management and operating practices accordingly.

(h) Products in the process of being manufactured but not yet complete.

(i) A model whose goal is to eliminate waste while satisfying the customer and providing a

positive return to the company.

(j) An activity that provides financial and nonfinancial information to an organization's

managers and other internal decision makers.

189) For each of the characteristics below, identify whether it is a focus of financial accounting

or managerial accounting. Use the letter F to identify financial accounting and M to identify

managerial accounting.

_____ 1. Users are generally investors, creditors, analysts, and regulators.

_____ 2. Used to assist managers in making planning and control decisions.

_____ 3. Information is structured and controlled by GAAP.

_____ 4. Information is available quickly without the need to wait for an audit.

_____ 5. Information is mainly historical with some predictions.

_____ 6. Emphasis of the information is a company's projects, processes, and divisions.

_____ 7. Information is mostly monetary, but includes nonmonetary information.

190) Identify and describe the three categories of manufacturing costs.

191) What is managerial accounting and how is it used to aid decision makers?

192) There are many differences between financial and managerial accounting. Identify and explain at least three of these differences.

193) Explain what is meant by the "lean business model" and why many businesses have adopted it.

194) Define fraud and give at least two examples of employee fraud.

195) List the four goals of an internal control system.

196) An employee devises a payroll scheme that costs the employer $150. The employer discovers the fraud but decides not to confront the employee since the amount of the fraud is small. Discuss why this course of action is not advisable.

197) Define and contrast period costs and product costs. How are they reported in the financial statements of a manufacturing company?

198) What are the three types of inventories that are carried by manufacturers? Describe each type of inventory.

199) What is the main difference between the income statement of a manufacturer and that of a merchandiser?

200) What does the days' sales in raw materials inventory ratio reveal?

201) What are prime costs? What are conversion costs?

202) What are the components of the schedule of cost of goods manufactured? Describe each component.

203) The following cost items relate to the Henning Company. Classify each cost as a variable cost or a fixed cost by placing an X in the appropriate column. Each cost should be evaluated by how it changes in total with changes in the volume of activity. Also indicate with an X for each item if it is a product cost or a period cost.

204) For each item shown below, classify it as a product cost or a period cost, by placing an X in the appropriate column. For each item that is a product cost, also indicate whether it is a direct cost or an indirect cost with respect to a unit of finished product.

205) Shemekia Co. produces seats for movie theaters. Listed below are selected cost items for the seat production. Classify each cost as either fixed or variable, and either a product or a period cost by placing an x in the appropriate boxes.

206) Place each of the following costs of a Blu-ray disc manufacturer in the appropriate column.

207) The following costs are incurred by Gonzalez Manufacturing Co. Classify each cost item as either a period cost or a product cost. If the cost is a product cost, identify it as a prime and/or conversion cost. Place an x in the appropriate column for your answers.

208) Walter Co. and Sandburg Industries report the following information at December 31:

Required:

(a) Which company is a manufacturer? Explain.

(b) Prepare the current assets section of the balance sheet for the manufacturer.

209) Tasty Foods bakes and sells 2,000 dozen muffins each week. Among the costs are bakers' salaries, $24,000; production management salaries, $16,000; production equipment operating costs, $32,000; and flour and ingredient costs, $15,000. Using this information, compute: (a) prime costs and (b) conversion costs.

210) A manufacturing company's finished goods inventory on January 1 was $68,000; cost of goods manufactured for the year was $147,000; and the December 31 finished goods inventory was $77,000. What is the cost of goods sold for the year?

211) A manufacturing company's beginning finished goods inventory was $29,000; cost of goods manufactured for the year was $316,000; and the ending finished goods inventory was $31,000. What is the cost of goods sold for the year?

212) Calculate Cost of Goods Sold for the following two companies:

213) Castillo Co. manufactures staples. Costs for October were direct labor, $84,000; indirect labor, $36,700; direct materials, $55,900; factory maintenance, $4,800; factory utilities, $3,200; and insurance on plant and equipment, $700. What is the company's total factory overhead cost for October?

214) Langston Company manufactures coats. Costs for February were as follows:

Required: Calculate the total manufacturing cost for February.

215) Information for Maxim Manufacturing is presented below. Compute both the cost of goods manufactured and the cost of goods sold for Maxim Manufacturing.

216) Information for Underwood Industries is presented below. Compute the cost of goods manufactured.

217) Information for Eastman Industries is presented below. Compute the cost of goods manufactured.

218) Use the following information to prepare the schedule of cost of goods manufactured for Graffstone Company for the month ended June 30.

219) Duncan Crafts manufactures specialty key chains for tourist attractions. On January 1, the firm had 300 souvenir attraction disks, costing $3 each, used in the production of key chains. During the year Duncan Crafts purchased 1,500 souvenir disks costing $3 each and produced 1,100 key chains. Compute the total cost of souvenir disk raw materials inventory at December 31.

220) Compute the ending work in process inventory for a manufacturer with the following information.

221) The following items for Neptune Company are used to compute the cost of goods manufactured and the cost of goods sold. Indicate how each item should be used in the calculations by filling in the blanks with "+" if the item is to be added, "-" if the item is to be subtracted, or "0" if the item is not used in the calculation. The first item is completed as an example.

222) Information for Stanton, Inc., as of December 31 follows. Prepare a schedule of cost of goods manufactured for the year ended December 31.

223) Information for the Deuce Manufacturing Company follows. Compute the cost of goods manufactured for this company.

224) Information for Jersey Metalworks as of December 31 follows. Prepare (a) the company's schedule of cost of goods manufactured for the year ended December 31; (b) prepare the company's income statement that reports separate categories for selling and general and administrative expenses.

225) Martinez Company makes leather cowboy hats. Each hat requires 1/2 yard of leather to produce. At the beginning of the year, the company had (a) 75 hats in Finished Goods Inventory and (b) 60 yards of leather at a cost of $12 per yard in Raw Materials Inventory. During the year, the company purchased 850 more yards of leather at $12 per yard and manufactured 1,600 hats. Determine the unit and dollar amounts of leather Raw Materials Inventory at the end of the year.

226) ________ is an activity that provides financial and nonfinancial information to an organization's managers and other internal decision makers.

227) ________ is the process of setting goals and making plans to achieve them.

228) ________ is the process of monitoring planning decisions and evaluating an organization's activities and employees.

229) The purpose of managerial accounting information is to help ________ users make decisions while the purpose of financial accounting is to help ________ users make decisions.

230) A ________ system means that a company acquires or produces inventory only when needed.

231) The model whose goal is to eliminate waste while satisfying the customer and providing a positive return to the company is the ________.

232) ________ rejects the notions of "good enough" or "acceptable" and challenges employees and managers to continuously experiment with new and improved business practices.

233) ________ means that managers and employees understand the changing needs and wants of customers and align management and operating practices accordingly.

234) ________ is the deliberate misuse of the employer's assets for the employee's personal gain.

235) Policies and procedures used by management to monitor and control business activities are known as ________.

236) ________ are beliefs that distinguish right from wrong.

237) A cost can be classified as either ________ or ________based how it changes, in total, with changes in the volume of activity.

238) A ________ cost changes in total in proportion to changes in the volume of activity.

239) A ________ cost does not change in total in proportion to changes in the volume of activity within the relevant range.

240) Costs necessary and integral to the manufacture of finished products are ________ costs.

241) Costs that flow directly to the current income statement and are not reported as assets are ________ costs.

242) ________ inventory consists of goods a company acquires to use in making products.

243) ________ inventory consists of products in the process of being manufactured but not yet complete.

244) ________ inventory consists of completed products ready for sale by a manufacturer.

245) A manufacturer's inventory that is not completely finished is called ________ .

246) One of the main differences between the calculation of cost of goods sold for a merchandiser and that of a manufacturer is that the calculation includes cost of goods purchased for the merchandiser, but the manufacturer replaces that with ________.

247) ________ reveals how much raw materials inventory is available in terms of the number of days' sales.

248) ________ reveals how many times a company uses its raw materials inventory in production during a period.

249) Expenditures incurred in the process of converting raw materials to finished goods, that include direct labor and factory overhead are known as ________.

250) Expenditures directly associated with the manufacture of finished goods that include direct materials and direct labor, are ________ costs.

251) Crane, Inc. reported the following data regarding costs and inventories for the current year: beginning work in process inventory, $4,000; beginning finished goods inventory, $2,000; cost of goods manufactured, $11,500; operating expenses, $3,000; ending finished goods inventory, $1,000; ending work in process inventory, $1,500. Cost of goods sold for Crane, Inc. equals ________.

252) Waters, Inc. reported the following data regarding costs and inventories for the current year: beginning finished goods inventory, $5,000; cost of goods manufactured, $21,500; ending finished goods inventory, $4,000. Cost of goods sold for Waters, Inc. equals ________.

253) For a manufacturer, the cost of goods sold can be computed by adding the beginning finished goods inventory to ________ and then subtracting the ending finished goods inventory.