question

Managerial accounting applies to all types of businesses, including service, merchandising, and manufacturing, as well as to all forms of business organizations.

answer

True.

question

Which of the following statements is not true about managerial accounting?

answer

It is highly aggregated.

question

Which of the following statements is true about managerial accounting?

answer

It provides more detailed information than financial accounting does.

question

Managerial accounting

answer

places emphasis on special-purpose information.

question

All of the following are distinguishing features of managerial accounting except

answer

independent audits.

question

Planning is the process of keeping the company's activities on track.

answer

False. Look ahead and establish objectives

question

Which of the following are considered to be management's three broad functions?

answer

Planning, directing, and controlling

question

Which of the following is considered part of the controlling process?

answer

Keeping the company's activities on track

question

After passage of the Sarbanes-Oxley Act of 2002

answer

CEOs and CFOs must certify that financial statements give a fair presentation of the company's operating results.

question

The process of keeping the company's activities on track is

answer

controlling.

question

Indirect material costs are easily traced to products because of their physical association with the finished product.

answer

False.

question

Manufacturing overhead consists of costs that are indirectly associated with the manufacture of the finished product.

answer

True.

question

Which one of the following is not a manufacturing cost?

answer

Advertising cost

question

Which of the following answer choices lists the three manufacturing costs?

answer

Direct materials, direct labor, and manufacturing overhead

question

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

answer

Depreciation on testing equipment.

question

Which of the following is not an element of manufacturing overhead?

answer

Sales manager's salary.

question

Manufacturing overhead includes all of the following except

answer

direct materials.

question

On average, studies have shown that the smallest component of total manufacturing cost is

answer

direct labor.

question

Product costs are costs that are a necessary and integral part of producing the finished product.

answer

True.

question

Barry's BarBQue incurred the following costs: $1,400 for ribs, 45 hours of labor to cook the ribs at $10 per hour, $50 for seasoning and sauce, $300 for signs to advertise the ribs, $150 to clean the grill after cooking the ribs, and $100 of administrative costs. How much are total product costs?

answer

$2,050 $1,400 + (45*$10) + $50 + $150 = $2,050.

question

Which group of costs consists of only product costs?

answer

Direct labor, indirect labor, factory utilities

question

Indirect labor is a

answer

product cost.

question

Which of the following costs are classified as a period cost?

answer

Wages paid to a cost accountant department supervisor.

question

Product costs include each of the following except

answer

selling and administrative expenses.

question

Each of the following is a period cost except

answer

indirect labor.

question

Pharmco incurred the following costs while manufacturing its product: Materials used in production, $120,000; factory depreciation, $60,000; property taxes on the administrative offices, $12,000; labor costs of assembly-line workers, $95,000; factory supplies used, $8,000; advertising expense, $13,000; property taxes on the factory, $20,000; delivery expense, $23,000; salaries of the sales staff, $53,000; and sales commissions, $17,000. The total product costs for Pharmco are

answer

$303,000 120,000 + 95,000 + 8,000 + 60,000 + 20,000= 303,000

question

Manufacturers compute cost of goods sold by adding the beginning finished goods inventory to the cost of goods purchased and subtracting the ending finished goods inventory.

answer

False

question

Which of the following would you find on the income statement of a manufacturing company, but not on the income statement of a merchandising company?

answer

Cost of goods manufactured

question

One key difference appears when comparing the income statements of a manufacturing company to a merchandising company. What is that difference?

answer

Manufacturing companies use cost of goods manufactured and merchandising companies use cost of goods purchased.

question

For the year, Redder Company has cost of goods manufactured of $600,000, beginning finished goods inventory of $200,000, and ending finished goods inventory of $250,000. The cost of goods sold is

answer

$550,000 200,000 + 600,000 - 250,000= 550,000

question

Cost of goods available for sale is reported on the income statement of

answer

a merchandising company and a manufacturing company.

question

For a manufacturing firm, cost of goods available for sale is computed by adding the beginning finished goods inventory to

answer

cost of goods manufactured.

question

The principal difference between a merchandising and a manufacturing income statement is the

answer

cost of goods sold section.

question

Manders Corporation has $20,000 of ending finished goods inventory at December 31. If beginning finished goods inventory was $15,000 and cost of goods sold was $40,000, how much would Manders Corporation report as cost of goods manufactured?

answer

$45,000 40,000 + 15,000 - 20,000= 45,000

question

The costs assigned to beginning work in process inventory are based on the manufacturing costs incurred in the prior period.

answer

True.

question

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

answer

False.

question

A cost of goods manufactured schedule shows beginning and ending inventories for

answer

raw materials and work in process only.

question

The formula to determine the cost of goods manufactured is

answer

beginning work in process inventory + total manufacturing costs - ending work in process inventory.

question

The sum of the direct materials costs, direct labor costs, and manufacturing overhead incurred is the

answer

total manufacturing costs.

question

Companies compute cost of goods manufactured by subtracting ending work in process inventory from

answer

total cost of work in process.

question

Model Magic Manufacturing reported the following year-end balances: Beginning work in process inventory, $35,000; beginning raw materials inventory, $18,000; ending work in process inventory, $38,000; ending raw materials inventory, $15,000; raw materials purchased, $510,000; direct labor, $180,000; and manufacturing overhead, $75,000. What is the amount of total work in process for Model Magic for the current year?

answer

First, direct materials used = beginning raw materials inventory ($18,000) + raw materials purchased ($510,000) - ending raw materials inventory ($15,000) = $513,000. Then, total cost of work in process = beginning work in process inventory ($35,000) + direct materials used ($513,000) + direct labor ($180,000) + manufacturing overhead ($75,000) = $803,000

question

Buxmont Manufacturing reported the following year-end balances: Beginning work in process inventory, $40,000; beginning finished goods inventory, $60,000; ending work in process inventory, $20,000; ending finished goods inventory, $30,000; direct materials used, $240,000; direct labor, $250,000; manufacturing overhead, $150,000; selling expenses, $50,000; and administrative expenses, $350,000. How much would Buxmont Manufacturing report as cost of goods manufactured at year-end?

answer

Cost of goods manufactured = beginning work in process ($40,000) + total manufacturing costs [direct materials used ($240,000) + direct labor ($250,000) + manufacturing overhead ($150,000)] or $640,000 - ending work in process ($20,000) = $660,000

question

Companies generally list manufacturing inventories in the order of completion-raw materials, work in process, and finished goods.

answer

False.

question

Which one of the following is true concerning manufacturing and merchandising companies' inventories?

answer

Manufacturing companies report inventories in the order of liquidity.

question

Which one of the following is true concerning manufacturing and merchandising companies' inventories on the balance sheet?

answer

Finished goods is to a manufacturer what merchandise inventory is to a merchandiser.

question

A manufacturer may report three inventories in its balance sheet: (1) raw materials, (2) work in process, and (3) finished goods. Indicate in what sequence these inventories generally appear on a balance sheet.

answer

(3), (2), (1)

question

The cost applicable to units that have been started into production but not completed is shown as

answer

work in process inventory.

question

Under the just-in-time inventory method, goods are manufactured or purchased just-in-time for use.

answer

True.

question

Which one of the following is a trend in industry?

answer

The U.S. economy has shifted toward an emphasis on providing services.

question

Which one of the following is a trend in managerial accounting?

answer

Large machines have been replaced with smaller, more flexible ones.

question

Which of the following managerial accounting techniques attempts to allocate manufacturing overhead in a more meaningful fashion?

answer

Activity-based costing.

question

Examples of recent trends in the economic environment of U.S. businesses are

answer

increasing deregulation, increasing global competition, and a shift toward providing services rather than goods.

question

Many companies have significantly lowered inventory levels and costs using

answer

just-in-time inventory methods.

question

All activities associated with providing a product or service is referred to as

answer

the value chain.

ACC Chapter 14 – Flashcards

Unlock all answers in this set

Haven't found what you were looking for?

Search for samples, answers to your questions and flashcards