question

Who is managerial accounting for?

answer

managers and internal users

question

Managerial Accounting A) Is governed by generally accepted accounting principles B) Places emphasis on special-purpose information C) Pertains to the entity as a whole and is highly aggregated D) Is limited to cost data

answer

B) Places emphasis on special-purpose information

question

Managerial Accounting is a field of accounting that provides economic information for external users. (True/False)

answer

False

question

The primary users of managerial accounting information are external users who are stockholders, creditors and regulatory agencies. (True/False)

answer

False

question

The purpose of reports in managerial accounting is to provide special-purpose information for a particular user for a specific decision. (True/False)

answer

True

question

Which of the following does not apply to the content of managerial reports? A) Reporting standard is relevant to the decision to be made B) May extend beyond the double entry accounting system C) Pertains to subunits of the entity and may be very detailed D) Pertains to the entity as a whole and is highly aggregated

answer

D) Pertains to the entity as a whole and is highly aggregated

question

What are the three management functions?

answer

Planning, Directing and Controlling

question

According to the Sarbanes Oxley Act of 2002, a chief executive officer or chief financial officer who misrepresents the company's finances may be penalized by being... A) Fired, but not imprisoned B) Imprisoned, but not fined C) Removed from the corporate office and fined D) Fined and imprisoned

answer

D) Fined and imprisoned

question

Managerial accountants have a single role within an organization, collecting and reporting costs to management. (True/False)

answer

False

question

Financial accounting reports are general-purpose and intended for external users. (True/False)

answer

True

question

Managerial accounting reports are special-purpose and issued as frequently as needed. (True/False)

answer

True

question

Managers' activities and responsibilities can be classified into three broad functions: cost accounting, budgeting, and internal control. (True/False)

answer

False

question

As a result of the Sarbanes-Oxley Act, managerial accounting reports must now comply with generally accepted accounting principles (GAAP) (True/False)

answer

False

question

Top managers must certify that a company maintains an adequate system of internal controls. (True/False)

answer

True

question

Manufacturing Costs vs. Manufacturing Overhead

answer

Costs = Direct Materials and Direct Labor Overhead = Everything else (indirectly affects costs)

question

Manufacturing inventory is one of the three inventory accounts a manufacturing company may have. (True/False)

answer

False The three accounts are: 1) Raw Materials Inventory 2) Work In Progress Inventory 3) Finished Goods Inventory

question

Which of the following is not an element of manufacturing overhead? A) Sales manager's salary B) Plant manager's salary C) Factory repairman's wages D) Product inspector's salary

answer

A) Sales manager's salary

question

Product Costs vs. Period Costs

answer

Product - Direct materials, Direct labor and Manufacturing overhead (integral part of producing the product) Period - Non-manufacturing costs; selling expenses and administrative costs

question

Direct materials and direct labor are... A) Period costs B) Product costs C) Overhead costs D) Indirect costs

answer

B) Product Costs

question

A bicycle company has these costs: tires, salaries of employees who put tires onthe wheels, factory building depreciation, wheel nuts, spokes, salary of factory manager, handlebars, and salaries of factory maintenance employees. Classify each as direct materials, direct labor, or overhead.

answer

Direct Materials - Tires, Spokes, Handlebars Direct Labor - Salaries of employees who put tires on the wheels Overhead - Factory depreciation, Factory manager salary, Factory maintenance employees salary

question

Indirect materials, indirect labor, and maintenance on factory facilities are all included in manufacturing overhead. (True/False)

answer

True

question

For the year, Red 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... A) $450,000 B) $500,000 C) $550,000 D) $600,000

answer

C) $550,000 Beginning finished goods inventory 200,000 + COGs Manufactured +600,000 - Ending finished goods inventory -250,000 = Cost of goods sold =550,000

question

What together ='s Manufacturing Costs

answer

Direct materials + Direct labor + Overhead = Manufacturing Costs

question

Finished goods inventory plus work in process inventory constitutes cost of goods available for sale. (True/False)

answer

False

question

The sum of direct materials costs, direct labor costs, and manufacturing overhead incurred is the total manufacturing costs for the current period. (True/False)

answer

True

question

A cost of goods manufactured schedule shows beginning and ending inventories for: A) Raw materials and work in process only B) Work in process only C) Raw materials only D) Raw materials, work in process, and finished goods

answer

A) Raw materials and work in process only

question

Material cost ($30) per board (product/period, Direct materials/direct labor/manufacturing overhead)

answer

Product - direct materials

question

Labor cost ($40) per board (product/period, Direct materials/direct labor/manufacturing overhead)

answer

Product - direct labor

question

Depreciation on factory equipment ($25,000 per year) (product/period, Direct materials/direct labor/manufacturing overhead)

answer

Product - manufacturing overhead

question

Property taxes on factory building ($6,000 per year) (product/period, Direct materials/direct labor/manufacturing overhead)

answer

Product - manufacturing overhead

question

Advertising costs ($60,000 per year) (product/period, Direct materials/direct labor/manufacturing overhead)

answer

Period

question

Sales commissions ($20 per board) (product/period, Direct materials/direct labor/manufacturing overhead)

answer

Period

question

Maintenance salaries (factory facilities) ($45,000 per year) (product/period, Direct materials/direct labor/manufacturing overhead)

answer

Product - manufacturing overhead

question

Salary of plant manager ($70,000) (product/period, Direct materials/direct labor/manufacturing overhead)

answer

Product - manufacturing overhead

question

Cost of shipping boards ($8 per board) (product/period, Direct materials/direct labor/manufacturing overhead)

answer

Period

question

How to find the manufacturing cost from list of items....

answer

Manufacturing cost (price x amount produced) +Labor cost (price x amount produced) +Depreciation on factory equipment +Property taxes on factory building +Maintenance salaries (factory facilities) +Salary of plant manager = Total manufacturing cost

question

Just-in-Time Inventory methods

answer

inventory system in which goods are manufactured or purchased just in time for sale

question

Total Quality Management

answer

Reduce defects in finished products, with the goal of zero defects

question

Activity-based Costing

answer

Allocates overhead based on use of activities Results in more accurate product costing and scrutiny of all activities in the value chain

question

Balanced Scorecard

answer

Evaluates operations in an integrated fashion Uses both financial and non-financial measures Links performance to overall company objectives

question

Which of the following managerial accounting techniques attempts to allocate manufacturing overhead in a more meaningful manner? A) Just-in-time inventory B) Total-quality management C) Balanced scorecard D) Activity-based costing

answer

D) Activity-based costing

question

Which of the following inventory accounts is not applicable to a manufacturing company? A) Finished goods inventory B) Merchandise inventory C) Raw materials inventory D) Work in process inventory

answer

B) Merchandise inventory

question

If direct materials for one unit of product are $9.00, direct labor for one hour is $15.00, manufacturing overhead costs are $5.00 per direct labor hour, and one fourth hour of direct labor is required to produce one unit of product, how much are the labor and overhead costs for one unit of product? A) $5.00 B) $2.50 C) $20.00 D) $15.00 E) None of these

answer

A) $5.00 DM = $9.00 DL = $15.00 MOH = $5.00 per DL hour MOH .25 x 5 = 1.25 DL .25 x 15 = 3.75 = $5.00

question

If a product required a great deal of electricity to produce, and crude oil prices increased, which of the following costs most likely increased? (AICPA) A) Direct materials B) Direct labor C) Prime costs D) Conversion costs

answer

A) Direct materials or D) Conversion costs (depends how you read the question) extra notes: prime costs = direct materials + direct labor conversion costs = direct labor + overhead

question

Cost accounting involves...

answer

Measuring, Recording, and Reporting product costs

question

Job Order Cost System

answer

Costs are assigned to each job or batch

question

Process Cost System

answer

Used when a large volume of similar products are manufactured Costs are accumulated for a time period Costs are assigned to departments or processes for a specified period of time

question

Cost accounting involves the measuring, recording, and reporting of: A) Product costs B) Future costs C) Manufacturing processes D) Managerial accounting decisions

answer

A) Product costs

question

Job Order Cost Flow

answer

Work in Process (WIP) -> Finished Goods -> Cost of Goods Sold

question

Factory Labor Costs

answer

1) Gross earnings of factory workers 2) Employer payroll taxes on these earnings 3) Fringe benefits incurred by the employer

question

When incurred, factory labor costs are debited to: A) Work in Process B) Factory Wages Expense C) Factory Labor D) Factory Wages Payable

answer

C) Factory Labor

question

In the current assets section of the balance sheet, in which order are manufacturing inventories listed? A) Raw materials, work in process, finished goods B) Finished goods, work in process, raw materials C) Work in process, finished goods, raw materials D) Finished goods, raw materials, work in process

answer

B) Finished goods, work in process, raw materials

question

Which one of the following costs is a component of both manufacturing overhead and total manufacturing costs? A) Direct Labor B) Direct materials C) Selling and administrative costs D) Factory utilities

answer

D) Factory utilities

question

Manufacturing costs are typically classified as... A) Product costs or period costs B) Direct materials or Direct labor C) Direct materials, Direct labor, or manufacturing overhead D) Direct materials, direct labor, or selling and administrative

answer

C) Direct materials, Direct labor, or manufacturing overhead

question

Raw materials inventory, January 1 $12,000 Raw materials inventory, December 31 16,000 Work in process, January 1 5,000 Work in process, December 31 8,000 Finished goods, January 1 17,000 Finished goods, December 31 12,000 Raw materials purchases 118,000 Direct Labor 165,000 Factory Utilities 64,000 Indirect Labor 12,000 Factory Depreciation 18,000 Selling and Administrative expenses 220,000 How much is the cost of the Direct Materials used? A) $118,000 B) $114,000 C) $122,000 D) $130,000

answer

B) $114,000 12,000 + 118,000 - 16,000 = 114,000

question

Raw materials inventory, January 1 $12,000 Raw materials inventory, December 31 16,000 Work in process, January 1 5,000 Work in process, December 31 8,000 Finished goods, January 1 17,000 Finished goods, December 31 12,000 Raw materials purchases 118,000 Direct Labor 165,000 Factory Utilities 64,000 Indirect Labor 12,000 Factory Depreciation 18,000 Selling and Administrative expenses 220,000 Assume your direct materials used is $130,000. How much are total manufacturing costs? A) $389,000 B) $393,000 C) $295,000 D) $609,000

answer

A) $389,000 DM + DL + OH (factory utilities, indirect labor, factory depreciation) = total manufacturing costs

question

Raw materials inventory, January 1 $12,000 Raw materials inventory, December 31 16,000 Work in process, January 1 5,000 Work in process, December 31 8,000 Finished goods, January 1 17,000 Finished goods, December 31 12,000 Raw materials purchases 118,000 Direct Labor 165,000 Factory Utilities 64,000 Indirect Labor 12,000 Factory Depreciation 18,000 Selling and Administrative expenses 220,000 Assume your total manufacturing costs are $400,000. How much is cost of goods manufactured? A) $420,000 B) $389,000 C) $397,000 D) $403,000

answer

C) $397,000 WIP, Jan. 1 + TMC - WIP, Dec. 31 = COGM

question

Raw materials inventory, January 1 $12,000 Raw materials inventory, December 31 16,000 Work in process, January 1 5,000 Work in process, December 31 8,000 Finished goods, January 1 17,000 Finished goods, December 31 12,000 Raw materials purchases 118,000 Direct Labor 165,000 Factory Utilities 64,000 Indirect Labor 12,000 Factory Depreciation 18,000 Selling and Administrative expenses 220,000 Assume your costs of goods manufactured is $420,000. How much is cost of goods sold? A) $420,000 B) $408,000 C) $295,000 D) $425,000

answer

D) $425,000 FG, Jan. 1 + COGM - FG, Dec. 31 = COGS

question

The formula for computing a predetermined overhead rate is... A) Estimated annual overhead cost / Estimated annual operating activity B) Estimated annual overhead costs / Actual annual operating activity C) Actual annual overhead costs / Actual annual operating activity D) Actual annual overhead costs / Estimated annual operating activity

answer

A) Estimated annual overhead cost / Estimated annual operating activity

question

Which one of the following is an example of a period cost... A) Maintenance on factory machines B) Wages of factory workers C) Salesmen's commissions D) Depreciation on the factory building

answer

C) Salesmen's commissions

question

What are the functions of management in an organization? A) Planning, controlling, and decision making B) Planning, directing, and controlling C) Directing, controlling, and decision making D) Directing, planning, and decision making

answer

B) Planning, directing, and controlling

question

Which one of the following is not one of the major activities of managerial accounting... A) Providing a basis for controlling costs by comparing actual results with planned objectives B) Preparing financial statements designed primarily for stockholders and creditors C) Preparing internal reports for management D) Determining the behavior of costs as activity levels change

answer

B) Preparing financial statements designed primarily for stockholders and creditors

question

Which of the following would most likely use a job order cost system? A) Cement manufacturer B) Cat food manufacturer C) Specialty printing company D) Automobile manufacturer

answer

C) Specialty printing company

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