Managerial Accounting Exam Ch. 1-3 – Flashcards
Unlock all answers in this set
Unlock answersquestion
The management accountant at Woodhaven Cycle Shoppe developed a budget to establish the sales goals at the store in 2012. In 2013, the management accountant evaluated the performance in the organization, reviewed the performance of the sales staff, and compared the sales results to the actual budget that the managerial accountant developed in 2012. Which of the following management accounting responsibilities is the management accountant using in this example? A. Directing B. Controlling C. Designing D. Implementing E. Planning
answer
B. Controlling
question
When deciding to buy a new computer, all of the following should be considered *except* for the A. cost of the old computer B. cost of the new computer C. warranty on the new computer D. games that come with the new computer
answer
A. cost of the old computer
question
The value chain is used by A. only service and manufacturing businesses B. only service and merchandising businesses C. service, manufacturing, and merchandising businesses D. only manufacturing and merchandising businesses
answer
C. service, manufacturing, and merchandising businesses
question
Assigning manufacturing overhead costs and other indirect costs is called A. material requisition B. cost allocation C. predetermined manufacturing overhead rate D. cost driver
answer
B. cost allocation
question
Tandoi Furniture started and finished Job 310 during November. The company's records show that the following direct materials were requisitioned for Job 310: *Direct Materials for Job 310:* Lumber: 50 units at $5 per unit Padding: 11 yards at $13 per yard Upholstery fabric: 28 yards at $30 per yard Labor time records show the following employees (direct labor) worked on Job 310: *Labor Time Records for Job 310:* Jeff Paradise: 11 hours at $9 per hour John Maddock: 12 hours at $18 per hour Tandoi allocates manufacturing overhead at a rate of $14 per direct labor hour. *Requirements:* *1.* Compute the total amount of direct materials, direct labor, and manufacturing overhead that should be shown on Job 310's job cost record *2.* Job 310 consists of six recliners. If each recliner sells for $725, what is the gross profit per recliner?
answer
*Requirement 1:* Compute the total amount of direct materials, direct labor, and manufacturing overhead that should be shown on Job 310's job costing record. *Job Costing Record for Job 310* *Direct Materials* Lumber *50* units at *$5* per units *$250* Padding *11* yards at *$13* per yard *$143* Upholstery Fabric *28* yards at *$30* per yard *$840* ->Total Direct Materials *$1,233* ($250+$143+$840=$1,233) *Direct Labor:* Jeff Paradis *11 hours at *$9* per hour *$99* John Maddock *12 hours at *$18* per hour *$216* ->Total Direct Labor *23 hours* ..................... $315 ($99+$216=$315) *Manufacturing Overhead Allocated:* $14 Per direct labor hour................................... $322 -> Total Job Cost .................................................*$1,870* ($1,233+$315+$322=$1,870) Direct labor hrs x Predetermined overhead rate = MOH 23 x$14 = $322 *Requirement 2.* Job 310 consists of six recliners. If each recliner sells for $725, what is the gross profit per recliner? Identify the formula and then compute the gross profit. Sales price (per unit) - Total job cost (per unit) = Gross profit (per unit) $725 - $312 = $413 Total job cost / Units produced = Recliner cost (per unit) $1,870 / 6 = $312
question
Sales revenue is $750,000; actual manufacturing overhead is $120,000; allocated manufacturing overhead is $95,000; and cost of goods sold before adjustment is $380,000. What is the actual gross profit? A. $250,000 B. $370,000 C. $395,000 D. $345,000
answer
D. $345,000
question
Movements toward sustainability and corporate responsibility often A. include monetary support of local schools and charities B. include green initiatives C. result in increased demand for the company's product or service D. All of the above are correct
answer
D. All of the above are correct
question
Which of these documents informs the storeroom to send specific materials to the factory floor? A. Materials requisition B. Bill of materials C. Receiving report D. Purchase order
answer
A. Materials requisiton
question
Tuity Fruity Beverage Company's operating activities for the year are listed below. Purchase .... $140,000 Operating expenses ... $80,000 Beginning inventory ... $12,000 Ending inventory ... $18,000 Sales revenue ... $3000,000 What is the cost of goods sold for the year? A. $134,000 B. $140,000 C. $80,000 D. $152,000
answer
A. $134,000
question
Service firms develop a predetermined rate for some costs. This rate is called the A. indirect cost allocation rate B. hourly cost rate C. direct cost rate D. labor rate
answer
A. indirect cost allocation rate
question
Kramer Manufacturing produces blenders. Its total fixed costs are $30,000. Its variable costs are $55.00 per blender. As production of blenders increases (within the relevant range), fixed costs will A. increase as production decreases B. decrease as production increases C. decrease per unit as production increases D. stay the same per unit
answer
C. decrease per unit as production increases
question
Which of the following statements is *true*? A. Management accounting focuses on relevant data. B. Managerial accounting focuses on historical transactions C. Financial accounting focuses on future data. D. Managerial accounting uses the cash basis for recording transactions
answer
A. Management accounting focuses on relevant data.
question
The cost of direct materials used in production is debited to A. Work - in - Process Inventory account B. either Manufacturing Overhead account or Work-in-Process Inventory account C. Finished Goods Inventory account D. Manufacturing Overhead account
answer
A. Work-in-Process Inventory account
question
Which product costing system would better account for a unique product? A. Job costing system B. Product costing system C. Overhead costing system D. Process costing system
answer
A. Job costing system
question
Which of the following roles in an organization is responsible for the oversight of the vice president of operations? A. COO B. CFO C. CEO D. BOARD OF DIRECTORS
answer
A. COO
question
An Airline manufacturer incurred the following costs last month (in thousand of dollars?: *Cost:* a. Airplane seats...$220 b. Production supervisors' salaries...$100 c. Depreciation on forklifts...$30 d. Machine lubricants...$40 e. Factory janitors' wages...$35 f. Assembly workers' wages...$650 g. Property tax on corporate marketing office...$15 h. Plant utilities...$190 I. Cost of warranty repairs...$245 j. Machine operators' health insurance...$60 k. Depreciation on administrative offices...$20 l. Cost of designing new plant layout...$180 m. Jet engines...$1,700 *Requirements* *1.* Assuming the cost object is an airplane, classify each cost as one of the following: direct material (DM), direct labor (DL), indirect labor (IL), indirect materials (IM), other manufacturing overhead (other MOH), or period cost. What is the total for each type of cost? *2.* Calculate total manufacturing overhead costs. *3.* Calculate total inventoriable product costs. *4.* Calculate total prime costs. *5.* Calculate total prime costs. *6.* Calculate total period costs.
answer
*Requirement 1:* Assuming the cost object is an airplane, classify each cost as one of the following: direct material (DM), direct labor (DL), indirect labor (IL), indirect materials (IM), other manufacturing overhead (other MOH), or period cost. What is the total for each type of cost? a. Airplane seats: *DM $220* b. Production supervisors' salaries: *IL $100* c. Depreciation on forklift: *OTHER MOH $30* d. Machine lubricants: *IM $40* e. Factory janitors' wages: *IL $35* f. Assembly workers' wages: *DL $650* g. Property tax on corporate marketing offices: *Period $15* h. Plant utilities: *OTHER MOH $190* I. Cost of warranty repairs: *Period $245* j. Machine operators' health insurance: *DL $60* k. Depreciation on administrative offices: *Period $20* l. Cost of designing new plant layout: *Period $180* m. Jet engines: *DM $1,700* *DM Total: $1,920* ($22+$1,700=$1,920) *DL Total: $710* ($650+$60=$710) *IM Total: $40* *IL Total: $135* ($100+$35=$135) *Other MOH Total:* $220 ($30+$190=$220) *Period Total: $460* ($15+$245+$20+$180=$460) *Requirement 2:* Calculate total manufacturing overhead costs. First determine the formula, then calculate the total manufacturing overhead costs. *Indirect labor + Indirect materials + Other MOH = Total manufacturing overhead costs* $135 + $40 + $220 = $395 *Requirement 3:* Calculate total inventoriable product costs. Determine the formula, then calculate the total inventoriable product costs. *Direct materials + Direct labor + Manufacturing overhead = Total inventoriable product costs* $1,920 + $710 + $395 = $3,025 *Requirement 4:* Calculate total prime costs. Determine the formula, then calculate the total prime costs. *Direct materials + Direct labor = Total prime costs* $1,920 + $710 =$2,630 *Requirement 5:* Calculate total conversion costs. Determine the formula, then calculate the total conversion costs. *Direct labor + Manufacturing overhead = Total conversion costs* $710 + $395 = $1,105 *Requirement 6:* Calculate total period costs. The total period costs are *$460* thousand.
question
The following account balances at the beginning of January were selected from the general ledger of Ocean City Manufacturing Company: Work in process inventory...$0 Raw materials inventory...$28,800 Finished goods inventory...$40,200 *Additional data:* *1.* Actual manufacturing overhead for January amounted to $63,900. *2.* Total direct labor cost for January was $63,800. *3.* The predetermined manufacturing overhead rate is based on direct labor cost. The budget for the year called for $250,500 of direct labor cost and $350,500 of manufacturing overhead costs. *4.* The only job unfinished on January 31 was Job No. 151, for which total direct labor charges were $6,000 (1,800 direct labor hours) and total direct material changes were $14,300. *5.* Cost of direct materials placed in production during January totaled $123,700. There were no indirect material requisitions during January. *6.* January 31 balance in raw materials inventory was $35,400 *7.* Finished goods inventory balance on January 31 was $34,800 What is the amount of materials purchased during January? A. $130,300 B. $59,800 C. $123,700 D. $159,100
answer
A. $130,300
question
Inflating your expenses for a company - sponsored conference that discredits the profession is a violation of what ethical standard? A. Confidentiality B. Integrity C. Competence D. Credibility
answer
B. Integrity
question
As CEO of OceanWorld, Rita Greenwood knows it is important to control costs and to respond quickly to changes in the highly competitive boat-building industry. When ABC Consulting proposes that Ocean World invest in an ERP system, she forms a team to evaluate the proposal: the plant engineer, the plant foreman, the systems specialist, the human resources director, the marketing director, and the management accountant. A month later, management accountant Miles Chumura reports that the team and ABC estimate that if OceanWorld implements the ERP system, it will incur the following costs: *OceanWorld's anticipated project costs* *Costs of the Project* *a.* $380,000 in software costs *b.* $72,000 to customize the ERP software and load OceanWorld's data into the new ERP system *c.* $112,000 for employee training The Team estimates that the ERP system should provide several benefits: *OceanWorld's anticipated project benefits* *Benefits of the Project* *a.* More efficient order processing should lead to savings of $188,000. *b.* Streamlining the manufacturing process so that it maps into the ERP system will create savings of $260,000. *c.* Integrating purchasing, production, marketing, and distribution into a single system will allow OceanWorld to reduce inventories, saving $220,000. *d.* Higher customer satisfaction should increase sales, which, in turn, should increase profits by $155,000. *Requirements* *1.* If the ERP installation succeeds, which is the dollar amount of the benefits? *2.* Should OceanWorld install the ERP system? Why or why not? Show your calculations. *3.* Why did Stuckey create a team to evaluate ABC's proposal? Consider each piece of cost-benefit information that management accountant Chumura reported. Which person on the team is most likely to have contributed each item? (HINT: Which team member is likely to have the most information about each cost or benefit?)
answer
*Requirement 1:* If the ERP installation succeeds, what is the dollar amount of the benefits? If the ERP installation succeeds, the dollar amount of the benefits is *$823,000* Expected benefits: ($188,000 + $260,000 + $220,000 + $155,000) = $823,000 *Requirement 2.* Should OceanWorld install the ERP system? Why or Why not? Show your calculations Complete the table below to calculate the expected net benefits (costs) of the project. *Expected benefits .... $823,000* *Expected costs ... $564,000* *Net benefits (costs) $259,000* Expected costs: ($380,000 + $72,000 + $112,000) = $564,000 Since the expected value of the benefits *are greater than* the total costs, OceanWorld *should* undertake the project. *Requirement 3.* Why did Stuckey create team to evaluate ABC's proposal? Consider each piece of cost-benefit information that management accountant Chumura reported. Which person on the team is most likely to have contributed each item? (Hint: Which team member is likely to have the most information about each cost or benefit?) Stuckey formed a team to evaluate the feasibility of installing an ERP system for the following reasons. *-The project was probably too big for one person.* *-The representatives of different functional business areas knowledge and information to contribute* Consider each piece of cost-benefit information that management accountant Chumura reported. Which person on the team is most likely to have contributed each item? (HINT: Which team member is likely to have the most information about each cost or benefit?) *a.* Estimating software costs *systems specialist* *b.* Estimating cost of loading data into the new ERP system *management accountant* *systems specialist* *c.* Customize the ERP software *systems specialist* *management accountant* *d.* Estimate customization costs *all team members* *e.* Estimate training costs *human resource director* *f.* Savings from more efficient order processing *systems specialist* *management accountant* *g.* Savings from streamlining the manufacturing process *plant engineer* *plant foreman* *h.* Evaluate the effects of integrating purchasing, production, marketing, and distribution into a single system *plant foreman* *I.* Estimate increase in sales from higher customer satisfaction *marketing director* *j.* Estimate benefits and costs *all team members*
question
Which type of company makes up the largest sector of the United States economy? A. Wholesalers B. Merchandising C. Manufacturers D. Service companies
answer
D. Service companies
question
All of the following would be considered a direct material for a kitchen cabinet *except* A. hinges B. stain c. sand paper D. wood
answer
C. sand paper
question
Country Furniture Company manufacturers furniture at its Akron, Ohio, factory. Some of its costs from the past year include: Depreciation on sales office ... $9,600 Depreciation on factory equipment ... $16,100 Factory supervisor salary .. $50,300 Sales commissions ... $23,700 Lubricants used in factory equipment ... $3,200 Insurance costs for factory ... $21,600 Wages paid to factory maintenance workers ... $115,600 Fabric used to upholster furniture ... $10,200 Freight-in (on raw materials) ... $3,300 Costs of delivery to customers ... $9,800 Wages paid to assembly-line workers ... $115,500 Lumber used to build product ... $82,100 Utilities in factory ... $54,800 Utilities in sales office ... $26,000
answer
B. $95,600
