Managerial Accounting Midterm Test Questions Essay

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Which of the following are the fixed costs relative to the number of units produced and sold?
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Store rent Managers Salary Straight line depreciation
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Behavior
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Classification of costs as variable or fixed
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Costs which are tangible components of the finished product are called
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Direct Materials
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Inventory which is completed but not yet sold by a manufacturer is known as
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Finished goods inventory
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The following items would be included in the overhead section of the schedule of cost of goods manufactured
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Factory supplies used Factory utilities Factory insurance
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Match the following characteristics to the type of accounting: -Used by investors when making stock purchase decisions -Information reviewed by external auditors -Used by creditors when making loan approval decisions -Focuses on company as a whole
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Financial
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Match the following characteristics to the type of accounting: -Regularly uses predictions -Information reviewed by internal auditors -Includes nonfinancial items such as on-time deliveries and product quality
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Managerial
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Raw materials inventory includes all of the following
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-Direct materials -Indirect materials
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A _____ company does not have any inventory held for sale, while a merchandising company does have merchandise for sale
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Service
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A manufacturing company reports the following items: Finished goods inventory, beginning balance: $1,000 Finished goods inventory, ending balance: $1,200 Cost of goods manufactured, $5,000 The cost of goods sold is:
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$4,800 Cost of goods sold = Beginning finished goods inventory + Cost of goods manufacturing – Ending finished goods inventory
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Consider a company that manufactures automobiles. Which of the following costs would be considered direct labor? A. Salary of the accounting manager B. Salary of production supervisor C. Wages of factory maintenance worker D. Wages of assembly line workers
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D. Wages of assembly line workers
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Each of the following are examples of factory overhead:
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Indirect labor Indirect materials
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The efforts of employees who work directly to convert direct materials into finished product are referred to as
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Direct labor
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Inventory which is partially complete is known as
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work in process
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Financial accounting provides information for (internal/external) _____________ decision makers, while managerial accounting provides information for (internal/external)____________ decision makers.
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Financial – external Managerial – internal
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Which of the following are inventory accounts commonly found in manufacturing companies? Raw materials inventory Work in process inventory Merchandise inventory Goods for sale inventory Finished goods inventory
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Raw materials inventory Work in process inventory Finished goods inventory
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Which of the following are the fixed costs relative to the number of units produced and sold? (check all that apply) Manager’s salary Commissions based on sales Store rent Straight-line depreciation
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Manager’s Salary Store rent Straight-line depreciation
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Match the following activity to the appropriate accounting trend: Survey customers to better align operating practices with their expectations
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Customer orientation
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Match the following activity to the appropriate accounting trend: Updating the company’s website to promote online sales transactions
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E-commerce
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Match the following activity to the appropriate accounting trend: Establishing better relationships with vendors to ensure on-time delivery of quality raw materials
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JIT manufacturing
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Match the following activity to the appropriate accounting trend: Evaluating business activities with a focus on improving quality
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TQM
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A company reported Cost of goods manufactured of $55,000 on the manufacturing statement. If the beginning balance in Work in process inventory was $5,000 and the Total manufacturing costs were $60,000, then the ending balance in Work in process inventory was $_______ ?
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$10,000 Manufacturing costs (60,000) + beginning Work in process inventory (5,000) – ending Work in process inventory = Cost of goods manufactured (55,000)
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Direct and indirect materials are known as
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Raw materials
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Which of the following characteristics describe managerial accounting? Many projections and estimates External users Used to make planning and control decisions Emphasis on whole organization Controlled by GAAP
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Many projections and estimates Used to make planning and control decisions
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Inventory account used by manufacturing companies to record cost of completed products ready for sale is called:
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finished goods inventory
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Which of the following are the variable costs relative to number of units produced and sold? Materials used in production Commissions based on sales Property tax Insurance premiums
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Materials used in production Commissions based on sales
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Activities such as selling and storing finished products are considered _____ activities
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sales
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Conversion costs consist of: -factory overhead and direct labor -direct labor and direct materials -factory overhead and direct materials
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factory overhead and direct labor
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Activities such as purchasing and storing raw materials are considered _____ activities
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materials
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Managerial accounting has which of the following characteristics? -Focus on historical information -Monetary and nonmonetary information -Emphasis on projects, processes, and subdivisions -Information available only after audit complete -Internal users
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-Monetary and nonmonetary information -Emphasis on projects, processes, and subdivisions -Internal users
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Consider the production department of a manufacturer of laptop computers. Classify the cost of the processor chips. (Check all that apply) -Product -Direct -Period -Variable -Fixed -Indirect
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-Product -Direct -Variable
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What types of information does managerial accounting provide? -Non-financial -Information for external decision makers -Information for internal decision makers -Financial
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-Non-financial -Information for internal decision makers -Financial
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The primary difference between the income statement for a merchandising company and a manufacturing statement is the _____ section.
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cost of goods sold
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The main difference between a manufacturer’s and merchandiser’s balance sheet is in the _____
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inventory account
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A company reported Cost of goods manufactured of $50,000 on the statement of cost of goods manufactured. If the beginning balance in Work in process inventory was $20,000 and the ending balance was $25,000, then the total manufacturing costs were:
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Manufacturing costs + beginning Work in process inventory – ending Work in process inventory = Cost of goods manufactured X + 20,000 – 25,000 = 50,000 – 20,000 +25,000 + 50,000 = 55,000
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Managerial accounting systems are a. flexible b. rigid c. standardized
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a. flexible
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Which of the following are period costs for a manufacturer -Wages for administrative staff -Sales commissions -Rent on the office building -Utilities for the manufacturing plant -Wages for factory labor
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-Wages for administrative staff -Sales commissions -Rent on the office building (Period costs are non-production costs and are usually more associated with activities linked to a time period than with completed products.
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Major Manufacturing Company has direct materials used of $50,000, beginning raw materials inventory of $10,000 and ending raw materials inventory of $8,000. Compute the raw materials inventory turnover.
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5.55 Raw materials inventory turnover = Raw materials used/Average raw materials inventory Average raw materials inventory (10000 + 8000 / 2 = 9000) 50,000/9,000 = 5.55
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Which of the following are indirect costs for the finishing department of a furniture manufacturing plant? -Finishing department manager’s salary -Rent on the manufacturing facility -Plant manager’s salary -Electricity cost for the plant
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-Rent on the manufacturing facility -Plant manager’s salary -Electricity cost for the plant
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A manufacturing company reports the following items: Work in process inventory, beginning balance: $500; Work in process inventory, ending balance: $200; Direct materials: $700; Direct labor: $600; Factory overhead: $100 The cost of goods manufactured is?
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$1700 Direct materials+ Direct labor + Factory overhead + Beginning balance Work in process inventory – Ending balance work in process inventory (700 + 600 + 100 + 500 – 200 = 1700)
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List the following documents in the order in which they are used when recording indirect labor costs in job order costing, with the first document on top.
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1. time tickets 2. factory overhead ledger 3. allocated to specific jobs through factory overhead
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The journal entry to record indirect materials in production is to:
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Debit Factory Overhead and credit Raw Materials inventory
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A company has a predetermined overhead rate of 50% of direct labor costs. Job 62 incurs $560 in labor costs. Overhead allocated to Job 62 will be…
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$280 (50% x $560 = $280)
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Job cost sheets can be used to:
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Monitor costs incurred to date and to predict and control costs for each job Provide a subsidiary ledger for the Finished Goods Inventory account Provide a permanent record for the Cost of Goods Sold account
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Match the following overhead activity to the correct time period: Calculate the predetermined overhead rate
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At the start of the accounting period
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Match the following overhead activity to the correct time period: Allocate overhead to jobs
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During the accounting period
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Match the following overhead activity to the correct time period: Adjust overhead account for over-or underapplied overhead
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At the end of the accounting period
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The characteristics of cost accounting systems include which of the following? a. They are used to record costs of selling activities b. They are used with periodic inventory systems. c. They generate timely and accurate inventory information.
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c. They generate timely and accurate inventory information.
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After adjusting for over-or underapplied overhead, the balance in the Factory Overhead account will be:
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Journal entries for materials used in production are posted to:
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-general ledger accounts -subsidiary records
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List the following documents in the order which they are used when recording direct materials costs in job order cost accounting, with the first document on top
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1. Receiving reports 2. Materials ledger cards 3. Materials requisitions 4. Job cost sheets
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Match the activity to its affect on the general ledger accounts: Allocate overhead costs to jobs
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Credit Factory Overhead
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Match the activity to its affect on the general ledger accounts: Pay factory utilities
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Debit Factory Overhead
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Match the activity to its affect on the general ledger accounts: Purchase indirect materials
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Debit Raw Materials Inventory
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Match the activity to its affect on the general ledger accounts: Use indirect materials
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Credit Raw Materials Inventory
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Match the activity to its affect on the general ledger accounts: Direct labor used
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Debit Work in Process Inventory
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Job order production is most likely used by companies that produce: a. chocolate chip cookies b. cake pans c. customized wedding cakes d. cookie sheets
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c. customized wedding cakes
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A company uses direct labor hours as its allocation base. Management estimates the company will have 10,000 hours of direct labor during the year and total overhead costs of $120,000. The predetermined overhead rate will be :
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$12 per hour This rate equals the estimated overhead costs divided by the estimated activity base
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The journal entry to record the purchase of materials is to:
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debit Raw Materials Inventory and credit Accounts Payable
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The cost accounting system which is used when producing customized products is called ____ order production
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job
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If the factory overhead is overapplied, then:
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applied overhead costs>actual overhead costs the Factory Overhead account has a credit balance
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Match the following activity to its affect on the general ledger account Allocate indirect labor
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Credit Factory Wages Payable
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Match the following activity to its affect on the general ledger account Pay factory property tax
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Debit Factory Overhead
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Match the following overhead activity to the correct time period: Allocate overhead to jobs
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During the accounting period

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