Exam 1: Management Accounting and Corporate Governance

Manufacturing costs that cannot be traced to specific units of product in a cost-effective manner include:

Which of the following is not classified as manufacturing overhead?

Assuming that the inventory on hand at the end of the period is sold during the following period,misclassifying a period cost as a product cost during a period will usually correct itself in the following period.

With respect to income taxes,managers would prefer to classify costs as assets rather than expenses.

Which of the following statements concerning manufacturing costs is incorrect?

Costs such as transportation-out,sales commissions,uncollectible accounts receivable,and advertising costs are sometimes called:

Which of the following statements is true with regard to product costs versus general, selling, and administrative costs?

Management accountants have a responsibility to be objective.What does this ethical standard require of management accountants?

Choose the answer that is not a distinguishing characteristic of financial accounting information.

Howard Lumber Company mistakenly classified a product cost as an expense that totaled $20,000.The company produced 2,000 units of product and sold 1,000 of them during the year.Management is paid a bonus equal to 2% of net income.In the year in which the mistake was made:

Unlike direct material and direct labor costs,overhead costs must be allocated to products.

What benefits may result from use of a just in time system?

For a manufacturing company,product costs include all of the following except:

What are period costs? How does the accounting for period costs differ from the accounting for product costs?

Which of the following items would be reported directly on the income statement as a period cost?

The Jacobson Manufacturing Company was started at the beginning of the current year when it acquired $200,000 from its owners.During the year,the company incurred the following costs,all for cash: Direct material costs \ 80,000 Direct labor costs 100,000 Overhead costs 40,000 Selling and administrative costs 60,000 The company produced 10,000 units of product and sold 8,000 units.The average selling price was $34 per unit;all sales were for cash.The accountant who prepared the firm's financial statements misclassified the selling and administrative costs as product costs. Required: Demonstrate the impact of the error on the company's income statement and balance sheet by completing the following schedule: Scenario 1: With the error Scenario 2: Without the error Income statement: Revenue Less: Cost of goods sold Gross margin Less: Selling, general, and administrative expenses Net income Balance sheet: Assets Cash Inventory Total assets Equity Common stock Retained earnings Total equity

All of the following are downstream costs except:

Is depreciation on manufacturing equipment expensed in the period incurred? Explain why or why not.

The Szakos Company engaged in the following transactions during the current year: a)Acquired $50,000 of cash by issuing common stock to owners b)Paid $10,000 to acquire manufacturing equipment c)Paid $5,000 cash for materials used in production d)Paid $2,000 for wages of production workers e)Paid $8,000 in general,selling,and administrative costs f)Recognized $1,000 of depreciation on the manufacturing equipment g)Sold inventory for $18,000 cash h)The cost of the inventory sold was $6,500 Required: Show the balance sheet and income statement effects of the transactions by completing the financial statement model provided.

The time spent moving a product from one processing department to the next processing department is an example of a value-added activity.