Exam 1: Management Accounting and Corporate Governance

Discuss three practical implications of misclassifying product and/or period costs.

Steuben Company produces dog houses.During the current year,Steuben Company incurred the following costs: Rent on manufacturing facility Office manager's salary Wages of factory machine operators Depreciation on manufacturing equipment Insurance and taxes on selling and administrative offices Direct materials purchased and used \ 250,000 150,000 110,000 50,000 30,000 170,000 Based on the above information,which of the following would not be treated as a product cost:

During its first year of operations,Forrest Company paid $30,000 for direct materials and $50,000 in wages for production workers.Lease payments,utility costs,and depreciation on factory equipment totaled $15,000.General,selling,and administrative expenses were $20,000.The average cost to produce one unit was $2.50.How many units were produced during the period?

Steuben Company produces dog houses.During the current year,Steuben Company incurred the following costs: Rent on manufacturing facility Office manager's salary Wages of factory machine operators Depreciation on manufacturing equipment Insurance and taxes on selling and administrative offices Direct materials purchased and used \ 250,000 150,000 110,000 50,000 30,000 170,000 Wages paid to factory machine operators in producing the dog houses should be categorized as:

Costs that are not classified as product costs are normally expensed in the period incurred.

Financial accounting information is reported periodically,primarily at the end of each fiscal year.When is managerial accounting information reported to managers of an organization?

A company uses sandpaper to prepare its product for finishing.Most manufacturers would classify the sandpaper as direct material because it is physically consumed in the production process.

What inventory holding costs would be incurred by a business that holds a large amount of inventory?

How does the Sarbanes-Oxley Act of 2002 affect the responsibilities of the managers of publicly held US corporations?

Unlike manufacturers,service companies do not have an inventory of products.

Levenworth Company incurs unnecessary costs each period because of the excess quantities of inventory maintained to meet unexpected customer demand.The costs of inventory financing,storage,supervision,and obsolescence could most likely be reduced by which of the following practices?

The biggest challenge in computing the total cost per unit of a product is determining the amount of overhead cost that should be assigned to each unit.

A company that uses a just in time inventory system:

A potential negative effect of using a just in time inventory system is the immediate impact of labor strikes on the transportation system such as railroad.

Benchmarking involves the identification of the best practices used by world-class competitors.Discuss the following widely recognized best practices: activity-based management and just in time inventory.

What are upstream costs? What upstream costs would be incurred by a company that produces and sells computer software programs?

The following information relates to the operations of Cruz Manufacturing during the current year: Raw materials used \ 20,000 Direct labor wages 60,000 Sales salaries and commissions 50,000 Depreciation on production equipment 4,000 Rent on manufacturing facilities 30,000 Packaging and shipping supplies 6,000 Sales revenue 190,000 Units produced and sold 10,000 Selling price per unit \ 20.00 Based on this information,what is the company's cost of goods sold?

The following information relates to Marshall Manufacturing's current accounting period: Raw materials used \ 34,000 Direct labor wages 66,000 Sales salaries and commissions 50,000 Depreciation on production equipment 6,000 Rent on manufacturing facilities 4,000 Administrative supplies and utilities 10,000 Sales revenue 210,000 Units produced 10,000 Units sold 10,000 Based on this information,what is the company's net income?

Who are the primary users of financial accounting information? Who are the primary users of managerial accounting information?

Cash paid to production workers should be recorded as Wages Expense in the income statement for the period incurred.