Question 1

Management accounting encompasses the design and use of accounting information systems inside the company to achieve the company's objectives.

Accepted Answer

A) True 
 B)False  True

Question 2

Which of the following is not a product cost?

Accepted Answer

A)  Property tax on the factory building. 
B)  Advertising. 
C)  Factory workers' salaries. 
D)  Indirect materials used in production. 
A)  Property tax on the factory building. 
B)  Advertising. 
C)  Factory workers' salaries. 
D)  Indirect materials used in production. B

Question 3

If the end of the fiscal year is not a payroll date, the Direct Labor account normally has:

Accepted Answer

A)  A debit balance, representing prepaid labor costs. 
B)  A credit balance, representing accrued wages payable. 
C)  Either a debit or a credit balance, depending upon whether the end of the fiscal year falls before or after the end of the pay period. 
D)  A zero balance, because the Direct Labor account is closed along with the other expense accounts. 
A)  A debit balance, representing prepaid labor costs. 
B)  A credit balance, representing accrued wages payable. 
C)  Either a debit or a credit balance, depending upon whether the end of the fiscal year falls before or after the end of the pay period. 
D)  A zero balance, because the Direct Labor account is closed along with the other expense accounts. B

Question 4

Management accounting systems are designed to assist organizations in the performance of all of the following functions except:

Accepted Answer

A)  The assignment of decision-making authority over company assets. 
B)  Planning and decision-making. 
C)  Monitoring, evaluating, and rewarding performance. 
D)  The preparation of income tax returns. 
A)  The assignment of decision-making authority over company assets. 
B)  Planning and decision-making. 
C)  Monitoring, evaluating, and rewarding performance. 
D)  The preparation of income tax returns.

Question 5

Product cost vs. period cost
Briefly define the terms product cost and period cost. Explain why the distinction between these two types of costs is important.

Accepted Answer

Product costs are the costs of purchasin

Question 6

When a manufacturing company purchases raw materials or component parts to be used in manufacturing finished goods, these costs are initially debited to:

Accepted Answer

A)  Expense accounts. 
B)  Raw Materials Inventory. 
C)  Finished Goods Inventory. 
D)  Manufacturing Overhead. 
A)  Expense accounts. 
B)  Raw Materials Inventory. 
C)  Finished Goods Inventory. 
D)  Manufacturing Overhead.

Question 7

As units are completed, their cost is transferred from the Work in Process Inventory account to the Finished Goods Inventory account.

Accepted Answer

A) True 
 B)False

Question 8

In comparison with a financial statement prepared in conformity with generally accepted accounting principles, a managerial accounting report is less likely to:

Accepted Answer

A)  Focus upon the entire organization as the accounting entity. 
B)  Focus upon future accounting periods. 
C)  Make use of estimated amounts. 
D)  Be tailored to the specific needs of an individual decision maker. 
A)  Focus upon the entire organization as the accounting entity. 
B)  Focus upon future accounting periods. 
C)  Make use of estimated amounts. 
D)  Be tailored to the specific needs of an individual decision maker.

Question 9

Prime costs include direct materials and direct labor used in the production of goods and services.

Accepted Answer

A) True 
 B)False

Question 10

During its first year of operations, the Brown Company incurred the following product costs: Direct materials used in production $200,000
Direct labor $175,000
Manufacturing overhead $145,500
The Brown Company's ending Work in Process Inventory amounted to $35,000 at the end of the year. What is the company's cost of finished goods manufactured for the year?

Accepted Answer

A)  $200,000. 
B)  $375,000. 
C)  $485,500. 
D)  $520,500. 
A)  $200,000. 
B)  $375,000. 
C)  $485,500. 
D)  $520,500.

Question 11

Flow of manufacturing costs
The "flow" of manufacturing costs through the ledger of Wolpe Mfg. Co. during the month of October is summarized in the following T accounts. Certain amounts have been omitted and are represented by question marks.
 
From the data supplied above, determine each of the following amounts. Some of the required amounts already appear in the T accounts; others require a short computation.
(a) The amount of direct materials used during the month: $____________ (b) The amount paid to direct labor workers during the month: $____________ (c) The amount of accrued wages payable to direct labor workers at October 31: $____________ (d) Total manufacturing costs charged (debited) to the Work in Process Inventory account during the month: $____________ (e) The cost of finished goods manufactured during the month: $____________

Accepted Answer

(a) 44,000
(b) 29,00

Question 12

The amount of wages paid to direct workers during April amounted to:

Accepted Answer

A)  $14,000. 
B)  $12,000. 
C)  $13,000. 
D)  Some other amount. $_____________ 
A)  $14,000. 
B)  $12,000. 
C)  $13,000. 
D)  Some other amount. $_____________

Question 13

Classification of costs
Using the code letters below, indicate in the space provided how each of the following costs should be classified in the indicated pen manufacturing company:
$\begin{array}{|l|l|}
\hline \text { Code Letters } & \
\hline \mathrm{DM}=\text { Direct materials } & \mathrm{WP}=\text { Work in process } \
\hline \mathrm{DL}=\text { Direct labor } & \mathrm{FG}=\text { Finished goods } \
\hline \mathrm{MO}=\text { Manufacturing overhead } & \mathrm{PC}=\text { Period cost } \
\hline
\end{array}$
Costs
______ (a) Property tax on the factory building.
______ (b) The chief financial officer's salary.
______  (c) Plastic used to manufacture pens.
______ (d) Janitors at the factory.
______ (e) Manufactured pens waiting to be sold to customers.
______ (f) Advertising logos.
______ (g) Partially completed pens.

Accepted Answer

(a) MO (b)

Question 14

The Alton Company produces metal belts. During the current month, the company incurred the following product costs: Raw materials $100,000
Direct labor $75,000
Electricity used in the Factory $25,000
Factory foreperson salary $3,750
Maintenance of factory machinery $2,000
Alton Company's total product costs totaled:

Accepted Answer

A)  $175,000. 
B)  $30,750. 
C)  $205,750. 
D)  $28,750. 
A)  $175,000. 
B)  $30,750. 
C)  $205,750. 
D)  $28,750.

Question 15

Which of the following is not a characteristic of managerial accounting?

Accepted Answer

A)  Reports are used primarily by insiders rather than by persons outside of the business entity. 
B)  Its purpose is to assist managers in planning and controlling business operations. 
C)  Information must be developed in conformity with generally accepted accounting principles or with income tax regulations. 
D)  Information may be tailored to assist in specific managerial decisions. 
A)  Reports are used primarily by insiders rather than by persons outside of the business entity. 
B)  Its purpose is to assist managers in planning and controlling business operations. 
C)  Information must be developed in conformity with generally accepted accounting principles or with income tax regulations. 
D)  Information may be tailored to assist in specific managerial decisions.

Question 16

A value chain is a linked set of activities and resources necessary to deliver a product of low cost but high value to the retailer.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following costs would not be considered part of the manufacturing overhead of a chemical plant?

Accepted Answer

A)  The costs of disposing of toxic waste materials. 
B)  Salaries of factory medical personnel. 
C)  Salaries of employees who operate distilling equipment used in the production process. 
D)  The cost of complying with federal safety regulations concerning plant operations. 
A)  The costs of disposing of toxic waste materials. 
B)  Salaries of factory medical personnel. 
C)  Salaries of employees who operate distilling equipment used in the production process. 
D)  The cost of complying with federal safety regulations concerning plant operations.

Question 18

The three basic types of manufacturing costs are direct materials, direct labor and manufacturing overhead.

Accepted Answer

A) True 
 B)False

Question 19

Product costs are charged directly to expense accounts.

Accepted Answer

A) True 
 B)False

Question 20

Generally Accepted Accounting Principles
The accounting department of Burke Manufacturing prepares numerous reports at the request of, and for exclusive use by, the management of the company. Is it necessary that these managerial accounting reports be developed in accordance with generally accepted accounting principles (GAAP)?

Accepted Answer

Since managerial accounting information

Exam 16: Management Accounting: a Business Partner

Management accounting encompasses the design and use of accounting information systems inside the company to achieve the company's objectives.

Which of the following is not a product cost?

If the end of the fiscal year is not a payroll date, the Direct Labor account normally has:

Management accounting systems are designed to assist organizations in the performance of all of the following functions except:

Product cost vs. period cost Briefly define the terms product cost and period cost. Explain why the distinction between these two types of costs is important.

When a manufacturing company purchases raw materials or component parts to be used in manufacturing finished goods, these costs are initially debited to:

As units are completed, their cost is transferred from the Work in Process Inventory account to the Finished Goods Inventory account.

In comparison with a financial statement prepared in conformity with generally accepted accounting principles, a managerial accounting report is less likely to:

Prime costs include direct materials and direct labor used in the production of goods and services.

The amount of wages paid to direct workers during April amounted to:

Which of the following is not a characteristic of managerial accounting?

A value chain is a linked set of activities and resources necessary to deliver a product of low cost but high value to the retailer.

Which of the following costs would not be considered part of the manufacturing overhead of a chemical plant?

The three basic types of manufacturing costs are direct materials, direct labor and manufacturing overhead.

Product costs are charged directly to expense accounts.

Accounting: Information for Decision Making

Basic Financial Statements

The Accounting Cycle: Capturing Economic Events

The Accounting Cycle: Accruals and Deferrals

The Accounting Cycle: Reporting Financial Results

Merchandising Activities

Financial Assets

Inventories and the Cost of Goods Sold

Plant and Intangible Assets

Liabilities

Stockholders Equity: Paid-In Capital

Income and Changes in Retained Earnings

Statement of Cash Flows

Financial Statement Analysis

Global Business and Accounting

Job Order Cost Systems and Overhead Allocations

Process Costing

Costing and the Value Chain

Cost-Volume-Profit Analysis

Incremental Analysis

Responsibility Accounting and Transfer Pricing

Operational Budgeting

Standard Cost Systems

Rewarding Business Performance

Capital Budgeting

Forms of Business Organization

The Time Value of Money: Future Amounts and Present Values Answer Key

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