Question 1

Indicate which of the following statements are more descriptive of managerial accounting than of financial accounting.

Accepted Answer

A)  Recognized standards for presentation. 
B)  Information is tailored to the needs of individual decision makers. 
C)  Information is more widely distributed. 
D)  Emphasis is on historical data. 
A)  Recognized standards for presentation. 
B)  Information is tailored to the needs of individual decision makers. 
C)  Information is more widely distributed. 
D)  Emphasis is on historical data.

Question 2

Amounts credited to the Work in Process inventory account may best be described as:

Accepted Answer

A)  The cost of finished goods manufactured. 
B)  Total manufacturing costs charged to production. 
C)  The cost of goods sold. 
D)  Direct materials purchased, direct labor costs paid, and payments for items classified as manufacturing overhead. 
A)  The cost of finished goods manufactured. 
B)  Total manufacturing costs charged to production. 
C)  The cost of goods sold. 
D)  Direct materials purchased, direct labor costs paid, and payments for items classified as manufacturing overhead.

Question 3

Which of the following is not a period cost?

Accepted Answer

A)  Depreciation on factory equipment. 
B)  Depreciation on the retail store building. 
C)  Salesperson salaries. 
D)  Office supplies used. 
A)  Depreciation on factory equipment. 
B)  Depreciation on the retail store building. 
C)  Salesperson salaries. 
D)  Office supplies used.

Question 4

In a manufacturing company, the costs debited to the Work in Process Inventory account represent:

Accepted Answer

A)  Direct materials used in production, direct labor, and manufacturing overhead. 
B)  Cost of finished goods manufactured. 
C)  Period costs and product costs. 
D)  None of the above. The types of costs debited to this account will depend upon the type of products being manufactured. 
A)  Direct materials used in production, direct labor, and manufacturing overhead. 
B)  Cost of finished goods manufactured. 
C)  Period costs and product costs. 
D)  None of the above. The types of costs debited to this account will depend upon the type of products being manufactured.

Question 5

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 manufacturing company:
$$\begin{array} { | l | l | } 
\hline & \text { Code Letters } \
\hline \text { DM = Direct materials } & \text { WP = Work in process } \
\hline \text { DL = Direct labor } & \text { FG = Finished goods } \
\hline \text { MO = Manufacturing overhead } & \text { PC Period cost } \
\hline
\end{array}$$
Costs
______ (a) Research and development costs incurred by Martin, manufacturer of derailleurs, brakes, and other component parts for bicycles in its efforts to develop new products.
______ (b) Salaries paid by Martin to the plant managers supervising production operations.
______ (c) An inventory of Martin Group 105 components purchased by Earl Bicycle Corporation for use in the manufacture of Earl 's Model 1200 aluminum bicycle.
______ (d) An inventory of Model 1200 bicycle frames manufactured by Earl. Prior to sale, these frames will be painted and equipped with derailleurs, brakes, and other component parts.
______ (e) Salaries paid by Earl to its sales personnel.
______ (f) Salaries paid by Earl to employees who install derailleurs, brakes, and other component parts on the bicycle frames.
______ (g) An inventory of Martin Group 105 derailleurs awaiting sale to customers.

Accepted Answer

(a) PC (b)

Question 6

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 indirect product costs totaled:

Accepted Answer

A)  $175,000. 
B)  $30,750. 
C)  $75,000. 
D)  $28,750. 
A)  $175,000. 
B)  $30,750. 
C)  $75,000. 
D)  $28,750.

Question 7

The following information is for the Harding Company for 2012:
$\begin{array}{lll}&\text { Dec } 31&\text { Jan } 1\
\text { Raw Materials Inventory } & \$ 330 & \$ 340 \
\text { Work in Process } & \$ 340 & \$ 190 \
\text { Finished Goods } & \$ 350 & \$ 370\\text { Direct materials used }&&\$1,130\
\text { Total Manufacturing costs charged to }\\text { production of which } \$ 855 \text { was }\\text { manufacturing overhead }&&\$3,340\\
\text { Selling and administrative expenses }&&\$2,460\
\text { Sales revenue }&&\$6,390
\end{array}$
Required:
(1) What is the cost of materials purchased?
(2) What is the cost of goods sold?
(3) What is gross profit?
(4) What is net profit?

Accepted Answer

(1) $1,120

Question 8

Which of the following should not be classified as a manufacturing cost?

Accepted Answer

A)  Indirect factory labor costs, such as salaries of plant security guards. 
B)  Direct materials used in the production process. 
C)  Utility bills related to factory operations. 
D)  Commissions paid to salespeople. 
A)  Indirect factory labor costs, such as salaries of plant security guards. 
B)  Direct materials used in the production process. 
C)  Utility bills related to factory operations. 
D)  Commissions paid to salespeople.

Question 9

Which of the following is a period cost?

Accepted Answer

A)  Depreciation on a factory building. 
B)  The cost of direct materials used. 
C)  Depreciation on a sales showroom. 
D)  The cost of disposing of hazardous waste materials from factory operations. 
A)  Depreciation on a factory building. 
B)  The cost of direct materials used. 
C)  Depreciation on a sales showroom. 
D)  The cost of disposing of hazardous waste materials from factory operations.

Question 10

Manufacturing overhead is best described as:

Accepted Answer

A)  All manufacturing costs other than direct materials and direct labor. 
B)  All period costs associated with manufacturing operations. 
C)  Indirect materials and indirect labor. 
D)  All operating expenses other than selling expenses and general and administrative expenses. 
A)  All manufacturing costs other than direct materials and direct labor. 
B)  All period costs associated with manufacturing operations. 
C)  Indirect materials and indirect labor. 
D)  All operating expenses other than selling expenses and general and administrative expenses.

Question 11

The cost of finished goods manufactured in August is:

Accepted Answer

A)  $147,000. 
B)  $92,000. 
C)  $57,000. 
D)  Some other amount. 
A)  $147,000. 
B)  $92,000. 
C)  $57,000. 
D)  Some other amount.

Question 12

Direct labor costs are debited and is credited when the direct labor employees contribute to the production process.

Accepted Answer

A) True 
 B)False

Question 13

The following information is available for the LBB Company for the year 2011:
$\begin{array}{|l|c|c|}
\hline & 12 / 31 & 1 / 1 \
\hline \text { Raw materials inventory } & & 0 \
\hline \text { Work in process inventory } & \$ 70 & \$ 80 \
\hline \text { Finished goods inventory } & \$ 75 & \$ 60 \
\hline\\hline \text { Direct materials used } & \$ 375 \
\hline \text { Net sales } & \$ 2,585 \\hline \text { Direct labor } & \$ 500 \
\hline \text { Manufacturing overhead } & \$ 1,000\\hline \text { General \& administrative } & \
\hline \text { expenses } & \$ 300 \
\hline \text { Selling expenses } & \$ 300 \
\hline \text { Income tax paid } & \$ 100 \
\hline
\end{array}$
Required
(1) What are total manufacturing costs charged to work in process?
(2) What are costs of finished goods manufactured?
(3) What is the cost of goods sold?
(4) What is gross profit?
(5) What is operating income?

Accepted Answer

(1) $1,875
(2) $1,88

Question 14

In a manufacturing company, the cost of goods sold is equal to:

Accepted Answer

A)  The beginning inventory of finished goods, plus total manufacturing costs, less the ending inventory of finished goods. 
B)  Total manufacturing costs for the period, less selling expenses. 
C)  The beginning inventory of work in process, plus total manufacturing costs, less the ending inventory of work in process. 
D)  The cost of goods available for sale, less the ending inventory of finished goods. 
A)  The beginning inventory of finished goods, plus total manufacturing costs, less the ending inventory of finished goods. 
B)  Total manufacturing costs for the period, less selling expenses. 
C)  The beginning inventory of work in process, plus total manufacturing costs, less the ending inventory of work in process. 
D)  The cost of goods available for sale, less the ending inventory of finished goods.

Question 15

Direct materials used, direct labor, and manufacturing overhead are included among the expenses listed in the income statement of a manufacturing company.

Accepted Answer

A) True 
 B)False

Question 16

The James Company has incurred the following costs of production:
Direct Materials $350,000
Direct Labor $475,000
Manufacturing Overhead $722,000
Selling and Administrative Costs $256,000
The James Company conversion costs are $1,197,000.
Conversion costs = Direct Labor $475,000 + Manufacturing Overhead = $1,197,000

Accepted Answer

A) True 
 B)False

Question 17

When products are completed:

Accepted Answer

A)  Finished Goods Inventory is credited. 
B)  Work in Process Inventory is credited. 
C)  Cost of Goods Sold is debited. 
D)  Work in Process Inventory is debited. 
A)  Finished Goods Inventory is credited. 
B)  Work in Process Inventory is credited. 
C)  Cost of Goods Sold is debited. 
D)  Work in Process Inventory is debited.

Question 18

Flow of manufacturing costs
The following data are taken from the accounting records of Victoria Mfg. Co.:
 
Compute the following amounts:
(a) Direct materials purchased during the period: $____________ (b) Total manufacturing costs charged to production (the Work in Process Inventory account) during the year: $____________ (c) The cost of finished goods manufactured during the year: $____________ (d) The cost of goods sold during the year: $____________

Accepted Answer

(a) 25,000

Question 19

Manufacturing overhead is a term used to describe all manufacturing costs other than direct materials and direct labor.

Accepted Answer

A) True 
 B)False

Question 20

You are to summarize the "flow" of manufacturing costs through the ledger accounts of Berman Mfg. Co. for the month of June. Complete the following T accounts by entering summary amounts for the month in each of the blank spaces provided (lettered a through j). In addition to the amounts already shown in the T accounts, the following information is available:

Accepted Answer

(a) $58,000
(b) $51,000
(c) $2

Exam 16: Management Accounting: a Business Partner

Indicate which of the following statements are more descriptive of managerial accounting than of financial accounting.

Amounts credited to the Work in Process inventory account may best be described as:

Which of the following is not a period cost?

In a manufacturing company, the costs debited to the Work in Process Inventory account represent:

Which of the following should not be classified as a manufacturing cost?

Which of the following is a period cost?

Manufacturing overhead is best described as:

The cost of finished goods manufactured in August is:

Direct labor costs are debited and is credited when the direct labor employees contribute to the production process.

In a manufacturing company, the cost of goods sold is equal to:

Direct materials used, direct labor, and manufacturing overhead are included among the expenses listed in the income statement of a manufacturing company.

When products are completed:

Manufacturing overhead is a term used to describe all manufacturing costs other than direct materials and direct labor.

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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