Question 1

The cost of direct materials flow through all of the following accounts except:

Accepted Answer

A) Manufacturing Overhead. 
B) Work in Process Inventory. 
C) Finished Goods Inventory. 
D) Cost of Goods Sold. 
A) Manufacturing Overhead. 
B) Work in Process Inventory. 
C) Finished Goods Inventory. 
D) Cost of Goods Sold.

Question 2

Cost of goods sold must be determined prior to computing cost of goods manufactured.

Accepted Answer

A) True 
 B)False

Question 3

Product costs are reported on the income statement above gross margin.

Accepted Answer

A) True 
 B)False

Question 4

Lake Manufacturing estimated its product costs and production volume for the upcoming year by quarter as follows:
The company expects a significant increase in volume in the fourth quarter due to holiday sales. The company does not expect overhead costs, which are predominately fixed, to vary with production volume or to vary significantly from previous years. Selling prices are established using a cost plus pricing strategy where cost is the product's estimated quarterly cost. However, the company finds the wide variations in short-term unit cost difficult to use. Specifically, unit cost fluctuations complicate pricing decisions and many other decisions where cost is a consideration.Required:
1) Compute the company's expected cost per unit for each quarter of the year.2) How would you suggest that overhead costs be estimated to solve the company's unit cost problem? Calculate the unit cost per quarter based on your recommendation.

Accepted Answer

Answers will vary
1) Expected quarterly

Question 5

Oakland Company paid $200 cash for various manufacturing overhead costs, not before recorded. How does this transaction affect the financial statements? $$\begin{array} { | l | l | l | l | l | l | l | l | l | l |  } 
\hline  { \text { Assets } } & = & \text { Liab. } & + & \text { Equity } & \text { Rev. } & - & \text { Exp. } & = & \text { Net Inc. } \
\hline \text { Cash } & + & \text { Mfg. } \mathrm { OH } & & & & & & &  \
\hline
\end{array}$$

Accepted Answer

A)  $$\begin{array} { | l | l | l | l | l | l | l | l | l | l | l | l | } 
\hline ( 200 ) & + & 200 & = & \text { NA } & + & \text { NA } & \text { NA } & - & \text { NA } & = & \text { NA } \
\hline
\end{array}$$ 
B)  $$\begin{array} { | l | l | l | l | l | l | l | l | l | l | l | l | } 
\hline ( 200 ) & + &  \text { NA }& = &200 & + & \text { NA } & \text { NA } & - & \text { NA } & = & \text { NA } \
\hline
\end{array}$$ 
C)  $$\begin{array} { | l | l | l | l | l | l | l | l | l | l | l | l | } 
\hline ( 200 ) & + & \text { NA } & = & \text { NA } & + & ( 200 ) & \text { NA } & - & 200 & = & ( 200 ) \
\hline
\end{array}$$ 
D)  $\begin{array}{|l|l|l|l|l|l|l|l|l|l|l|l|}
\hline(200) & + & (200) & = & \text { NA } & + & \text { NA } & \text { NA } & - & \text { NA } & = & \text { NA } \
\hline
\end{array}$ 
A)  $$\begin{array} { | l | l | l | l | l | l | l | l | l | l | l | l | } 
\hline ( 200 ) & + & 200 & = & \text { NA } & + & \text { NA } & \text { NA } & - & \text { NA } & = & \text { NA } \
\hline
\end{array}$$ 
B)  $$\begin{array} { | l | l | l | l | l | l | l | l | l | l | l | l | } 
\hline ( 200 ) & + &  \text { NA }& = &200 & + & \text { NA } & \text { NA } & - & \text { NA } & = & \text { NA } \
\hline
\end{array}$$ 
C)  $$\begin{array} { | l | l | l | l | l | l | l | l | l | l | l | l | } 
\hline ( 200 ) & + & \text { NA } & = & \text { NA } & + & ( 200 ) & \text { NA } & - & 200 & = & ( 200 ) \
\hline
\end{array}$$ 
D)  $\begin{array}{|l|l|l|l|l|l|l|l|l|l|l|l|}
\hline(200) & + & (200) & = & \text { NA } & + & \text { NA } & \text { NA } & - & \text { NA } & = & \text { NA } \
\hline
\end{array}$

Question 6

Guest Corporation estimated that total overhead cost would be $23,000 for the current year, but actual overhead costs were $25,500; as a result, Guest spent $2,500 more than expected for overhead cost. This type of variance is known as a(n):

Accepted Answer

A) material variance. 
B) activity variance. 
C) volume variance. 
D) spending variance. 
A) material variance. 
B) activity variance. 
C) volume variance. 
D) spending variance.

Question 7

Company X manufactures 3-ring notebooks. All of the following are considered indirect costs except:

Accepted Answer

A) cardboard used in production of the notebooks. 
B) depreciation on manufacturing equipment. 
C) factory utilities. 
D) salaries for production supervisors. 
A) cardboard used in production of the notebooks. 
B) depreciation on manufacturing equipment. 
C) factory utilities. 
D) salaries for production supervisors.

Question 8

Purchasing production supplies for cash is a(n):

Accepted Answer

A) asset source transaction. 
B) asset exchange transaction. 
C) asset use transaction. 
D) claims exchange transaction. 
A) asset source transaction. 
B) asset exchange transaction. 
C) asset use transaction. 
D) claims exchange transaction.

Question 9

For a manufacturing business, cost of indirect materials is first recorded in the:

Accepted Answer

A) Raw Materials Inventory account. 
B) Supplies Inventory account. 
C) Work In Process Inventory account. 
D) Manufacturing Overhead account. 
A) Raw Materials Inventory account. 
B) Supplies Inventory account. 
C) Work In Process Inventory account. 
D) Manufacturing Overhead account.

Question 10

Describe the basic differences between absorption and variable costing. Why are managers sometimes motivated to produce too much inventory when income is computed under an absorption costing system?

Accepted Answer

Answers will vary
Absorption costing is

Question 11

Orlando Company paid $700 cash for production workers' wages. How does this transaction affect the financial statements? $\begin{array}{|l|c|c|c|c|c|c|c|c|c|c|c|}
\hline &{\text { Assets }} && = & \text { Liab. } & + & \text { Equity } & \text { Rev. } & - & \text { Exp. } & = & \text { Net Inc. } \
\hline \text { Cash } & + & \text { WIP Inv. } & & & & & & & & & \
\hline
\end{array}$

Accepted Answer

A)  $\begin{array}{|l|l|l|l|l|l|l|l|l|l|l|l|}
\hline(700) & + & 700 & = & \text { NA } & + & \text { NA } & \text { NA } & - & \text { NA } & = & \text { NA } \
\hline
\end{array}$ 
B)  $\begin{array}{|l|l|l|l|l|l|l|l|l|l|l|l|}
\hline(700) & + & \text { NA } & = & \text { (700) } & + & \text { NA } & \text { NA } & - & \text { NA } & = & \text { NA } \
\hline
\end{array}$ 
C)  $\begin{array}{|l|l|l|l|l|l|l|l|l|l|l|l|}
\hline(700) & + & \text { NA } & = & \text { NA } & + & (700) & \text { NA } & - & 700 & = & \text { (700) } \
\hline
\end{array}$ 
D)  $\begin{array}{|l|l|l|l|l|l|l|l|l|l|l|l|}
\hline \text { NA } & + & 700 & = & 700 & + & \text { NA } & \text { NA } & - & \text { NA } & = & \text { NA } \
\hline
\end{array}$ 
A)  $\begin{array}{|l|l|l|l|l|l|l|l|l|l|l|l|}
\hline(700) & + & 700 & = & \text { NA } & + & \text { NA } & \text { NA } & - & \text { NA } & = & \text { NA } \
\hline
\end{array}$ 
B)  $\begin{array}{|l|l|l|l|l|l|l|l|l|l|l|l|}
\hline(700) & + & \text { NA } & = & \text { (700) } & + & \text { NA } & \text { NA } & - & \text { NA } & = & \text { NA } \
\hline
\end{array}$ 
C)  $\begin{array}{|l|l|l|l|l|l|l|l|l|l|l|l|}
\hline(700) & + & \text { NA } & = & \text { NA } & + & (700) & \text { NA } & - & 700 & = & \text { (700) } \
\hline
\end{array}$ 
D)  $\begin{array}{|l|l|l|l|l|l|l|l|l|l|l|l|}
\hline \text { NA } & + & 700 & = & 700 & + & \text { NA } & \text { NA } & - & \text { NA } & = & \text { NA } \
\hline
\end{array}$

Question 12

Describe the conflict between the need for cost information to make managerial decisions and the timing of the availability of actual cost data. How do companies resolve this conflict?

Accepted Answer

Answers will vary
There are two kinds of

Question 13

Applied overhead costs are recorded as decreases in the manufacturing overhead account.

Accepted Answer

A) True 
 B)False

Question 14

Describe the schedule of cost of goods manufactured and sold. What information does it include, and how is it used?

Accepted Answer

Answers will vary
The schedule of cost o

Question 15

The accounting records for Moss Manufacturing Company included the following cost information relating to its first year of operations: Assume the company produced 10,000 units of inventory and sold 6,000 of these units for $196,000. What amount of finished goods will be reported on the balance sheet at the end of the year under variable costing?
$$\begin{array} { | l | c r | } 
\hline \text { Direct materials } & \$ & 60,000 \
\hline \text { Direct labor } & \$ & 80,000 \
\hline \text { Fixed manufacturing overhead } & \$ & 100,000 \
\hline \text { Variable manufacturing overhead } & \$ & 20,000 \
\hline
\end{array}$$

Accepted Answer

A) $100,000 
B) $96,000 
C) $64,000 
D) None of these. 
A) $100,000 
B) $96,000 
C) $64,000 
D) None of these.

Question 16

Herald Company paid $2,800 cash for production supplies. The recognition of this event will:

Accepted Answer

A) not impact total assets. 
B) increase expenses. 
C) decrease equity. 
D) None of these. 
A) not impact total assets. 
B) increase expenses. 
C) decrease equity. 
D) None of these.

Question 17

Recording depreciation on manufacturing equipment will:

Accepted Answer

A) decrease total assets, total equity, and net income. 
B) not affect total assets or net income. 
C) decrease total assets, decrease net income, and increase total equity. 
D) not affect total assets, and decrease net income. 
A) decrease total assets, total equity, and net income. 
B) not affect total assets or net income. 
C) decrease total assets, decrease net income, and increase total equity. 
D) not affect total assets, and decrease net income.

Question 18

The work in process account is debited when production workers are paid.

Accepted Answer

A) True 
 B)False

Question 19

Ringgold Company had beginning finished goods of $36,000. During the period, the company produced goods that cost $150,000. If the ending balance in the Finished Goods Inventory account was $24,000, the amount of cost of goods sold was:

Accepted Answer

A) $162,000. 
B) $150,000. 
C) $138,000. 
D) none of these. 
A) $162,000. 
B) $150,000. 
C) $138,000. 
D) none of these.

Question 20

Cost of goods sold is equal to the cost of goods:

Accepted Answer

A) manufactured minus ending finished goods. 
B) available for sale minus beginning finished goods. 
C) available for sale minus ending finished goods. 
D) manufactured minus beginning finished goods. 
A) manufactured minus ending finished goods. 
B) available for sale minus beginning finished goods. 
C) available for sale minus ending finished goods. 
D) manufactured minus beginning finished goods.

The cost of direct materials flow through all of the following accounts except:

Cost of goods sold must be determined prior to computing cost of goods manufactured.

Product costs are reported on the income statement above gross margin.

Oakland Company paid $200 cash for various manufacturing overhead costs, not before recorded. How does this transaction affect the financial statements? Assets = Liab. + Equity Rev. - Exp. = Net Inc. Cash + Mfg.

Guest Corporation estimated that total overhead cost would be $23,000 for the current year, but actual overhead costs were $25,500; as a result, Guest spent $2,500 more than expected for overhead cost. This type of variance is known as a(n):

Company X manufactures 3-ring notebooks. All of the following are considered indirect costs except:

Purchasing production supplies for cash is a(n):

For a manufacturing business, cost of indirect materials is first recorded in the:

Describe the basic differences between absorption and variable costing. Why are managers sometimes motivated to produce too much inventory when income is computed under an absorption costing system?

Orlando Company paid $700 cash for production workers' wages. How does this transaction affect the financial statements? Assets = Liab. + Equity Rev. - Exp. = Net Inc. Cash + WIP Inv.

Describe the conflict between the need for cost information to make managerial decisions and the timing of the availability of actual cost data. How do companies resolve this conflict?

Applied overhead costs are recorded as decreases in the manufacturing overhead account.

Describe the schedule of cost of goods manufactured and sold. What information does it include, and how is it used?

Herald Company paid $2,800 cash for production supplies. The recognition of this event will:

Recording depreciation on manufacturing equipment will:

The work in process account is debited when production workers are paid.

Ringgold Company had beginning finished goods of $36,000. During the period, the company produced goods that cost $150,000. If the ending balance in the Finished Goods Inventory account was $24,000, the amount of cost of goods sold was:

Cost of goods sold is equal to the cost of goods:

Management Accounting and Corporate Governance

Cost Behavior, Operating Leverage, and Profitability Analysis

Analysis of Cost, Volume, and Pricing to Increase Profitability

Cost Accumulation, Tracing, and Allocation

Cost Management in an Automated Business Environment: Abc, Abm, and Tqm

Relevant Information for Special Decisions

Planning for Profit and Cost Control

Performance Evaluation

Responsibility Accounting

Planning for Capital Investments

Job-Order, Process, and Hybrid Costing Systems

Financial Statement Analysis

Statement of Cash Flows

Filters

Exam 11: Product Costing in Service and Manufacturing Entities

The cost of direct materials flow through all of the following accounts except:

Cost of goods sold must be determined prior to computing cost of goods manufactured.

Product costs are reported on the income statement above gross margin.

Oakland Company paid $200 cash for various manufacturing overhead costs, not before recorded. How does this transaction affect the financial statements? Assets = Liab. + Equity Rev. - Exp. = Net Inc. Cash + Mfg.

Guest Corporation estimated that total overhead cost would be $23,000 for the current year, but actual overhead costs were $25,500; as a result, Guest spent $2,500 more than expected for overhead cost. This type of variance is known as a(n):

Company X manufactures 3-ring notebooks. All of the following are considered indirect costs except:

Purchasing production supplies for cash is a(n):

For a manufacturing business, cost of indirect materials is first recorded in the:

Describe the basic differences between absorption and variable costing. Why are managers sometimes motivated to produce too much inventory when income is computed under an absorption costing system?

Orlando Company paid $700 cash for production workers' wages. How does this transaction affect the financial statements? Assets = Liab. + Equity Rev. - Exp. = Net Inc. Cash + WIP Inv.

Describe the conflict between the need for cost information to make managerial decisions and the timing of the availability of actual cost data. How do companies resolve this conflict?

Applied overhead costs are recorded as decreases in the manufacturing overhead account.

Describe the schedule of cost of goods manufactured and sold. What information does it include, and how is it used?

Herald Company paid $2,800 cash for production supplies. The recognition of this event will:

Recording depreciation on manufacturing equipment will:

The work in process account is debited when production workers are paid.

Ringgold Company had beginning finished goods of $36,000. During the period, the company produced goods that cost $150,000. If the ending balance in the Finished Goods Inventory account was $24,000, the amount of cost of goods sold was:

Cost of goods sold is equal to the cost of goods:

Management Accounting and Corporate Governance

Cost Behavior, Operating Leverage, and Profitability Analysis

Analysis of Cost, Volume, and Pricing to Increase Profitability

Cost Accumulation, Tracing, and Allocation

Cost Management in an Automated Business Environment: Abc, Abm, and Tqm

Relevant Information for Special Decisions

Planning for Profit and Cost Control

Performance Evaluation

Responsibility Accounting

Planning for Capital Investments

Job-Order, Process, and Hybrid Costing Systems

Financial Statement Analysis

Statement of Cash Flows

Filters