Exam 1: Management Accounting and Corporate Governance

According to the Sarbanes-Oxley Act, a company's audit committee is responsible for its system of internal controls.

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

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

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: 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: Direct material costs \ 80,000 Direct labor costs 100,000 Overhead costs 40,000 Selling and administrative costs 60,000 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

The benefits of a just-in-time system would include all of the following except:

Which of the following best represents a characteristic of managerial accounting?

How does the level of aggregation differ between financial accounting information and managerial accounting information?

During its first year of operations, a company that incurred $1,000 in production costs reported cost of goods sold of $800 and selling costs of $100. Its ending finished goods inventory was $300.

Which of the following is not classified as manufacturing overhead?

Identify the false statement regarding how product costs in a manufacturing company differ from product costs in a service or merchandising company.

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

Which of the following transactions would cause net income for the period to decrease?

Does the term "cost" mean the same thing as the term "expense?" Explain your answer.

Steuben Company produces dog houses. During the current year, Steuben Company incurred the following costs: Based on the above information, the amount of period costs shown on Steuben's income statement is: Rent on manufacturing facility \ 250,000 Office manager's salary 150,000 Wages of factory machine operators 110,000 Depreciation on manufacturing equipment 50,000 Insurance and taxes on selling and administrative offices 30,000 Direct materials purchased and used 170,000

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

During her first year with the company, Ann mistakenly accumulated some of the company's period costs in ending inventory. Which of the following indicates how this error affects the company's financial statements assuming number of units produced exceeded number of units sold during the period?

The objective of a just-in-time inventory system is to totally eliminate all inventories.

Randall Company manufactures chocolate bars. The following were among Randall's manufacturing costs during the current year: Randall's direct materials amounted to: Wages Machine operators \ 300,000 Selling and administrative personnel \ 75,000 Materials used Lubricant for oiling machinery \ 25,000 Cocoa, sugar, and other raw materials \ 225,000 Packaging materials \ 190,000

Select the incorrect statement regarding service companies.

Which of the following costs should be recorded as an expense?