Exam 1: Management Accounting and Corporate Governance

Jarvis Company provided the following information regarding its first year of operations: Required: Determine the following amounts: (a) Total overhead costs.(b) Total product costs.(c) Product cost per unit.(d) Total cost of ending finished goods inventory.(e) Total cost of goods sold. Administrative salaries \ 60,000 Depreciation on factory equipment 16,000 Indirect materials 4,000 Marketing costs 40,000 Salaries for factory supervisors 28,000 Wages for production workers 80,000 Raw materials used 100,000 Research and development 32,000 Rent on factory building 18,000 Sales revenues 432,000 Sales salaries and other selling costs 56,000 Beginning inventory 0 units Number of units produced 20,000 Number of units sold 18,000

Assuming a company's inventory increased during the period, which of the following misclassifications may increase net income?

The Sarbanes Oxley Act of 2002:

As a Certified Management Accountant, Suzanne is bound by the standards of ethical conduct issued by the Institute of Management Accountants. During the course of business, Suzanne learned that her company has decided to discontinue a major product line. If she mentions this fact to her brother, who is a stockbroker, Suzanne could be in violation of the:

Which of the following statements concerning manufacturing costs is incorrect?

Select the term from the list provided that best matches each of the following descriptions. The first is done for you. Answer Description List of terms 4 A. An inventory flow system that minimizes the amount of inventory on hand 1 . Continuous improvement B. The organization established by the accounting profession to develop accounting standards 2. Cost of goods sold C. The area of accounting designed to meet information needs of internal users 3. Financial Accounting Standards Board D. The government agency authorized to establish and regulate public company reporting practices 4. Just in time E. Assessing the value chain to create new value-added activities 5. Managenal accounting F. Tasks that do not contribute to a product's abulity to satisfy customer needs 6 . Nonvalue-added activities G. Costs incurred before the manufacturing process begins 7 . Re-enganeening H. The process of changing an or garization's production and delivery systems to make the organization more competitive . Upstream costs I. The ongoung process through whach employees become more effective and leam to work more efficiently 9. Secunties and Exchange Commission f. The term used for the amount of product costs expensed in the current period 10. Activity-based management

Which of the following is a product cost for a construction company?

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: Based on the above information, which of the following would not be treated as a product cost: 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

Arizona Company provided the following information regarding its most recent year of operations: Required: Determine the following amounts: (a) Total product costs (b) Total upstream costs (c) Total downstream costs (d) Product cost per unit (e) Total cost per unit, including product costs and upstream and downstream costs (f) The selling price per unit that would be required if the company wishes to earn a profit margin equal to 25% of total cost (g) Comment on the company's profitability at its current selling price Administrative salaries \ 24,000 Direct labor 48,000 Direct raw material 80,000 Marketing and distribution costs 60,000 Overhead costs 36,000 Product design and testing 30,000 Research and development 40,000 Sales revenues 410,000 Sales salaries and commissions 54,000 Warranty costs 4,000 Number of units produced 20,000 Number of units sold 20,000

Manufacturing costs that cannot be traced to specific units of product in a cost-effective manner include:

Complete the following table to compare and contrast financial and managerial accounting. Characteristic Financial Accounting Managerial Accornting Users Level of aggregation Regulation Characteristics of information Time horizon Reporting frequency

For a manufacturing company, both direct labor costs and indirect labor costs are classified as product costs.

Misclassifying a product cost as a period cost will usually cause the income statement to be incorrect, but the balance sheet will not be affected.

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?

Management accountants have a responsibility to demonstrate integrity. What does this ethical standard require of management accountants?

A merchandising business paid $2,500 to purchase inventory and $50 to have the inventory delivered to its customers. Its product costs were $2,550.

Which of the following items would be reported directly on the income statement as a period cost?

Choose the answer that is not a distinguishing characteristic of financial accounting information.

Because management accountants prepare and analyze financial information used by company decision-makers, they are considered to be at the forefront of corporate governance.