Question 1

Supervisor salaries,equipment repairs,depreciation of machinery,and indirect materials are all examples of manufacturing overhead.

Accepted Answer

A) True 
 B)False

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.

Question 3

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 4

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 direct 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 5

Indicate whether each of the following is a product cost or a period cost:
(a)Electricity for lighting a factory building.
(b)Costs of delivering finished bicycles to dealers.
(c)Cost of a store detective in a retail establishment.
(d)Cost of eggs in a bakery.
(e)Cost of chocolate to a candy manufacturer.
(f)Salary of injection molding machine operator in a plastics factory.
(g)Salary of a sewing machine operator in a clothing factory.
(h)Depreciation of a freezer in an ice cream plant.

Accepted Answer

(a)Product (b)Period

Question 6

Depreciation on a manufacturing facility is considered a period cost whereas depreciation on a warehouse used to store finished goods is considered a product cost.

Accepted Answer

A) True 
 B)False

Question 7

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 8

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:   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)M

Question 9

When direct labor employees contribute to the production process,the cost of their labor is recorded by debiting:

Accepted Answer

A) Wages Expense. 
B) Direct Labor. 
C) Work in Process Inventory. 
D) Manufacturing Overhead. 
A) Wages Expense. 
B) Direct Labor. 
C) Work in Process Inventory. 
D) Manufacturing Overhead.

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

The placing of direct materials into the production process is recorded by an entry crediting:

Accepted Answer

A) Materials Expense. 
B) Raw Materials Inventory. 
C) Work in Process Inventory. 
D) Finished Goods Inventory. 
A) Materials Expense. 
B) Raw Materials Inventory. 
C) Work in Process Inventory. 
D) Finished Goods Inventory.

Question 12

The wages paid to employees working directly on a company's products would be shown as a:

Accepted Answer

A) Credit to Direct Labor. 
B) Debit to Direct Labor. 
C) Credit to Work in Process. 
D) Debit to Manufacturing Overhead. 
A) Credit to Direct Labor. 
B) Debit to Direct Labor. 
C) Credit to Work in Process. 
D) Debit to Manufacturing Overhead.

Question 13

Herb Company manufactured more product than it was able to sell during the current year.If the salaries of the sales staff of Herb Company are improperly recorded as a product cost,what will be the likely effect on net income of the period in which the error occurs?

Accepted Answer

A) Net income will be overstated. 
B) Net income will be understated. 
C) Net income will be unaffected. 
D) Net income will be understated only if inventory levels rise. 
A) Net income will be overstated. 
B) Net income will be understated. 
C) Net income will be unaffected. 
D) Net income will be understated only if inventory levels rise.

Question 14

The payment of wages to factory employees who work directly on the goods being manufactured is recorded by an entry crediting:

Accepted Answer

A) Wages Expense. 
B) Direct Labor. 
C) Work in Process Inventory. 
D) Cash. 
A) Wages Expense. 
B) Direct Labor. 
C) Work in Process Inventory. 
D) Cash.

Question 15

Which of the following is not one of the three types of inventories of a manufacturing company?

Accepted Answer

A) Raw materials inventory. 
B) Work in process inventory. 
C) Product inventory. 
D) Finished goods inventory. 
A) Raw materials inventory. 
B) Work in process inventory. 
C) Product inventory. 
D) Finished goods inventory.

Question 16

Manufacturing costs do not include:

Accepted Answer

A) Direct labor applicable to production within the period. 
B) Selling expenses related to goods manufactured during the period. 
C) Direct materials used during the period. 
D) Manufacturing overhead charged to work in process during the period. 
A) Direct labor applicable to production within the period. 
B) Selling expenses related to goods manufactured during the period. 
C) Direct materials used during the period. 
D) Manufacturing overhead charged to work in process during the period.

Question 17

Management accounting reports may provide sufficient means of monitoring,evaluating and rewarding performance.

Accepted Answer

A) True 
 B)False

Question 18

Finished goods is comprised of direct materials purchased,direct labor,and manufacturing overhead.

Accepted Answer

A) True 
 B)False

Question 19

Which of the following is a period cost?

Accepted Answer

A) Direct materials used. 
B) Direct labor costs applicable to production. 
C) Manufacturing overhead. 
D) Advertising expense. 
A) Direct materials used. 
B) Direct labor costs applicable to production. 
C) Manufacturing overhead. 
D) Advertising expense.

Question 20

Since manufacturing costs (direct materials,direct labor,and overhead)are incurred in the process of manufacturing units of product,these costs are credited to:

Accepted Answer

A) The Direct Materials Inventory,Direct Labor,and Manufacturing Overhead accounts respectively. 
B) Liability accounts. 
C) The Work in Process Inventory account. 
D) The Cost of Goods Sold account. 
A) The Direct Materials Inventory,Direct Labor,and Manufacturing Overhead accounts respectively. 
B) Liability accounts. 
C) The Work in Process Inventory account. 
D) The Cost of Goods Sold account.

Exam 16: Management Accounting: a Business Partner

Supervisor salaries,equipment repairs,depreciation of machinery,and indirect materials are all examples of manufacturing overhead.

Which of the following is not a product cost?

Depreciation on a manufacturing facility is considered a period cost whereas depreciation on a warehouse used to store finished goods is considered a product cost.

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

When direct labor employees contribute to the production process,the cost of their labor is recorded by debiting:

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

The placing of direct materials into the production process is recorded by an entry crediting:

The wages paid to employees working directly on a company's products would be shown as a:

Herb Company manufactured more product than it was able to sell during the current year.If the salaries of the sales staff of Herb Company are improperly recorded as a product cost,what will be the likely effect on net income of the period in which the error occurs?

The payment of wages to factory employees who work directly on the goods being manufactured is recorded by an entry crediting:

Which of the following is not one of the three types of inventories of a manufacturing company?

Manufacturing costs do not include:

Management accounting reports may provide sufficient means of monitoring,evaluating and rewarding performance.

Finished goods is comprised of direct materials purchased,direct labor,and manufacturing overhead.

Which of the following is a period cost?

Since manufacturing costs (direct materials,direct labor,and overhead)are incurred in the process of manufacturing units of product,these costs are credited to:

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

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