Question 1

Indirect materials are accounted for as factory overhead because they are not easily traced to specific units or batches of production.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following statements is regarding product and period costs?

Accepted Answer

A)  Office salaries expense is a product cost and factory maintenance is a period cost. 
B)  Office rent is a product cost and supervisors' salaries expense is a period cost. 
C)  Factory rent is a product cost and advertising expense is a period cost. 
D)  Delivery expense is a product cost and indirect materials is a period cost. 
E)  Sales commissions is a product cost and indirect labor is a period cost. 
A)  Office salaries expense is a product cost and factory maintenance is a period cost. 
B)  Office rent is a product cost and supervisors' salaries expense is a period cost. 
C)  Factory rent is a product cost and advertising expense is a period cost. 
D)  Delivery expense is a product cost and indirect materials is a period cost. 
E)  Sales commissions is a product cost and indirect labor is a period cost.

Question 3

A financial report that summarizes the amounts and types of costs that were incurred in the manufacturing process during the period is a:

Accepted Answer

A)  Materiality statement. 
B)  Managerial statement. 
C)  Manufacturing statement. 
D)  Merchandise statement. 
E)  Monetary statement. 
A)  Materiality statement. 
B)  Managerial statement. 
C)  Manufacturing statement. 
D)  Merchandise statement. 
E)  Monetary statement.

Question 4

Direct costs are incurred for the benefit of more than one cost object.

Accepted Answer

A) True 
 B)False

Question 5

An employee is dissatisfied with the resolution of an ethical conflict at his place of employment. According to the Institute of Management Accountants, the employee's next step should be to

Accepted Answer

A)  contact the IMA. 
B)  contact the next level of management who is not involved in the ethical conflict. 
C)  make the president of the company aware of the ethical conflict. 
D)  report the incident to the State Board of Accountancy. 
E)  resign from the company. 
A)  contact the IMA. 
B)  contact the next level of management who is not involved in the ethical conflict. 
C)  make the president of the company aware of the ethical conflict. 
D)  report the incident to the State Board of Accountancy. 
E)  resign from the company.

Question 6

Period costs are incurred by purchasing merchandise or manufacturing finished goods.

Accepted Answer

A) True 
 B)False

Question 7

Total quality management and just-in-time manufacturing are two modern systems designed to improve the quality of management and the products and services offered.

Accepted Answer

A) True 
 B)False

Question 8

Indirect labor refers to the cost of the workers whose efforts are directly traceable to specific units or batches of product.

Accepted Answer

A) True 
 B)False

Question 9

The Goods in Process Inventory account is found only in the ledgers of merchandising companies.

Accepted Answer

A) True 
 B)False

Question 10

Information for York Plastics as of December 31 follows. Prepare (a) the company's manufacturing statement for the year ended December 31; (b) prepare the company's income statement that reports separate categories for selling and general and administrative expenses.

Accepted Answer

The answer of Information for York Plastics as of December...

Question 11

An opportunity cost requires a future cash outlay and is relevant for decision making.

Accepted Answer

A) True 
 B)False

Question 12

A ___________________ cost has already been incurred and cannot be avoided or changed, so it irrelevant to decision making.

Accepted Answer

The answer of A ___________________ cost has already been incurred...

Question 13

Using the information below for Talking Toys, Inc., determine cost of goods manufactured for the year:

Accepted Answer

A)  $13,000. 
B)  $44,500. 
C)  $57,500. 
D)  $94,500. 
E)  $52,000. 
A)  $13,000. 
B)  $44,500. 
C)  $57,500. 
D)  $94,500. 
E)  $52,000.

Question 14

____________________ inventory consists of completed products ready for sale by a manufacturer.

Accepted Answer

The answer of ____________________ inventory consists of completed products ready...

Question 15

Which of the following accounts would all appear on a manufacturing statement?

Accepted Answer

A)  Raw materials, factory insurance expired, indirect labor. 
B)  Raw materials, goods in process, finished goods. 
C)  Factory buildings, delivery equipment, and depreciation on factory equipment. 
D)  Direct labor, indirect labor, sales salaries. 
E)  Direct labor, factory repairs and maintenance, wages payable. 
A)  Raw materials, factory insurance expired, indirect labor. 
B)  Raw materials, goods in process, finished goods. 
C)  Factory buildings, delivery equipment, and depreciation on factory equipment. 
D)  Direct labor, indirect labor, sales salaries. 
E)  Direct labor, factory repairs and maintenance, wages payable.

Question 16

Define and contrast period costs and product costs. How are they reported in the financial statements of a manufacturing company?

Accepted Answer

Period costs are the costs that are char

Question 17

The following costs are incurred by Estes Manufacturing Co. Classify each cost item as either a period cost or a product cost. If the cost is a product cost, identify it as a prime and/or conversion cost.

Accepted Answer

The answer of The following costs are incurred by Estes...

Question 18

Benny, an employee of Parrott Company, used company assets for his own personal gain. This is an example of

Accepted Answer

A)  embezzlement. 
B)  fraud. 
C)  internal control. 
D)  ethics. 
E)  employment perks. 
A)  embezzlement. 
B)  fraud. 
C)  internal control. 
D)  ethics. 
E)  employment perks.

Question 19

Which of the following costs is not included in factory overhead?

Accepted Answer

A)  Payroll taxes on the wages of supervisory factory workers. 
B)  Indirect labor. 
C)  Depreciation of manufacturing equipment. 
D)  Manufacturing supplies used. 
E)  Direct materials. 
A)  Payroll taxes on the wages of supervisory factory workers. 
B)  Indirect labor. 
C)  Depreciation of manufacturing equipment. 
D)  Manufacturing supplies used. 
E)  Direct materials.

Question 20

Which of the following statements is correct concerning the elements of cycle time?

Accepted Answer

A)  Move time is the time spent moving (1) raw materials from storage to production and (2) goods in process from factory location to another factory location. 
B)  Inspection time is the time spent producing the product. 
C)  Process time is considered non-value-added time. 
D)  Wait time is considered value-added time. 
E)  Cycle efficiency is the ratio of non-value-added time to total cycle time. 
A)  Move time is the time spent moving (1) raw materials from storage to production and (2) goods in process from factory location to another factory location. 
B)  Inspection time is the time spent producing the product. 
C)  Process time is considered non-value-added time. 
D)  Wait time is considered value-added time. 
E)  Cycle efficiency is the ratio of non-value-added time to total cycle time.

Exam 18: Managerial Accounting Concepts and Principles

Indirect materials are accounted for as factory overhead because they are not easily traced to specific units or batches of production.

Which of the following statements is regarding product and period costs?

A financial report that summarizes the amounts and types of costs that were incurred in the manufacturing process during the period is a:

Direct costs are incurred for the benefit of more than one cost object.

An employee is dissatisfied with the resolution of an ethical conflict at his place of employment. According to the Institute of Management Accountants, the employee's next step should be to

Period costs are incurred by purchasing merchandise or manufacturing finished goods.

Total quality management and just-in-time manufacturing are two modern systems designed to improve the quality of management and the products and services offered.

Indirect labor refers to the cost of the workers whose efforts are directly traceable to specific units or batches of product.

The Goods in Process Inventory account is found only in the ledgers of merchandising companies.

Information for York Plastics as of December 31 follows. Prepare (a) the company's manufacturing statement for the year ended December 31; (b) prepare the company's income statement that reports separate categories for selling and general and administrative expenses.

An opportunity cost requires a future cash outlay and is relevant for decision making.

A ___________________ cost has already been incurred and cannot be avoided or changed, so it irrelevant to decision making.

Using the information below for Talking Toys, Inc., determine cost of goods manufactured for the year:

____________________ inventory consists of completed products ready for sale by a manufacturer.

Which of the following accounts would all appear on a manufacturing statement?

Define and contrast period costs and product costs. How are they reported in the financial statements of a manufacturing company?

The following costs are incurred by Estes Manufacturing Co. Classify each cost item as either a period cost or a product cost. If the cost is a product cost, identify it as a prime and/or conversion cost.

Benny, an employee of Parrott Company, used company assets for his own personal gain. This is an example of

Which of the following costs is not included in factory overhead?

Which of the following statements is correct concerning the elements of cycle time?

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories and Cost of Sales

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Long-Term Assets

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments and International Operations

Statement of Cash Flows

Analysis of Financial Statements

Job Order Cost Accounting

Process Cost Accounting

Cost Allocation and Performance Measurement

Cost-Volume-Profit Analysis

Master Budgets and Planning

Flexible Budgets and Standard Costs

Capital Budgeting and Managerial Decisions

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