Question 1

The cost of finished goods manufactured will exceed the cost of goods sold whenever:

Accepted Answer

A) The inventory of finished goods increases over the period. 
B) The inventory of work in process increases over the period. 
C) The inventory of finished goods decreases over the period. 
D) The inventory of work in process decreases over the period. 
A) The inventory of finished goods increases over the period. 
B) The inventory of work in process increases over the period. 
C) The inventory of finished goods decreases over the period. 
D) The inventory of work in process decreases over the period.

Question 2

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.

Question 3

Product costs are offset against revenue in the period in which the related products are manufactured,rather than the period in which the products are sold.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following is a period cost?

Accepted Answer

A) Depreciation on a factory building 
B) The cost of direct materials used 
C) Depreciation on a sales showroom 
D) The cost of disposing of hazardous waste materials from factory operations 
A) Depreciation on a factory building 
B) The cost of direct materials used 
C) Depreciation on a sales showroom 
D) The cost of disposing of hazardous waste materials from factory operations

Question 5

[The following information applies to the questions displayed below.]
The following information has been taken from the perpetual inventory system of Imperial Mfg.Co.for the month ended September 30:
    
-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;and
Maintenance of factory machinery $2,000.
Alton Company's total product costs:

Accepted Answer

A) $175,000. 
B) $30,750. 
C) $205,750. 
D) $28,750. 
A) $175,000. 
B) $30,750. 
C) $205,750. 
D) $28,750.

Question 6

Product cost versus period cost
Briefly define the terms product cost and period cost.Explain why the distinction between these two types of costs is important.

Accepted Answer

Product costs are the costs of purchasin

Question 7

A product cost is deducted from revenue in the period in which:

Accepted Answer

A) The related finished goods are sold. 
B) The expenditure is made. 
C) The production of the product begins. 
D) The production process is completed. 
A) The related finished goods are sold. 
B) The expenditure is made. 
C) The production of the product begins. 
D) The production process is completed.

Question 8

Manufacturing companies normally have three types of inventory:

Accepted Answer

A) Direct materials,direct labor,and manufacturing overhead. 
B) Raw materials,work in process,and finished goods. 
C) Work in process,finished goods,and returned merchandise. 
D) Economy,standard,and deluxe. 
A) Direct materials,direct labor,and manufacturing overhead. 
B) Raw materials,work in process,and finished goods. 
C) Work in process,finished goods,and returned merchandise. 
D) Economy,standard,and deluxe.

Question 9

The cost of the employee who installs the leather on the seats of a new automobile would be considered:

Accepted Answer

A) Manufacturing overhead. 
B) Indirect labor. 
C) Direct material. 
D) Direct labor. 
A) Manufacturing overhead. 
B) Indirect labor. 
C) Direct material. 
D) Direct labor.

Question 10

When a manufacturing company purchases raw materials or component parts to be used in manufacturing finished goods,these costs are initially debited to:

Accepted Answer

A) Expense accounts. 
B) Raw Materials Inventory. 
C) Finished Goods Inventory. 
D) Manufacturing Overhead. 
A) Expense accounts. 
B) Raw Materials Inventory. 
C) Finished Goods Inventory. 
D) Manufacturing Overhead.

Question 11

The following information is available for the LBB Company for the year 2018:
   Required
(1)What are total manufacturing costs charged to work in process?
(2)What are costs of finished goods manufactured?
(3)What is the cost of goods sold?
(4)What is gross profit?
(5)What is operating income?

Accepted Answer

(1)$1,875

Question 12

[The following information applies to the questions displayed below.]
The following information has been taken from the perpetual inventory system of Elite Mfg.Co.for the month ended August 31:
    
-The total amount of inventory to be included in Elite's August 31st balance sheet amounts to:

Accepted Answer

A) $135,000. 
B) $210,000. 
C) $160,000. 
D) Some other amount. 
A) $135,000. 
B) $210,000. 
C) $160,000. 
D) Some other amount.

Question 13

When products held in inventory are sold:

Accepted Answer

A) Cost of Goods Sold is credited. 
B) Work in Process Inventory is credited. 
C) Finished Goods Inventory is credited. 
D) Finished Goods Inventory is debited. 
A) Cost of Goods Sold is credited. 
B) Work in Process Inventory is credited. 
C) Finished Goods Inventory is credited. 
D) Finished Goods Inventory is debited.

Question 14

Direct labor costs in a paint factory would include wages of employees who:

Accepted Answer

A) Supervise heavy equipment operators. 
B) Operate paint-mixing machines. 
C) Develop highly secret formulas for new products. 
D) Paint the interior of the factory every two years. 
A) Supervise heavy equipment operators. 
B) Operate paint-mixing machines. 
C) Develop highly secret formulas for new products. 
D) Paint the interior of the factory every two years.

Question 15

In a schedule of cost of finished goods manufactured,the figure for total manufacturing costs:

Accepted Answer

A) May be less than the cost of direct materials used. 
B) May be less than the direct labor costs assigned to production. 
C) May be less than the manufacturing overhead applied to production. 
D) May be less than the cost of finished goods manufactured. 
A) May be less than the cost of direct materials used. 
B) May be less than the direct labor costs assigned to production. 
C) May be less than the manufacturing overhead applied to production. 
D) May be less than the cost of finished goods manufactured.

Question 16

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 17

The following information is available about the August transactions of the Helpful Tool Company:   The product costs to be deducted from revenue in August amount to:

Accepted Answer

A) $493,000. 
B) $737,000. 
C) $718,000. 
D) $739,000. 
A) $493,000. 
B) $737,000. 
C) $718,000. 
D) $739,000.

Question 18

The following information is for the Choplin Company for 2018:
   Required:
(1)What is the cost of materials purchased?
(2)What is the cost of goods sold?
(3)What is gross profit?
(4)What is net profit?

Accepted Answer

(1)$1,240

Question 19

Manufacturing overhead is best described as:

Accepted Answer

A) All manufacturing costs other than direct materials and direct labor. 
B) All period costs associated with manufacturing operations. 
C) Indirect materials and indirect labor. 
D) All operating expenses other than selling expenses and general and administrative expenses. 
A) All manufacturing costs other than direct materials and direct labor. 
B) All period costs associated with manufacturing operations. 
C) Indirect materials and indirect labor. 
D) All operating expenses other than selling expenses and general and administrative expenses.

Question 20

If the end of the fiscal year is not a payroll date,the Direct Labor account normally has:

Accepted Answer

A) A debit balance,representing prepaid labor costs. 
B) A credit balance,representing accrued wages payable. 
C) Either a debit or a credit balance,depending upon whether the end of the fiscal year falls before or after the end of the pay period. 
D) A zero balance,because the Direct Labor account is closed along with the other expense accounts. 
A) A debit balance,representing prepaid labor costs. 
B) A credit balance,representing accrued wages payable. 
C) Either a debit or a credit balance,depending upon whether the end of the fiscal year falls before or after the end of the pay period. 
D) A zero balance,because the Direct Labor account is closed along with the other expense accounts.

Exam 16: Management Accounting

The cost of finished goods manufactured will exceed the cost of goods sold whenever:

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

Product costs are offset against revenue in the period in which the related products are manufactured,rather than the period in which the products are sold.

Which of the following is a period cost?

Product cost versus period cost Briefly define the terms product cost and period cost.Explain why the distinction between these two types of costs is important.

A product cost is deducted from revenue in the period in which:

Manufacturing companies normally have three types of inventory:

The cost of the employee who installs the leather on the seats of a new automobile would be considered:

When a manufacturing company purchases raw materials or component parts to be used in manufacturing finished goods,these costs are initially debited to:

The following information is available for the LBB Company for the year 2018: Required (1)What are total manufacturing costs charged to work in process? (2)What are costs of finished goods manufactured? (3)What is the cost of goods sold? (4)What is gross profit? (5)What is operating income?

[The following information applies to the questions displayed below.] The following information has been taken from the perpetual inventory system of Elite Mfg.Co.for the month ended August 31: -The total amount of inventory to be included in Elite's August 31st balance sheet amounts to:

When products held in inventory are sold:

Direct labor costs in a paint factory would include wages of employees who:

In a schedule of cost of finished goods manufactured,the figure for total manufacturing costs:

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 following information is available about the August transactions of the Helpful Tool Company: The product costs to be deducted from revenue in August amount to:

The following information is for the Choplin Company for 2018: Required: (1)What is the cost of materials purchased? (2)What is the cost of goods sold? (3)What is gross profit? (4)What is net profit?

Manufacturing overhead is best described as:

If the end of the fiscal year is not a payroll date,the Direct Labor account normally has:

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

the Time Value of Money: Future Amounts and Present Values

Forms of Business Organization

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