Question 1

Which of the following is a risk that would more likely be seen in a lean production and just-in-time (JIT) manufacturing environment than in a traditional production environment?

Accepted Answer

A)  Reduced customer satisfaction due to product quality. 
B)  Reduced raw material supply bringing the production process to a halt. 
C)  Increased inventory storage costs. 
D)  Increased production time resulting in lost sales.

Question 2

In the books of a manufacturing company, the journal entry to record raw materials used would include a:

Accepted Answer

A)  debit to finished goods. 
B)  debit to raw materials. 
C)  debit to work in process. 
D)  debit to cost of goods sold.

Question 3

Jasper Corporation Jasper Corporation incurred the following costs which includes salaries and wages in April:
 Refer to the Jasper Corporation information above. Total period costs are:

Accepted Answer

A)  $65,000 
B)  $60,000 
C)  $38,000 
D)  $70,000

Question 4

Creative Products Inc. incurred the following costs (in alphabetical order) during 2012 related to one of its products:
  During the year, 3,000 units were produced out of which 2,750 units were sold for $30 each.
Required:

Accepted Answer

The answer of Creative Products Inc. incurred the following costs...

Question 5

Which of the following decreases the work in process account?

Accepted Answer

A)  Transferring raw materials to work in process account. 
B)  Transferring cost of goods manufactured from work in process account. 
C)  Transferring cost of goods sold from work in process account. 
D)  Transferring raw materials from work in process account.

Question 6

Classify the following as either direct labor (DL), indirect labor (IL), or a period cost (P).

Accepted Answer

The answer of Classify the following as either direct labor...

Question 7

When the cost of a product is matched with its sales revenue, the result (difference) is called:

Accepted Answer

A)  net operating income. 
B)  gross margin. 
C)  cost of goods sold. 
D)  cost of goods manufactured.

Question 8

In 2011 Bradshaw Inc. incurred $40,000 of manufacturing overhead costs which will be paid for in 2012. Which of the following would be the correct journal entry to record this transaction?

Accepted Answer

A)  Cost of Goods Sold 40,000 Accounts Payable 40,000 
B)  Finished Goods Inventory 40,000 Accounts Payable 40,000 
C)  Overhead Expenses 40,000 Accounts Payable 40,000 
D)  Work in Process Inventory 40,000 Accounts Payable 40,000

Question 9

Michael's Manufacturing, Inc. Michael's Manufacturing, Inc. has the following information available for the month of July:
 Refer to the Michael's Manufacturing, Inc. information above. Cost of goods manufactured for July is:

Accepted Answer

A)  $183,000 
B)  $206,000 
C)  $263,000 
D)  $223,000

Question 10

Which of the following statements regarding the traditional manufacturing environment is not true?

Accepted Answer

A)  Machines are often put into "manufacturing cells" whereby dissimilar machines are grouped together. 
B)  Raw material is "pushed" to the next production area in anticipation of customer demand. 
C)  Manufacturers often have raw material, work in process, and finished goods inventory on hand. 
D)  Buffers of inventory may result in workers being less efficient.

Question 11

Which of the following is an example of a manufacturing overhead cost?

Accepted Answer

A)  Supplies used by administrative staff. 
B)  Supplies used by a salesperson. 
C)  Materials easily traced to a specific product. 
D)  Lubricants used by factory maintenance workers.

Question 12

Which of the following is a product cost?

Accepted Answer

A)  Insurance on factory machinery 
B)  Insurance on delivery trucks 
C)  Lease expense on office computer 
D)  Advertising costs

Question 13

In the books of a manufacturing company, the journal entry to record cost of goods manufactured would include a:

Accepted Answer

A)  credit to work in process. 
B)  credit to finished goods. 
C)  debit to work in process. 
D)  debit to cost of goods sold.

Question 14

Hillsborough Street Manufacturing Inc. Hillsborough Street Manufacturing Inc. incurred the following costs in 2011:
 45,000 units were produced during the year out of which 38,000 units were sold for $10 each. There was no beginning or ending raw materials or work in process inventory.
Refer to the Hillsborough Street Manufacturing Inc. information above. What is the net operating income for the year? (Ignore taxes)

Accepted Answer

A)  $222,500 
B)  $244,200 
C)  $240,500 
D)  $259,400

Question 15

Thompson Inc. has the following selected information available for 2011:  Manufacturing overhead costs in 2011 amounted to:

Accepted Answer

A)  $67,000. 
B)  $55,000. 
C)  $43,000. 
D)  $53,000.

Question 16

When nonmanufacturing costs are subtracted from gross margin, the result is called:

Accepted Answer

A)  cost of goods sold. 
B)  net operating income. 
C)  sales. 
D)  nonmanufacturing income.

Question 17

A "manufacturing cell" is defined as:

Accepted Answer

A)  grouping of all the machinery and equipment that are needed to make a product being available in one area of the factory. 
B)  restructuring of the factory so that the companies are able to manufacture products quickly. 
C)  an area in the warehouse where similar raw materials are grouped together. 
D)  grouping of all the factories that are engaged in manufacturing similar products.

Question 18

Clyde Retailers is a local merchandiser which buys vintage clothing and sells it to local college students. Clyde began the year with inventory costing $60,000. During the year inventory costing $300,000 was purchased. At the end of the year, inventory costing $45,000 still remained. What was Clyde's cost of goods sold for the year?

Accepted Answer

A)  $255,000 
B)  $285,000 
C)  $300,000 
D)  $315,000

Question 19

Which of the following types of employees would most likely have their wage be classified as indirect labor?

Accepted Answer

A)  Factory supervisor 
B)  Managerial accountant 
C)  Salesperson 
D)  Machine operator

Question 20

Hudson Inc. Hudson Inc. has the following information available for September:
 Refer to the Hudson Inc. information above. Cost of goods sold for September is:

Accepted Answer

A)  $119,000. 
B)  $143,000. 
C)  $140,000. 
D)  $122,000.

Exam 2: Product Costing: Manufacturing Processes, Cost Terminology, and Cost Flows