Which one of the following does not appear on the balance sheet of a manufacturing company?
 
Finished goods inventory
Work in process inventory
Raw materials inventory
Cost of goods manufactured
Cost of goods manufactured
   
The wages of a timekeeper in the factory would be classified as
 
a period cost.
direct labor.
indirect labor.
compliance costs.
indirect labor.
   
Managerial accounting applies to each of the following types of businesses except
 
managerial accounting applies to all types of firms.
service firms.
merchandising firms.
manufacturing firms.
managerial accounting applies to all types of firms.
   
Managerial accounting applies to all forms of business organizations.
 
True
False
   
Direct materials and direct labor are the only product costs.
 
True
False
   
Which one of the following is not a direct material?
 
Plastic used in the covered case for a home PC
Steel used in the manufacturing of steel-radial tires
A tire used for a lawn mower
Lubricant for a ball-bearing joint for a large crane
Lubricant for a ball-bearing joint for a large crane
   
Because of automation, which component of product cost is declining?
 
Advertising
Direct materials
Direct labor
Manufacturing overhead
Direct labor
   
Management accountants would not
 
assist in budget planning.
prepare reports primarily for external users.
determine cost behavior.
be concerned with the impact of cost and volume on profits.
prepare reports primarily for external users.
   
Determining the unit cost of manufacturing a product is an output of financial accounting.
 
True
False
   
When the physical association of raw materials with the finished product is too small to trace in terms of cost, they are usually classified as indirect materials.
 
True
False
   
Which of the following are period costs?
 
Selling expenses
Raw materials
Direct materials and direct labor
Direct labor and manufacturing overhead
Selling expenses
   
Raw materials inventory shows the cost of completed goods available for sale to customers.
 
True
False
   
Walker Company reported the following year-end information:
 
Beginning work in process inventory                        $ 46,000
Beginning raw materials inventory                            24,000
Ending work in process inventory                              50,000
Ending raw materials inventory                  20,000
Raw materials purchased                                              830,000
Direct labor                                                                         440,000
Manufacturing overhead                                              100,000
 
How much is Walker's cost of goods manufactured for the year?
 
$1,374,000
$1,370,000
$1,378,000
$834,000
$1,370,000
   
Laflin Company reported the following year-end information:
 
Beginning work in process inventory                        $1,080,000
Beginning raw materials inventory                            300,000
Ending work in process inventory                              900,000
Ending raw materials inventory                                  480,000
Raw materials purchased                                              960,000
Direct labor                                                                         900,000
Manufacturing overhead                                               720,000
 
Laflin Company's cost of goods manufactured for the year is
 
$2,400,000.
$2,580,000.
$2,760,000.
$2,220,000.
$2,580,000.
   
Given the following data for Glennon Company, compute (A) total manufacturing costs and (B) costs of goods manufactured:
 
Direct materials used $270,000 Beginning work in process                             $40,000
Direct labor 200,000 Ending work in process                                                        20,000
Manufacturing overhead 250,000 Beginning finished goods                          50,000
Operating expenses 350,000 Ending finished goods                                           30,000
 
(A)                                          (B)
$720,000                             $700,000
$740,000                            $760,000
$720,000                             $740,000
$700,000                            $740,000
$720,000                             $740,000
   
Molina Company has beginning and ending work in process inventories of $130,000 and $145,000 respectively.
If total manufacturing costs are $680,000, what is the total cost of goods manufactured?
 
$665,000.
$825,000.
$810,000.
$695,000.
$665,000.
 
Presented below are Truck Company's monthly manufacturing cost data related to its personal computer products.
 
(a) Taxes on factory building                                         $820,000
(b) Raw materials                                                             66,000
(c) Depreciation on manufacturing equip.              210,000
(d) Wages for assembly line workers                         340,000
 
Enter each cost item in the following table, placing an "X" under the appropriate headings.
 
Product Costs
Direct Materials Direct Labor Manufacturing Overhead
(a) Manufacturing Overhead
(b) Direct Materials
(c) Manufacturing Overhead
(d) Direct Labor
 
Identify whether each of the following is classified as a product cost or a period cost.
 
1. Direct labor
2. Direct materials
3. Factory utilities
4. Repairs to office equipment
5. Property taxes on factory building
6. Sales salaries
 
1. Direct labor                                                   <>           product cost
2. Direct materials                                           <>           product cost
3. Factory utilities                                           <>           product cost
4. Repairs to office equipment                   <>           period cost
5. Property taxes on factory building      <>           product cost
6. Sales salaries                                                <>           period cost
   
When goods are sold, the Cost of Goods Sold account is debited and Work in Process Inventory account is credited.
 
True
False
   
Which one of the following should be equal to the balance of the Work In Process Inventory account at the end of the period?
 
The total of manufacturing overhead applied to work in process for the period
The total manufacturing costs for the period
The sum of the costs shown on the job cost sheets of unfinished jobs
The total of the amounts transferred from raw materials for the current period
The sum of the costs shown on the job cost sheets of unfinished jobs
   
Cost accounting is primarily concerned with accumulating information about product costs.
 
True
False
   
In a job order cost accounting system, the Raw Materials Inventory account is
 
an expense.
A control account.
Not used.
A period cost.
A control account.
   
If actual overhead is greater than applied manufacturing overhead, then manufacturing overhead is:
 
a loss on the income statement under "Other Expenses and Losses."
underapplied.
considered a miscellaneous expense.
overapplied.
underapplied.
   
Which one of the following is a source document that impacts the job cost sheet?
 
Materials purchase orders.
Labor time tickets.
Finished goods shipping documents.
Raw materials receiving slips.
Labor time tickets.
   
Debits to Work in Process Inventory are accompanied by a credit to all but which one of the following accounts?
 
Cost of Goods Sold
Factory Labor
Raw Materials Inventory
Manufacturing Overhead
Cost of Goods Sold
   
Manufacturing overhead is applied to each job
 
by means of a predetermined overhead rate.
At the end of the year when actual costs are known.
Only if the overhead costs can be directly traced to that job.
At the time when the overhead cost is incurred.
By means of a predetermined overhead rate.
   
Which of the following is not used in assigning manufacturing costs to work in process inventory?
 
Time tickets
Predetermined overhead rate
Materials requisitions
Actual manufacturing overhead
Actual manufacturing overhead
   
In a job order cost system, a credit to Manufacturing Overhead will be accompanied by a debit to
 
Finished Goods Inventory.
Work in Process Inventory.
Raw Materials Inventory.
Cost of Goods Manufactured.
Work in Process Inventory.
   
Barnes Company applies overhead on the basis of machine hours. Given the following data, compute overhead applied and the under-
or overapplication of overhead for the period:
 
Estimated annual overhead cost                                $3,000,000
Actual annual overhead cost                                        $2,970,000
Estimated machine hours                                              300,000
Actual machine hours                                     295,000
 
$2,970,000 applied and neither under- nor overapplied
$3,000,000 applied and $20,000 overapplied
$2,950,000 applied and $20,000 underapplied
$2,950,000 applied and $20,000 overapplied
$2,950,000 applied and $20,000 underapplied
   
Haight Company incurred direct materials costs of $2,500,000 during the year. Manu-facturing overhead applied was $450,000 and is applied at
the rate of 60% of direct labor costs. Haight Company's total manufacturing costs for the year was
 
$3,220,000.
$2,950,000.
$3,700,000.
$4,720,000.
$3,700,000.
   
At the beginning of the year, Monroe Company estimates annual overhead costs to be $2,400,000 and that 300,000 machine hours will be operated.
Using machine hours as a base, the amount of overhead applied during the year if actual machine hours for the year was 315,000 hours is
 
$2,520,000.
$2,400,000.
$1,680,000.
$2,285,714.
$2,520,000.
   
Gannon Company had the following information at December 31:
 
Finished goods inventory, January 1                         $50,000
Finished goods inventory, December 31 150,000
 
If the cost of goods manufactured during the year amounted to $2,200,000 and annual sales were $2,750,000,
the amount of gross profit for the year is
 
$2,100,000.
$450,000.
$650,000.
$550,000.
$650,000.
   
Which of the following is a true statement about process cost systems?
 
In process cost systems, costs are accumulated but not assigned.
A process cost system has one work in process account for each process.
In process cost systems, costs are summarized on job cost sheets.
Unit costs are not computed in process cost systems.
A process cost system has one work in process account for each process.
   
It is necessary to calculate equivalent units of production in a department because
 
a physical count of units is impossible.
some units worked on in the department are not fully complete.
the physical units in the department are always 100% complete.
at times a department may use a job order cost system and then switch to a process cost system.
some units worked on in the department are not fully complete.
   
A production cost report
 
will show quantity and cost data for a production department.
is prepared from a job cost sheet.
will not identify a specific department if more than one department is involved in the production process.
is prepared for each product.
will show quantity and cost data for a production department.
   
Which of the following is not a necessary step in preparing a production cost report?
 
Compute the equivalent units of production.
Compute the physical unit flow.
Prepare the job order cost sheet.
Prepare a cost reconciliation schedule.
Prepare the job order cost sheet.
   
A process cost system would be used for all of the following products except
 
soft drinks.
motion pictures.
chemicals.
computer chips.
motion pictures.
   
The physical units in a department are another name for the equivalent units of production.
 
True
False
   
Materials requisitions are:
 
generally used more frequently in process costing than job order costing.
generally used less frequently in process costing than job order costing.
used more frequently by latter stage production departments.
not used in process costing.
generally used less frequently in process costing than job order costing.
   
In a process cost system, total costs are determined at the end of a month or year.
 
True
False
   
Zibba Company enters materials at the beginning of the process. In January, there was no beginning work in process, but there were 200 units
in the ending work in process inventory. The number of units completed equals the number of
 
units started.
equivalent units.
units started less 200.
units started plus 200.
units started less 200.
   
Which of the following manufacturing cost elements occurs in a process cost system?
 
Direct materials.
Direct labor.
Manufacturing overhead.
All of these.
All of these.
   
A primary driver of overhead costs in continuous manufacturing operations is:
 
machine hours.
direct labor dollars.
machine maintenance dollars.
direct labor hours.
machine hours.
   
A product requires processing in two departments, the Baking Department and then the Packaging Department, before it is completed.
Costs transferred out of the Baking Department will be transferred to:
 
Manufacturing Overhead.
Finished Goods Inventory.
Cost of Goods Sold.
Work in Process—Packaging Department.
Work in Process—Packaging Department.
   
Charley Company's Assembly Department has materials cost at $2 per unit and conversion cost at $4 per unit. There are 20,000 units in ending work in process,
all of which are 70% complete as to conversion costs and 100% complete as to materials. How much are total costs to be assigned to inventory?
 
$56,000.
$120,000.
$96,000.
$84,000.
$96,000.
   
Madison Industries has equivalent units of 8,000 for materials and for conversion costs. Total manufacturing costs are $200,000.
Total materials costs are $150,000. How much is the conversion cost per unit?
 
$25.00.
$5.00.
$6.25.
$2.50.
$6.25.
   
Gloria Company had no beginning work in process. During the period, 16,000 units were completed, and there were 1,200 units of ending work in process.
How many units were started into production?
 
1,200.
16,000.
14,800.
17,200.
17,200.
   
Corsi Company had the following department data:
 
Physical Units
Work in process, beginning 0
Completed and transferred out 90,000
Work in process, ending 7,000
 
Materials are added at the beginning of the process. What is the total number of equivalent units for materials during the period?
 
90,000.
9,000.
97,000.
83,000.
97,000.
   
Traditional costing systems use multiple predetermined overhead rates.
 
True
False
   
Current trends in manufacturing include less direct labor and more overhead.
 
True
False
   
Activity-based costing allocates overhead to multiple cost pools and assigns the cost pools to products using cost drivers.
 
True
False
   
A cost driver does not generally have a direct cause-effect relationship with the resources consumed.
 
True
False
   
The first step in activity-based costing is to assign overhead costs to products, using cost drivers.
 
True
False
   
To achieve accurate costing, a high degree of correlation must exist between the cost driver and the actual consumption of the activity cost pool.
 
True
False
   
ABC leads to enhanced control over overhead costs.
 
True
False
   
ABC is generally more costly to implement than traditional costing.
 
True
False
   
ABC is particularly useful when product lines differ greatly in volume and manufacturing complexity.
 
True
False
   
Activity-based management focuses on reducing costs and improving processes.
 
True
False
   
Any activity that increases the cost of producing a product is a value-added activity.
 
True
False
   
Engineering design is a value-added activity.
 
True
False
   
Non-value-added activities increase the cost of a product but not its perceived value.
 
True
False
   
Machining is a non-value-added activity.
 
True
False
   
Not all activities labeled non-value-added are totally wasteful, nor can they be totally eliminated.
 
True
False
   
Plant management is a batch-level activity.
 
True
False
   
Painting is a product-level activity.
 
True
False
   
The overall objective of installing ABC in service firms is no different than it is in a manufacturing company.
 
True
False
   
Just-in-time strives to eliminate inventories by using a pull approach.
 
True
False
   
Inventory storage costs are reduced in just-in-time processing.
 
True
False
   
Which of the following is not typical of traditional costing systems?
 
Use of multiple cost drivers to allocate overhead.
Use of a single predetermined overhead rate.
Use of direct labor hours or direct labor cost to assign overhead.
Assumption of correlation between direct labor and incurrence of overhead cost.
Use of multiple cost drivers to allocate overhead.
   
An activity that has a direct cause-effect relationship with the resources consumed is a(n)
 
overhead rate.
cost driver.
cost pool.
product activity.
cost driver.
   
The costs that are easiest to trace directly to products are
 
direct materials and direct labor.
direct labor and overhead.
direct materials and overhead.
none of the above; all three costs are equally easy to trace to the product.
direct materials and direct labor.
   
Often the most difficult part of computing accurate unit costs is determining the proper amount of _________ to assign to each product, service, or job.
 
overhead
direct materials and direct labor
direct materials
direct labor
overhead
   
Predetermined overhead rates in traditional costing are often based on
 
multiple bases for job order costing and direct labor cost for process costing.
multiple bases for both job order costing and process costing.
direct labor cost for job order costing and machine hours for process costing.
machine hours for job order costing and direct labor cost for process costing.
direct labor cost for job order costing and machine hours for process costing.
   
Advances in computerized systems, technological innovation, global competition, and automation have changed the manufacturing environment drastically by
 
decreasing direct labor costs and increasing overhead costs.
increasing direct labor costs and increasing overhead costs.
increasing direct labor costs and decreasing overhead costs.
decreasing direct labor costs and decreasing overhead costs.
decreasing direct labor costs and increasing overhead costs.
   
Activity-based costing
 
allocates overhead directly to products and services based on activity levels.
allocates overhead to activity cost pools, and it then assigns the activity cost pools to products and services by means of cost drivers.
assigns activity cost pools to products and services, then allocates overhead back to the activity cost pools.
accumulates overhead in one cost pool, then assigns the overhead to products and services by means of a cost driver.
allocates overhead to activity cost pools, and it then assigns the activity cost pools to products and services by means of cost drivers.
   
Ordering materials, setting up machines, assembling products, and inspecting products are examples of
 
cost drivers.
direct labor costs.
overhead cost pools.
non-manufacturing activities.
overhead cost pools.
   
An "Ordering and Receiving Materials" cost pool would most likely have as a cost driver:
 
number of inspection tests.
machine hours.
number of setups.
number of purchase orders.
number of purchase orders.
   
Hartley Company produces two products, Flower and Planter. Flower is a high-volume item totaling 20,000 units annually.
Planter is a low-volume item totaling only 6,000 units per year. Flower requires one hour of direct labor for completion,
while each unit of Planter requires 2 hours. Therefore, total annual direct labor hours are 32,000 (20,000 + 12,000).
Expected annual manufacturing overhead costs are $960,000. Hartley uses a traditional costing system and assigns
overhead based on direct labor hours. Each unit of Planter would be assigned overhead of
 
$36.91.
$60.00.
need more information to compute.
$30.00.
$60.00.
   
Reynoso Corporation manufactures titanium and aluminum tennis racquets. Reynoso's total overhead costs consist of assembly costs and inspection costs.
The following information is available:
 
Assembly
Titanium 500 machine hours
Aluminum 500 machine hours
Total Cost $60,000
 
Inspections
Titanium                              350
Aluminum                           150
Total Cost             $             100,000
Titanium                              2,100 labor hours
Aluminum                           1,900 labor hours
 
Reynoso is considering switching from one overhead rate based on labor hours to activity-based costing.
Total overhead costs assigned to titanium racquets, using a single overhead rate, are
 
$80,000.
$100,000.
$112,000.
$84,000.
$84,000.
   
Reynoso Corporation manufactures titanium and aluminum tennis racquets. Reynoso's total overhead costs consist of assembly costs and inspection costs.
The following information is available:
 
Assembly
Titanium 500 machine hours
Aluminum 500 machine hours
Total Cost $60,000
 
Inspections
Titanium                                              350
Aluminum                                           150
Total Cost                             $             100,000
Titanium                                              2,100 labor hours
Aluminum                                           1,900 labor hours
 
Reynoso is considering switching from one overhead rate based on labor hours to activity-based costing.
Using activity-based costing, how much assembly cost is assigned to titanium racquets?
 
$42,000.
$31,500.
$30,000.
$21,000.
$30,000.
   
Reynoso Corporation manufactures titanium and aluminum tennis racquets. Reynoso's total overhead costs consist of assembly costs and inspection costs.
The following information is available:
 
Assembly
Titanium 500 mach. hours
Aluminum 500 mach. hours
Total Cost $60,000
 
Inspections
Titanium                                              350
Aluminum                                           150
Total Cost                             $             100,000
Titanium                                              2,100 labor hours
Aluminum                                           1,900 labor hours
 
Reynoso is considering switching from one overhead rate based on labor hours to activity-based costing.
Using activity-based costing, how much inspections cost is assigned to titanium racquets?
 
$70,000.
$30,000.
$47,500.
$50,000.
$70,000.
   
Tidwell Industries has the following overhead costs and cost drivers. Direct labor hours are estimated at 100,000 for the year.
 
Activity Cost Pool Cost Driver Est. Overhead Cost Driver Activity
Ordering and Receiving Orders $ 120,000 500 orders
Machine Setup Setups 297,000 450 setups
Machining Machine hours 1,500,000 125,000 MH
Assembly Parts 1,200,000 1,000,000 parts
Inspection Inspections 300,000 500 inspections
 
If overhead is applied using traditional costing based on direct labor hours, the overhead application rate is
 
$34.17.
$9.60.
$12.00.
$15.00.
$34.17.
   
Tidwell Industries has the following overhead costs and cost drivers. Direct labor hours are estimated at 100,000 for the year.
 
Activity Cost Pool Cost Driver Est. Overhead Cost Driver Activity
Ordering and Receiving Orders $ 120,000 500 orders
Machine Setup Setups 297,000 450 setups
Machining Machine hours 1,500,000 125,000 MH
Assembly Parts 1,200,000 1,000,000 parts
Inspection Inspections 300,000 500 inspections
 
If overhead is applied using activity-based costing, the overhead application rate for ordering and receiving is
 
$6,834 per order.
$0.12 per part.
$1.20 per direct labor hour.
$240 per order.
$240 per order.
   
The last step in activity-based costing is to
 
compute the activity-based overhead rate per cost driver.
identify the cost driver that has a strong correlation to the activity cost pool.
assign overhead costs to products, using overhead rates determined for each cost pool.
identify and classify the activities involved in the manufacture of specific products, and allocate overhead to cost pools.
assign overhead costs to products, using overhead rates determined for each cost pool.
   
The first step in activity-based costing is to
 
identify the cost driver that has a strong correlation to the activity cost pool.
assign overhead costs to products, using overhead rates determined for each cost pool.
compute the activity-based overhead rate per cost driver.
identify and classify the activities involved in the manufacture of specific products, and allocate overhead to cost pools.
identify and classify the activities involved in the manufacture of specific products, and allocate overhead to cost pools.
   
A well-designed activity-based costing system starts with
 
computing the activity-based overhead rate.
identifying the activity-cost pools.
analyzing the activities performed to manufacture a product.
assigning overhead costs to products.
analyzing the activities performed to manufacture a product.
   
Which of the following is not an example of an activity cost pool?
 
Setting up machines
Machining
Inspecting
Machine hours
   
An example of an activity cost pool is
 
number of setups.
machine hours.
number of inspections.
setting up machines.
   
Estimated costs for activity cost pools and other item(s) are as follows:
 
Machining                           $             500,000
Assembling                                         200,000
Advertising                                          450,000
Inspecting and testing                    175,000
 
Total estimated overhead is
 
$1,325,000.
$700,000.
$1,150,000.
$875,000.
   
An example of a cost which would not be assigned to an overhead cost pool is
 
depreciation.
supplies.
indirect salaries.
freight-out.
   
One of Matheny Company's activity cost pools is inspecting, with estimated overhead of $200,000.
Matheny produces throw rugs (700 inspections) and area rugs (1,300 inspections).
How much of the inspecting cost pool should be assigned to throw rugs?
 
$100,000.
$200,000.
$107,692.
$70,000.
   
An activity-based overhead rate is computed as follows:
 
estimated overhead divided by actual use of cost drivers.
actual overhead divided by estimated use of cost drivers.
estimated overhead divided by estimated use of cost drivers.
actual overhead divided by actual use of cost drivers.
estimated overhead divided by estimated use of cost drivers.
 
Use of activity-based costing will result in the development of
 
one plantwide activity-based overhead rate.
no overhead rates; overhead rates are not used in activity-based costing.
one overhead rate based on direct labor hours.
multiple activity-based overhead rates.
   
To use activity-based costing, it is necessary to know the
 
cost driver for each activity cost pool.
expected use of cost drivers per activity.
expected use of cost drivers per product.
all of the above.
   
To assign overhead costs to each product, the company
 
assigns the cost of each activity cost pool in total to one product line.
multiplies the rate of cost drivers per estimated cost for the cost pool by the estimated cost for each cost pool.
multiplies the overhead rate by the number of direct labor hours used on each product.
multiplies the activity-based overhead rates per cost driver by the number of cost drivers expected to be used per product.
multiplies the activity-based overhead rates per cost driver by the number of cost drivers expected to be used per product.
  Companies that switch to ABC often find they have
 
been overpricing some products.
possibly losing market share to competitors.
been sacrificing profitability by underpricing some products.
all of the these answers are correct.
   
The wages of factory maintenance personnel will usually be considered to be:
 

	Indirect labor	Manufacturing overhead
A)	No	Yes
B)	Yes	No
C)	Yes	Yes
D)	No	No
A. Option A
B. Option B
C. Option C
D. Option D

   
Manufacturing overhead consists of:
 
A. all manufacturing costs.
B. indirect materials but not indirect labor.
C. all manufacturing costs, except direct materials and direct labor.
D. indirect labor but not indirect materials.
   
Which of the following should NOT be included as part of manufacturing overhead?
 
A. Sheet steel in a file cabinet made by the company.
B. Manufacturing equipment depreciation.
C. Idle time for direct labor.
D. Taxes on a factory building.
   
Which of the following costs would not be included as part of manufacturing overhead?
 
A. Insurance on sales vehicles.
B. Depreciation of production equipment.
C. Lubricants for production equipment.
D. Direct labor overtime premium.
   
Conversion cost consists of which of the following?
 
A. Manufacturing overhead cost.
B. Direct materials and direct labor cost.
C. Direct labor cost.
D. Direct labor and manufacturing overhead cost.
 

 
Each of the following would be a period cost except:
 
A. the salary of the company president’s secretary.
B. the cost of a general accounting office.
C. depreciation of a machine used in manufacturing.
D. sales commissions.
   
Which of the following would NOT be treated as a product cost for external financial reporting purposes?
 
A. Depreciation on a factory building.
B. Salaries of factory workers.
C. Indirect labor in the factory.
D. Advertising expenses.
   
The salary of the president of a manufacturing company would be classified as which of the following?
 
A. Product cost
B. Period cost
C. Manufacturing overhead
D. Direct labor
   
Last month, when 10,000 units of a product were manufactured, the cost per unit was $60.
At this level of activity, variable costs are 50% of total unit costs.
If 10,500 units are manufactured next month and the cost behavior patterns remain unchanged the:
 
A. total variable cost will remain unchanged.
B. fixed costs will increase in total.
C. variable cost per unit will increase.
D. total cost per unit will decrease.
   
Variable cost:
 
A. increases on a per unit basis as the number of units produced increases.
B. remains constant on a per unit basis as the number of units produced increases.
C. remains the same in total as production increases.
D. Decreases on a per unit basis as the number of units produced increases.
   
The salary paid to the production manager in factory is:
 
A. a variable cost.
B. part of prime cost.
C. part of conversion cost.
D. both a variable cost and a prime cost.

   
The following costs were incurred in September:
 

Direct materials	$38,000
Direct labor	$29,000
Manufacturing overhead	$21,000
Selling expenses	$17,000
Administrative expenses	$32,000

 
Conversion costs during the month totaled:
 
$50,000
$59,000
$137,000
$67,000
   
The following costs were incurred in September:
 

Direct materials	$39,000
Direct labor	$23,000
Manufacturing overhead	$17,000
Selling expenses	$14,000
Administrative expenses	$27,000

 
Prime costs during the month totaled:
 
$79,000
$120,000
$62,000
$40,000
   
In September direct labor was 40% of conversion cost.
If the manufacturing overhead for the month was $66,000 and the direct materials cost was $20,000, the direct labor cost was:
 
A. $13,333
B. $44,000
C. $99,000
D. $30,000

   
Gambarini Corporation is a wholesaler that sells a single product.
Management has provided the following cost data for two levels of monthly sales volume.
The company sells the product for $197.80 per unit.
 

Sales volume (units)	6,000	7,000
Cost of sales	$486,600	$567,700
Selling and administrative costs	$612,600	$624,400

 
The best estimate of the total monthly fixed cost is:
 
$541,800
$1,192,100
$1,099,200
$1,145,650
   
Iadanza Corporation is a wholesaler that sells a single product.
Management has provided the following cost data for two levels of monthly sales volume.
The company sells the product for $195.70 per unit.

Sales volume (units)                                        6,000                   7,000
Cost of sales                                                      $457,800            $534,100
Selling and administrative costs                $621,000            $639,100
                               
The best estimate of the total contribution margin when 6,300 units are sold is:
 
$752,220
$638,190
$100,170
$177,030
   
An increase in the Prepaid Expenses account of $1,000 over the course of a year would be shown on the company's statement of cash flows
prepared under the indirect method as:
 
an addition to net income of $1,000 in order to arrive at net cash provided by operating activities.
a deduction from net income of $1,000 in order to arrive at net cash provided by operating activities.
an addition of $1,000 under financing activities.
a deduction of $1,000 under financing activities.
  Comet Company accumulated the following account information for the year:
                                 
Beginning raw materials inventory            $             6,200   
Indirect materials cost                                                   2,200   
Indirect labor cost                                                           5,200   
Maintenance of factory equipment                          3,000   
Direct labor cost                                                              7,200   
 
Using the above information, total factory overhead costs would be:
 
$10,400
$16,400.
$8,200.
$17,600.
$13,600.
 
Total factory overhead = Indirect materials cost + Indirect labor cost +  Maintenance of factory equipment
 
Factory Overhead =
Indirect materials +
Indirect labor +
Maintenance
   
A manufacturing company has a beginning finished goods inventory of $28,200, cost of goods manufactured of $58,400,
and an ending finished goods inventory of $27,500. The cost of goods sold for this company is:
 
$114,100.
$57,700.
$85,900.
$59,100
$2,700.
 
Beginning Finished Goods
+ Cost of Goods Manufactured
- Ending Finished Goods
= Cost of Goods Sold
   
Using the information below, calculate gross profit for the period.
                                 
Sales revenues for the period      $                                             1,374,000          
Operating expenses for the period                                           246,000              
Finished Goods Inventory, January 1                                       36,700
Finished Goods Inventory, December 31                41,700
Cost of goods manufactured for the period                          575,000              
 
$570,000.
$565,000.
$809,000.
$474,600.
$804,000
 
Cost of manufactured
+ Finished Goods Inventory, January 1
- Finished Goods Inventory, December 31
570000
Gross Profit = sales - cost of goods sold
   
Using the information below, compute the Days' sales in raw materials inventory:
                                                 
Raw Materials Used        $                                             145,600              
Beginning Raw Materials Inventory                         19,200
Ending Raw Materials Inventory                21,400
 
6.80.
53.60.
48.10.
7.17.
7.58.
 
Days' sales in raw materials inventory =
Ending raw materials ÷ Raw materials used · 365
   
The Duerr Company manufactures a single product. All raw materials used are traceable to specific units of product.
Current information for the Duerr Company follows:
 
Beginning raw materials inventory            $             21,000
Ending raw materials inventory                 24,000
Raw material purchases                                98,000
Beginning work in process inventory                       33,000
Ending work in process inventory                             43,000
Direct labor                                                                        123,000
Total factory overhead                                  98,000
Beginning finished goods inventory                         73,000
Ending finished goods inventory                53,000
 
The company's cost of raw materials used, cost of goods manufactured and cost of goods sold is:
 
                Cost of Materials Used   Cost of Goods Manufactured                     Cost of Goods Sold
A.            $98,000                                              $306,000                                                           $286,000
B.            $101,000                                            $306,000                                                           $326,000
C.            $95,000                                             $326,000                                           $286,000
D.            $95,000                                            $306,000                                                             $326,000
E.            $101,000                                            $326,000                                                            $306,000
 
Explanation :
Raw Material used =
Beginning Raw Material
+ Raw Material purchases
— End Raw Material
95000
 
Cost of Goods Manufacture =
Raw Material used
+ Direct labor
+ Total factory overhead
+ Beginning work in process inventory
— Ending work in process inventory
306000
Cost of goods sold =
Beginning finished goods inventory
+ Cost of goods manufactured
— Ending finished goods inventory
326000
   
Use the following information to compute the cost of goods manufactured.
Assume that all raw materials used were traceable to specific units of product.
                                                 
Beginning raw materials $                             7,000   
Ending raw materials                                                      5,500   
Direct labor                                                                        13,750
Raw material purchases                                8,900   
Depreciation on factory equipment                         8,000   
Factory repairs and maintenance                              4,800   
Beginning finished goods inventory                         11,700
Ending finished goods inventory                10,400
Beginning work in process inventory                       7,200   
Ending work in process inventory                             7,800   
 
$38,150.
$44,150.
$36,950.
$36,350.
$37,550.
 
Beginning raw materials
+ Raw material purchases
- Ending raw materials
+ Direct labor
+ Depreciation on factory equipment
+ Factory repairs and maintenance
+ Beginning work in process inventory
- Ending work in process inventory
   
A company's prime costs total $5,500,000 and its conversion costs total $9,500,000.
If direct materials are $2,250,000 and factory overhead is $6,250,000, then direct labor is:
 
$5,500,000.
$19,000,000.
$4,000,000.
$3,250,000.
$1,000,000.
 
direct labor = prime cost - direct material cost
Conversion cost = direct labor + manufacturing overhead
manufacturing overhead costs = conversion cost - direct labor cost
   
If beginning and ending work in process inventories are $7,000 and $17,000, respectively,
and cost of goods manufactured is $190,000, what is the total manufacturing cost for the period?
 
$173,000.
$197,000.
$180,000.
$200,000.
$183,000.
 
Manufacturing Costs
+ Beginning Work in Process
- Ending Work in Process
= Cost of Goods Manufactured;
   
Using the information below, compute the raw materials inventory turnover:
                 
Raw Materials Used                                        $             135,600              
Beginning Raw Materials Inventory                         18,700
Ending Raw Materials Inventory                20,900
 
6.85.
7.25.
56.30.
50.30.
6.49.
 
Raw materials inventory turnover
= Raw materials used ÷ "Average" raw materials inventory
   
The following information is available for the year ended December 31:
 
Beginning raw materials inventory            $             12,500
Raw materials purchases                                              89,000
Ending raw materials inventory                 11,900
Manufacturing supplies expense                                750      
 
The amount of raw materials used in production for the year is:
 
ans. $89,600
 
$77,100
$89,600
$89,750
$90,350
$88,400
 
Beginning Raw Materials
+ Purchases
- Ending Raw Materials
= Raw Materials Used
   
Using the information below, calculate net income for the period:
                                 
Sales revenues for the period      $                                             1,324,000          
Operating expenses for the period                                           259,000              
Finished Goods Inventory, January 1                                       56,000
Finished Goods Inventory, December 31                                61,000
Cost of goods manufactured for the period                          560,000              
 
$809,000.
$814,000.
$388,000.
$555,000.
$510,000.
 
Sales revenues for the period
- Operating expenses for the period
- Cost of goods manufactured for the period
- Finished Goods Inventory, January 1
+ Finished Goods Inventory, December 31
   
Current information for the Stellar Corporation follows:
                                 
Beginning work in process inventory      $             36,900
Ending work in process inventory                           38,300
Direct materials                                                              166,000              
Direct labor                                                                       104,000              
Total factory overhead                                                 82,100
 
Stellar Corporation's Cost of Goods Manufactured for the year is:
 
$352,100.
$313,800.
$353,500.
$389,000.
$350,700
 
Beginning work in process inventory
+ Direct materials + Direct labour
+ Total factory overhead
- Ending work in process inventory
   
Current information for the Healey Company follows:
                                                 
Beginning raw materials inventory                          $25,200              
Raw material purchases                                              70,000
Ending raw materials inventory                26,600
Beginning work in process inventory      32,400
Ending work in process inventory                           38,000
Direct labor                                                                       52,800
Total factory overhead                                 40,000
 
All raw materials used were traceable to specific units of product. Healey Company's Cost of Goods Manufactured for the year is:
 
$167,000.
$161,400.
$158,600.
$159,000.
$155,800
 
Raw materials consumed =
Beginning raw materials
+ Raw material purchases
– Ending raw materials
 
Cost of Goods Manufactured =
Raw materials consumed
+ Direct Labor
+ Total Factory overhead
+ Beginning work in process inventory
– Ending work in process inventory
   
Using the information below for Singing Dolls, Inc., determine the total manufacturing costs incurred during the year:
                 
Work in Process, January 1                          $             52,000
Work in Process, December 31                 38,000
Direct materials used                                                    13,500
Total Factory overhead                                6,500   
Direct labor used                                                            27,500
 
$14,000.
$99,500.
$61,500.
$47,500
$93,000.
 
Costs Added =
Direct Materials Used
+ Direct Labor
+ Factory Overhead
   
Using the information below, calculate the cost of goods manufactured for the period:
                                                 
Beginning Raw Materials Inventory          $             34,000
Ending Raw Materials Inventory                25,600
Beginning Work in Process Inventory                      64,000
Ending Work in Process Inventory                            73,000
Beginning Finished Goods Inventory                       93,500
Ending Finished Goods Inventory                             76,000
Cost of Goods Sold for the period                             549,000              
Sales revenues for the period                                     1,263,000          
Operating expenses for the period                           241,000              
 
$566,500.
$558,000.
$540,500.
$574,200.
$531,500
 
cost of goods manufactured for the period =
Cost of Goods Sold for the period
+ Ending Finished Goods Inventory
- Begining Finished Goods Inventory
   
Calculate the cost of goods sold using the following information:
                 
Direct materials                                                 $             300,200              
Direct labor                                                                        133,700              
Factory overhead costs                                                 265,700              
General and administrative expenses                      87,200
Selling expenses                                                               50,500
Work in Process inventory, January 1                      120,200              
Work in Process inventory, December 31               127,600              
Finished goods inventory, January 1                        233,800              
Finished goods inventory, December 31                 240,400              
 
$685,600.
$707,000.
$699,600.
$692,200.
$779,400.
 
Cost of goods manufactured during the year =
Direct materials + Direct labour + Factory overhead costs
then
Cost of goods sold =
Cost of goods manufactured during the year
+ Work in process inventory, January 1
+  Finished goods inventory, January 1
- Finished goods inventory, December 31
- Work in process inventory, December 31
   
If the cost of the beginning work in process inventory is $70,000, direct materials cost is $360,000,
direct labor cost is $226,000, and overhead cost is $329,000, and the ending work in process inventory is $65,000,
calculate the cost of goods manufactured:
 
$920,000.
$591,000.
$985,000.
$1,050,000.
$915,000.
 
Cost of Goods Manufactured =
Beginning Work In Process Inventory
+ Direct Materials Costs
+ Direct Labor Costs
+ Overhead Costs
- Ending Work in Process Inventory
   
The following information pertains to the Frameworks Corporation for May.
Calculate the cost of goods sold for the period:
                                                 
Beginning Finished Goods Inventory                        $30,500              
Ending Finished Goods Inventory                             29,000
Cost of Goods Manufactured                                      137,800              
 
$168,300.
$137,800.
$139,300.
$197,300.
$136,300.
 
Cost of goods sold for the period =
Beginning Finished Goods Inventory
+ Cost of Finished Goods Manufactured
– Ending Finished Goods Inventory
   
The Richards Company manufactures a single product. All raw materials used are traceable to specific units of product.
Current information for the Richards Company follows:
 
Beginning raw materials inventory            $             23,000
Ending raw materials inventory                 25,000
Raw material purchases                                103,000
Beginning work in process inventory                       53,000
Ending work in process inventory                             38,000
Direct labor                                                                        143,000
Total factory overhead                                  73,000
Beginning finished goods inventory                         68,000
Ending finished goods inventory                58,000
 
The company's cost of raw materials used, cost of goods manufactured and cost of goods sold is:
 
 Cost of Materials Used  Cost of Goods Manufactured                       Cost of Goods Sold
A.            $103,000                           $332,000                                                            $322,000
B.            $105,000                            $332,000                                                            $342,000
C.            $101,000                            $302,000                                                            $322,000
D.            $101,000                            $332,000                                                            $342,000
E.            $105,000                            $302,000                                           $332,000
 
 
Cost of Materials Used =
Beginning raw materials inventory
+ Raw material purchases
- Ending raw materials inventory
101000
Cost of Goods Manufactured =
Cost of Materials Used
+ Beginning work in process inventory
+ Direct labor + Total factory overhead
- Ending work in process inventory
332000
Cost of Goods Sold =
Cost of Goods Manufactured
+ Beginning finished goods inventory
- Ending finished goods inventory
342000
   
Calculate the cost of goods manufactured using the following information:
                 
Direct materials                                 $             298,900              
Direct labor                                                                        132,400              
Factory overhead costs                                 264,400              
General and administrative expenses                      85,900
Selling expenses                                                               49,200
Work in Process inventory, January 1                      118,900              
Work in Process inventory, December 31               126,300             
Finished goods inventory, January 1                        232,500              
Finished goods inventory, December 31  239,100             
 
$695,700.
$703,100.
$774,200.
$681,700.
$688,300
 
Cost of Goods Manufactured =
Raw Materials Used
+ Direct Labor
+ Factory Overhead
+ Beginning Work in Process
- Ending Work in Process
   
Managerial accounting applies to all types of businesses-service, merchandising, and manufacturing-and to all forms of business organizations.
 
True
False
   
Both direct and indirect materials physically become part of the finished product.
 
True
False
   
Product costs are costs that are a necessary and integral part of producing the finished product.
 
True
False
   
The cost of the beginning work in process plus the total manufacturing cost for the current period is the cost of goods manufactured.
 
True
False
   
Under a just-in-time method, goods are manufactured or purchased just-in-time for use.
 
True
 False
   
All of the following are distinguishing features of managerial account except
 
Internal users.
Annual independent audit.
Reports pertain to subunits of the entity.
To provide special-purpose information.
   
The IMA code of ethical standards divides managerial accountants' responsibilities into all of the following areas except
 
Competence.
Confidentiality.
Objectivity.
 All of these options are responsibilities.
   
The management function that requires management to look ahead and establish objectives is
 
Controlling.
Directing and motivating.
Evaluating.
Planning.
   
The process of keeping the firm's activities on track is
 
Controlling.
Directing and motivating.
Evaluating.
Planning.
   
Manufacturing overhead includes all of the following except
 
Depreciation.
Direct materials.
Indirect labor.
Maintenance.
   
On average, the smallest component of total manufacturing cost is
 
Direct materials.
Direct labor.
Manufacturing overhead.
Factory overhead.
   
Prime costs are
 
Direct labor and manufacturing overhead.
Direct materials and manufacturing overhead.
Direct materials and direct labor.
Selling and administrative expenses.
   
Conversion costs include
 
Direct labor and manufacturing overhead.
Direct materials and manufacturing overhead.
Direct materials and direct labor.
Selling and administrative expenses.
   
For a manufacturing firm, cost of goods available for sale is computed by adding the beginning finished goods inventory to
 
Cost of goods purchased.
Cost of goods manufactured.
Net purchases.
Total manufacturing costs.
   
The principal difference between a merchandising and a manufacturing income statement is the
 
Cost of goods sold section.
Extraordinary item section.
Operating expense section.
Revenue section.
   
The sum of the direct materials costs, direct labor costs, and manufacturing overhead incurred is the
 
Cost of goods manufactured.
Total manufacturing overhead.
Total manufacturing costs.
Total cost of work in process.
   
Costs of goods manufactured is computed by subtracting ending work in process inventory from
 
Cost of goods available for sale.
Total manufacturing overhead.
Total manufacturing costs.
Total cost of work in process.
   
The cost applicable to units that have been started into production but not completed is shown as
 
Finished goods inventory.
Merchandise inventory.
Raw materials inventory.
Work in process inventory.
   
Many companies have significantly lowered inventory levels and costs using
 
Computer-integrated manufacturing.
Total quality control system.
Just-in-time inventory methods.
   
Many companies can now manufacture products that are untouched by human hands through
 
Computer-integrated manufacturing.
Total quality control system.
Just-in-time inventory methods.
   
Which of the following would be considered a cash outflow in the investing activities section of the statement of cash flows?
 
Dividends paid to the company's own stockholders.
Payment of interest to a lender.
Purchase of equipment.
Retirement of bonds payable.
   
In a statement of cash flows, which of the following would be classified as an operating activity?
 
The purchase of equipment.
Dividends paid to the company's own common stockholders.
Tax payments to governmental bodies.
The cash paid to retire bonds payable.
   
All of the following should be recorded in the operating activities section of the statement of cash flows EXCEPT:
 
a decrease in inventory.
the total credits to the accumulated depreciation account.
a decrease in prepaid expenses.
a purchase of equipment in exchange for cash.
an increase in income taxes payable.
   
In a statement of cash flows, receipts from sales of property, plant, and equipment should be classified as a(n):
 
 
Operating activity.
Financing activity.
Investing activity.
Selling activity.
   
In a statement of cash flows, all of the following would be classified as financing activities except:
 
the collection of cash related to a loan made to another entity.
the payment of a cash dividend on the company's own common stock.
the cash paid to retire bonds payable.
the sale of the company's own common stock for cash.
   

If Thomson Company did not issue any bonds payable during the year and its bonds payable account decreased by $200,000 over the
course of a year, then this amount would be shown on the company's statement of cash flows prepared under the indirect method as:
 
a cash inflow of $200,000 under investing activities.
a cash outflow of $200,000 under investing activities.
a cash inflow of $200,000 under financing activities.
a cash outflow of $200,000 under financing activities.
 
   
Which of the following would be added to net income in the operating activities section of a statement of cash flows prepared using the indirect method?
 
 
an increase in accounts receivable.
an increase in accounts payable.
an increase in common stock.
an increase in bonds payable.
   
Under the indirect method of determining net cash provided by operating activities on the statement of cash flows, which of
the following would be subtracted from net income?
 
A decrease in accounts receivable.
An increase in accrued liabilities.
A decrease in accounts payable.
An increase in dividend payments to stockholders.
   
Financial leverage is negative when:
 
the return on total assets is less than the rate of return on common stockholders' equity.
total liabilities are less than stockholders' equity.
total liabilities are less than total assets.
the return on total assets is less than the rate of return demanded by creditors.
   
Issuing new shares of stock in a five-for-one split of common stock would:
decrease the book value per share of common stock.
increase the book value per share of common stock. C. increase total stockholders' equity.
decrease total stockholders' equity.
   
At the beginning of the year, a company's current ratio is 2.2. At the end of the year, the company has a current ratio of 2.5.
Which of the following could help explain the change in the current ratio?
 
An increase in inventories.
B. An increase in accounts payable.
C. An increase in property, plant, and equipment. D. An increase in bonds payable.
   
A company's current ratio and acid-test ratios are both greater than 1. The collection of a current accounts receivable of $29,000 would:
 
 
increase the current ratio.
decrease the current ratio.
not affect the current ratio or the acid-test ratio.
decrease the acid-test ratio.