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Exam 1: Introduction to Managerial Accounting

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Question 121

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Which of the following would be considered a product cost for a manufacturing company?

A) depreciation on delivery vehicles
B) depreciation on administrative building furniture and fixtures
C) depreciation on manufacturing equipment
D) depreciation on the accounting department's computer equipment

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Question 122

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Manufacturing companies produce their own products,but merchandising companies do not.

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Question 123

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Varda,Inc.used $213,000 of direct materials and incurred $111,000 of direct labor costs during the year.Indirect labor amounted to $8,100,while indirect materials used totaled $4,800.Other operating costs pertaining to the factory included utilities of $9,300; maintenance of $13,500; repairs of $5,400; depreciation of $23,700; and property taxes of $7,800.There was no beginning or ending finished goods inventory.The Work-in-Process Inventory account reflected a balance of $16,500 at the beginning of the period and $22,500 at the end of the period. Required: Prepare a schedule of cost of goods manufactured for Varda,Inc.using the format below. Schedule of Cost of Goods Manufactured $\begin{array} { | l | l | l | l | } \hline \text { Beginning Work-in-Process Inventory } & \quad\quad\quad&\quad\quad\quad\quad & \quad\quad\quad\quad\quad\\\hline \text { Direct Materials Used } & & & \\\hline \text { Direct Labor } & & & \\\hline \text { Manufacturing Overhead: } & & & \\\hline \text { Indirect Labor Used } & & & \\\hline \text { Indirect Materials } & & & \\\hline \text { Utilities } & & & \\\hline \text { Maintenance } & & & \\\hline \text { Repairs } & & & \\\hline \text { Depreciation } & & & \\\hline \text { Property Taxes } & & & \\\hline \text { Total Manufacturing Overhead } & & & \\\hline \text { Total Manufacturing Costs Incurred } & & & \\ \text { during the Year } & & & \\\hline \text { Total Manufacturing Costs to Account } & & & \\ \text { For } & & & \\\hline \text { Ending Work-in-Process Inventory } & & & \\\hline \text { Cost of Goods Manufactured } & & & \\\hline\end{array}$

The cost of goods sold for Frye Manufacturing in the year was $297,000.The January 1 Finished Goods Inventory balance was $31,600,and the December 31 Finished Goods Inventory balance was $25,600.Calculate the cost of goods manufactured during the year.

Goods that have been started in the manufacturing process but are not yet complete are included in the ________.

In order to reach new markets,many companies are moving operations to other countries.

Financial reporting is typically much more detailed than managerial accounting.

ERP systems can integrate all of a company's functions,departments,and data into a single system.

Which of the following is a prime cost and a conversion cost?

All costs incurred in the manufacture of completed products are product costs.

The managerial role that involves the day-to-day running of the business is the ________.

The unit product cost is only part of the information that is needed to determine the sales price for each product.

Which of the following statements is TRUE of managerial accounting?

Unit product costs can be used to measure operating income and determine the cost of Finished Goods Inventory.

Accuracy Accounting,Inc.sells accounting textbooks.The following information summarizes Accuracy Accounting's operating activities for the year: $\begin{array} { | l | r | } \hline \text { Merchandise Inventory, January 1 } & \$ 10,000 \\\hline \text { Merchandise Inventory, December } 31 & 7,000 \\\hline \text { Purchases } & 95,000 \\\hline \text { Selling and Administrative Expenses } & 65,000 \\\hline \text { Sales Revenue } & 180,000 \\\hline\end{array}$ Required: Prepare Accuracy Accounting,Inc.'s income statement for the year ended December 31.

Companies that provide healthcare,communication,banking and other benefits to society are called ________.

For each of the following,indicate whether the statement relates to managerial accounting (MA)or financial accounting (FA): $\begin{array} { | l | l | } \hline \text { Statement } & \text { Applies to } \\&\text { MA or FA } \\\hline \text { How reports will affect employee behavior is a } & \\\text { concern. } & \\\hline \text { Summary reports are prepared primarily on the } & \\\text { company as a whole, usually on a quarterly or annual } \\\text { basis. } & \\\hline \text { Relevant information and focus on the future. } & \\\hline \text { Primary users include investors, creditors, and } & \\\text { government authorities. } & \\\hline \text { There is no requirement to follow GAAP. } & \\\hline\end{array}$

Product costs,such as direct materials costs,are expensed in the period they are incurred.

Classify each cost of a furniture manufacturer as either a product cost (PR)or a period cost (PE). $\begin{array} { | l | l | } \hline { \text { Cost } } & \text { PR or PE } \\\hline \text { Vice president of marketing's salary } & \\\hline \text { Delivery expense } & \\\hline \text { Wood used to make dining tables } & \\\hline \text { Depreciation on office equipment } & \\\hline \text { Production supervisor's salary } & \\\hline \text { Factory insurance } & \\\hline \text { Corporate office rent } & \\\hline\end{array}$

Merchandising companies,like service companies,do not use a Cost of Goods Sold account.