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Exam 18: Managerial Accounting Concepts and Principles

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Question 101

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Indirect costs cannot be easily and cost-beneficially traced to a single cost object.

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Question 102

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Match the following terms with the appropriate definition.

Premises

Responses

Direct materials

Costs that flow directly to the current income statement as expenses.

Indirect costs

Costs that change in proportion to changes in volume of activity.

Product costs

The efforts of employees who physically convert materials to finished products.

Prime costs

Manufacturing expenditures that cannot be separately or readily traced to finished goods.

Fixed costs

Expenditures necessary and integral to finished products.

Direct labor

Expenditures incurred in the process of converting raw materials to finished products; include direct labor and factory overhead.

Period costs

Tangible components of a finished product separately and readily traced through the manufacturing process.

Conversion costs

Expenditures directly associated with the manufacture of finished products; include direct materials and direct labor.

Factory overhead

Costs that do not change in total with changes in the volume of activity.

Variable costs

Costs that are incurred for the benefit of more than one cost object.

Premises

Direct materials

Indirect costs

Product costs

Prime costs

Fixed costs

Direct labor

Period costs

Conversion costs

Factory overhead

Variable costs

Responses

Costs that flow directly to the current income statement as expenses.

Costs that change in proportion to changes in volume of activity.

The efforts of employees who physically convert materials to finished products.

Manufacturing expenditures that cannot be separately or readily traced to finished goods.

Expenditures necessary and integral to finished products.

Expenditures incurred in the process of converting raw materials to finished products; include direct labor and factory overhead.

Tangible components of a finished product separately and readily traced through the manufacturing process.

Expenditures directly associated with the manufacture of finished products; include direct materials and direct labor.

Costs that do not change in total with changes in the volume of activity.

Costs that are incurred for the benefit of more than one cost object.

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Premises

Responses

Direct materials

Indirect costs

Product costs

Prime costs

Fixed costs

Direct labor

Period costs

Conversion costs

Factory overhead

Variable costs

Premises

Direct materials

Indirect costs

Product costs

Prime costs

Fixed costs

Direct labor

Period costs

Conversion costs

Factory overhead

Variable costs

Responses

Question 103

Multiple Choice

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Using the information below, calculate gross profit for the period: $\begin{array}{lr}\text { Sales revenues for the period }&\$1,304,000\\\\\text { Operating expenses for the period } & 239,000 \\\text { Finished Goods Inventory, January } 1 & 36,000 \\\text { Finished Goods Inventory, December } 31 & 41,000 \\\text { Cost of goods manufactured for the period } & 540,000\end{array}$

Using the information below, calculate net income for the period: $\begin{array}{lr}\text { Sales revenues for the period }&\$1,304,000\\\\\text { Operating expenses for the period } & 239,000 \\\text { Finished Goods Inventory, January } 1 & 36,000 \\\text { Finished Goods Inventory, December } 31 & 41,000 \\\text { Cost of goods manufactured for the period } & 540,000\end{array}$

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

Prime costs consist of direct materials and direct labor.

What are prime costs? What are conversion costs?

Beginning finished goods inventory plus cost of goods manufactured minus ending finished goods inventory equals cost of goods sold.

Costs may be classified by many different cost classifications.

Using the information below for Singing Dolls, Inc., determine cost of goods manufactured for the year: $\begin{array} { l | r } \hline \text { Work in Procest, January 1 } & 50,000 \\\hline \text { Work in Process, December 31 } & 37,000 \\\hline \text { Total Factory overhead } & 5,500 \\\hline \text { Direct materials used } & \$ 12,500 \\\hline \text { Direct labor used } & 26,500\end{array}$

The following information relates to the manufacturing operations of the Abbra Publishing Company for the year: $\begin{array}{llr} & \text {Beginning}& \text {Ending}\\ \text {Raw materials inventory } & \$ 547,000 & \$ 610.100\\\end{array}$ The raw materials used in manufacturing during the year totaled $1,018,000. Raw materials purchased during the year amount to:

What does the days' sales in raw materials inventory ratio reveal?

List the four goals of an internal control system.

The concept of total quality management focuses on continuous improvement.

The following cost items relate to the Henning Company. Classify each cost as a variable cost or a fixed cost by placing an X in the appropriate column. Each cost should be evaluated in terms of the volume of units of finished products produced. Also indicate with an X for each item if it is a product cost or a period cost.

Explain what is meant by the "lean business model" and why many businesses have adopted it.

Duncan Crafts manufactures specialty key chains for tourist attractions. On January 1, the firm had 300 souvenir attraction disks used in the production of the chains that cost $3 each; and 600 completed key chains that cost $6 each. During the year Duncan Crafts purchased 1,500 souvenir disks costing $3 each and produced 1,100 key chains. Compute the total cost of raw materials inventory at December 31.

Romeo Corporation has accumulated the following accounting data for the year: $\begin{array}{ll}\text { Finished goods inventory, January 1 } & \$ 3,200 \\\text { Finished goods inventory, December } 31 & 4,000 \\\text { Total cost of goods sold } & 14,200\end{array}$ The cost of goods manufactured for the year is:

Control is the process of setting goals and determining ways to achieve them.

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