Exam 10: An Introduction to Management Accounting

Travis Company had no beginning work in process or finished goods. Its total manufacturing costs for the year were $427,000. If cost of goods manufactured was $332,000 and cost of goods sold was $250,000, the amount of ending work in process would have been:

Steuben Company produces dog houses. During the current year, Steuben Company incurred the following costs: Wages paid to factory machine operators in producing the dog houses should be categorized as a:

Cash paid to production workers should be recorded as Wages Expense in the income statement for the period incurred.

Select the incorrect statement regarding service companies.

Product costs include materials, labor, and selling and administrative costs.

Costs associated with holding inventory include hidden costs, such as low employee motivation.

Costs associated with holding inventory often include:

For a manufacturing company, product costs include all of the following except:

Managerial accounting is designed to satisfy needs of external users including creditors, investors, and governmental agencies.

Information about all three manufacturing inventory accounts is required to prepare the cost of goods manufactured and sold schedule.

Manufacturing costs that cannot be traced to specific units of product in a cost-effective manner include:

Warren Company applies overhead based on direct labor cost. Warren Company estimated that it would incur $180,000 in manufacturing overhead costs and $120,000 of direct labor costs during the current year. Actual manufacturing overhead cost totaled $150,000 and actual direct labor costs totaled $110,000 during the current year. If total manufacturing costs were $320,000, what amount of direct materials was used during the year?

During its first year of operations, Silverman Company paid $14,000 for direct materials and $19,000 for production workers' wages. Lease payments and utilities on the production facilities amounted to $17,000 while general, selling, and administrative expenses totaled $8,000. The company produced 5,000 units and sold 3,000 units at a price of $15.00 a unit. What is Silverman's cost of goods sold for the year?

During its first year of operations, Forrest Company paid $30,000 for direct materials and $50,000 in wages for production workers. Lease payments, utility costs, and depreciation on factory equipment totaled $15,000. General, selling, and administrative expenses were $20,000. The average cost to produce one unit was $2.50. How many units were produced during the period?

Distinguishing between product and period costs is sometimes guided by the value-added principle.

Select the incorrect statement regarding the relationship between type of user and type of information.

Steuben Company produces dog houses. During the current year, Steuben Company incurred the following costs: Based on the above information, which of the following would not be treated as a product cost:

Newton Corporation entered into the following transactions during its first year of operations. (Assume all transactions involve cash.) 1) Acquired $2,000 of capital from the owners. 2) Purchased $600 of direct raw materials. 3) Used $400 of these direct raw materials in the production process. 4) Paid production workers $800 cash. 5) Paid $400 for manufacturing overhead. 6) Started and completed 200 units of inventory. 7) Sold 50 units at a price of $12 each. "8) Paid $80 for selling and administrative expenses. The amount of net income for the year was:"

During its first year of operations, a company that incurred $1,000 in production costs reported cost of goods sold of $800 and selling costs of $100. Its ending finished goods inventory was $300.

The time spent moving a product from one processing department to the next processing department is an example of a value-added activity.