Question 1

Comparing actual performance to previously budgeted amounts is part of the:

Accepted Answer

A)  controlling function of managerial accounting. 
B)  planning function of managerial accounting. 
C)  reporting function of managerial accounting. 
D)  organizing function of managerial accounting. 
A)  controlling function of managerial accounting. 
B)  planning function of managerial accounting. 
C)  reporting function of managerial accounting. 
D)  organizing function of managerial accounting. A

Question 2

Dreams Manufacturing Company provided the following information for the year 2015:
 $$\begin{array} { | l | r | } 
\hline \text { Purchases-Raw Materials } & \$ 270,000 \
\hline \text { Plant Utilities \& Insurance } & 202,500 \
\hline \text { Indirect Materials } & 35,250 \
\hline \text { Indirect Labor } & 14,250 \
\hline \text { Ending Balance - Work-in-Process Inventory } & 42,000 \
\hline \text { Ending Balance - Raw Materials Inventory } & 45,000 \
\hline \text { Direct Labor } & 352,500 \
\hline \text { Depreciation on Factory Plant \& Equipment } & 18,000 \
\hline \text { Beginning Balance - Work-in-Process Inventory } & 18,000 \
\hline \text { Beginning Balance-Raw Materials Inventory } & 63,000 \
\hline
\end{array}$$ Required: Prepare a statement of the cost of goods manufactured using the following format:
 \[\begin{array} { | l | l | l | l | } 
\hline \text { COSTOF GOODS MFGD } & \quad\quad\quad& \quad\quad\quad&\quad\quad\quad \
\hline \text { Beginning Work-in-Process Inventory } & & & \
\hline \text { Direct Materials Used: } & & & \
\hline \text { Beginning Raw Materials Inventory } & & & \
\hline \text { Purchases of Raw Materials } & & & \
\hline \text { Raw Materials Available for Use } & & & \
\hline \text { Ending Raw Materials Inventory } & & & \
\hline \text { Direct Materials Used } & & & \
\hline \text { Direct Labor } & & & \
\hline \text { Manufacturing Overhead: } & & & \
\hline \text { Indirect Materials } & & & \
\hline \text { Indirect Labor } & & & \
\hline \text { Depreciation-Plant \& Equip. } & & & \
\hline \text { Plant utilities \& Insurance } & & & \
\hline \text { Total Manufacturing Overhead } & & & \
\hline \text { Total Manufacturing Costs Incurred During } & & & \
\hline \text { the Year } & & & \
\hline \text { Total Manufacturing Costs to Account For } & & & \
\hline \text { Ending Work-in-Process Inventory } & & & \
\hline \text { Cost of Goods Manufactured } & & & \
\hline
\end{array}\]

Accepted Answer

$\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $Schedule af Cost of Ened MFinfictured
Beginning Work-in-Process Inventory $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $ $\quad $$18,000 Direct Materials Used
 $\begin{array}{c}
\begin{array}{lll}
 \text {Beginning Raw Materials Inventory}\  \text {Purchases of Raw Materials}\
 \text {Raw Materials Available for Use}\
 \text {Ending Raw Materials Inventory}\
 \text {Direct Materials Used}\
 \text {Direct Labor}
\end{array}
\begin{array}{l}
\$ 63,000 \
\underline{270,000}\
333,000 \
\underline{-45,000} \
 \
\
\end{array}
\begin{array}{lll}
\
\
\
\
\$288,000\
352,500
\end{array}
\end{array}$
 Manufacturing Overhead
 $\begin{array}{c}
\begin{array}{lll}
 \text {Indirect Materials}\
 \text {Indirect Labor}\
 \text {Depreciation on Factory Plant \&Equipment}\ 
 \text {Plant Utilities  \&Insurance}\
 \text {Total Manufacturing Overhead}
\end{array}
\begin{array}{l}
35,250 \
14,250 \
18,000 \
\underline{202,500} \
\
\end{array}
\begin{array}{lll}
\
\
\
\
\underline{270,000}
\end{array}

\end{array}$
 Total Manufacturing Costs Incurred During
 $\begin{array}{c}
\begin{array}{lll}
 \text {the Year}\
 \text {Total Manufacturing Costs to Account For }\
 \text {Ending Work-in-Process Inventory}\
 \text {Cost of Goods Manufactured}
\end{array}
\begin{array}{l}
\underline{910,500}\
928,500\
\underline{-42,000}\
\underline{\$ 886,500}
\end{array}
\end{array}$

Question 3

Which of the following is true of service companies?

Accepted Answer

A)  All of service companies' costs are product costs. 
B)  Service companies modify and resell products they buy from manufacturers. 
C)  Revenues of service companies are only recorded on cash receipt. 
D)  Service companies carry no inventories of products for sale. 
A)  All of service companies' costs are product costs. 
B)  Service companies modify and resell products they buy from manufacturers. 
C)  Revenues of service companies are only recorded on cash receipt. 
D)  Service companies carry no inventories of products for sale. D

Question 4

Manufacturing businesses have inventory accounts, but merchandising businesses do not.

Accepted Answer

A) True 
 B)False

Question 5

Jasper Inc. reports the following cost information for March: $$\begin{array} { | l | r | } 
\hline \text { Cost of Goods Manufactured } & \$ 75,000 \
\hline \text { Manufacturing Overhead } & 18,250 \
\hline \text { Finished Goods Inventory, March 1 } & 4,500 \
\hline \text { Finished Goods Inventory, March 31 } & 2,650 \
\hline \text { Work-in-Process Inventory, March 1 } & 9,670 \
\hline \text { Work-in-Process Inventory, March 31 } & 1,250 \
\hline \text { Direct Materials Used } & 25,300 \
\hline
\end{array}$$ What is the amount of direct labor incurred by Jasper in March?

Accepted Answer

A)  $29,600 
B)  $39,870 
C)  $126,970 
D)  $23,030 
A)  $29,600 
B)  $39,870 
C)  $126,970 
D)  $23,030

Question 6

Which of the following represents the combined sum of direct materials and direct labor?

Accepted Answer

A)  Conversion costs 
B)  Period costs 
C)  Prime costs 
D)  Fixed costs 
A)  Conversion costs 
B)  Period costs 
C)  Prime costs 
D)  Fixed costs

Question 7

Amoeba Manufacturing Company provided the following information for the year 2015: $$\begin{array} { | l | r | } 
\hline \text { Purchases-Raw Materials } & \$ 90,000 \
\hline \text { Plant Utilities \& Insurance } & 67,500 \
\hline \text { Indirect Materials } & 11,750 \
\hline \text { Dirdirect Labor } & 4,750 \
\hline \text { Direct Materials Used in Production } & 96,000 \
\hline \text { Direct Labor } & 117,500 \
\hline \text { Depreciation on Factory Plant \& Equipment } & 6,000 \
\hline
\end{array}$$ The inventory account balances as of January 1st 2015 are given below.
$$\begin{array} { | l | r | } 
\hline \text { Raw Materials Inventory } & \$ 42,000 \
\hline \text { Work-in-Process Inventory } & 12,000 \
\hline \text { Finished Goods Inventory } & 49,500 \
\hline
\end{array}$$ What is the ending balance in the Raw Materials Inventory account?

Accepted Answer

A)  $54,000 
B)  $6,000 
C)  $111,000 
D)  $24,250 
A)  $54,000 
B)  $6,000 
C)  $111,000 
D)  $24,250

Question 8

Which of the following will be classified as a conversion cost?

Accepted Answer

A)  Cost of raw materials 
B)  Depreciation on factory equipment 
C)  Salary of sales personnel 
D)  Depreciation on office furniture 
A)  Cost of raw materials 
B)  Depreciation on factory equipment 
C)  Salary of sales personnel 
D)  Depreciation on office furniture

Question 9

The following information was obtained from Fizz Company: $$\begin{array} { | l | r | } 
\hline \text { Advertising Costs } & \$ 9,900 \
\hline \text { Indirect Labor } & 11,000 \
\hline \text { CEO's Salary } & 49,000 \
\hline \text { Direct Labor } & 41,000 \
\hline \text { Indirect Materials } & 7,900 \
\hline \text { Direct Materials Used } & 61,000 \
\hline \text { Factory Utilities } & 700 \
\hline \text { Factory Janitorial Costs } & 2,300 \
\hline \text { Manufacturing Equipment Depreciation } & 2,100 \
\hline \text { Delivery Vehicle Depreciation } & 1,100 \
\hline \text { Administrative Wages and Salaries } & 21,000 \
\hline
\end{array}$$ How much were Fizz's period costs?

Accepted Answer

A)  $60,000 
B)  $81,000 
C)  $92,000 
D)  $79,900 
A)  $60,000 
B)  $81,000 
C)  $92,000 
D)  $79,900

Question 10

Excellent Company sells accounting textbooks. The following information summarizes Excellent's operating activities for 2015:
$$\begin{array} { | l | r | } 
\hline \text { Merchandise Inventory, January 1, 2015 } & \$ 10,000 \
\hline \text { Merchandise Inventory, December } 31,2015 & 7,000 \
\hline \text { Purchases } & 95,000 \
\hline \text { Selling and Administrative Expenses } & 65,000 \
\hline \text { Sales Revenue } & 180,000 \
\hline
\end{array}$$ Required: Prepare Excellent Company's income statement for the year ended December 31, 2015.

Accepted Answer

None

Question 11

Barricades Corporation provided the following information for the year 2015: $$\begin{array} { | l | r | } 
\hline \text { Beginning Balance - Work-in-Process Inventory } & \$ 24,000 \
\hline \text { Ending Balance - Work-in-Process Inventory } & 56,000 \
\hline \text { Beginning Balance - Raw Materials Inventory } & 84,000 \
\hline \text { Ending Balance - Raw Materials Inventory } & 60,000 \
\hline \text { Purchases-Raw Materials } & 360,000 \
\hline \text { Direct Labor } & 470,000 \
\hline \text { Indirect Materials } & 47,000 \
\hline \text { Indirect Labor } & 19,000 \
\hline \text { Depreciation on Factory Plant \& Equipment } & 24,000 \
\hline \text { Plant Utilities \& Insurance } & 270,000\
\hline
\end{array}$$ What was the amount of direct materials used in production during 2015?

Accepted Answer

A)  $360,000 
B)  $504,000 
C)  $384,000 
D)  $328,000 
A)  $360,000 
B)  $504,000 
C)  $384,000 
D)  $328,000

Question 12

Which of the following would be classified as a prime cost?

Accepted Answer

A)  Cost of raw materials 
B)  Depreciation on factory equipment 
C)  Salary of sales personnel 
D)  Depreciation on office furniture 
A)  Cost of raw materials 
B)  Depreciation on factory equipment 
C)  Salary of sales personnel 
D)  Depreciation on office furniture

Question 13

The following information relates to Webster Inc.: $$\begin{array} { | l | r | } 
\hline \text { Salvertising Costs } & \$ 10,270 \
\hline \text { Sales Salary } & 4,500 \
\hline \text { Sales Revenue } & 450,000 \
\hline \text { President's Salary } & 40,300 \
\hline \text { Office Rent } & 61,100 \
\hline \text { Manufacturing Equipment Depreciation } & 2,080 \
\hline \text { Indirect Materials } & 9,360 \
\hline \text { Indirect Labor } & 11,700 \
\hline \text { Factory Repair and Maintenance } & 910 \
\hline \text { Direct Materials } & 28,080 \
\hline \text { Direct Labor } & 35,100 \
\hline \text { Delivery Vehicle Depreciation } & 1,027 \
\hline \text { Administrative Salaries } & 24,700 \
\hline
\end{array}$$ How much was Webster's manufacturing overhead?

Accepted Answer

A)  $21,060 
B)  $21,970 
C)  $24,050 
D)  $141,897 
A)  $21,060 
B)  $21,970 
C)  $24,050 
D)  $141,897

Question 14

The cost of goods manufactured includes selling expenses, administrative expenses, and manufacturing overhead.

Accepted Answer

A) True 
 B)False

Question 15

The whole sequence of activities that add value to a company's products and services is called:

Accepted Answer

A)  the value chain. 
B)  the planning process. 
C)  TQM production chain. 
D)  enterprise resource planning (ERP). 
A)  the value chain. 
B)  the planning process. 
C)  TQM production chain. 
D)  enterprise resource planning (ERP).

Question 16

The IMA Standards of Ethical Practice include confidentiality, competence, credibility, and integrity.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following statements is true of management accounting?

Accepted Answer

A)  The primary users of management accounting are the external stakeholders of a company. 
B)  Management accounting information is used to help managers plan and control their operations. 
C)  Management accounting information requires an external audit by an independent CPA. 
D)  Management accounting information must comply with Generally Accepted Accounting Principles. 
A)  The primary users of management accounting are the external stakeholders of a company. 
B)  Management accounting information is used to help managers plan and control their operations. 
C)  Management accounting information requires an external audit by an independent CPA. 
D)  Management accounting information must comply with Generally Accepted Accounting Principles.

Question 18

Jasper Inc. reports the following cost information for March: $$\begin{array} { | l | r | } 
\hline \text { Cost of Goods Manufactured } & \$ 75,000 \
\hline \text { Manufacturing Overhead } & 18,250 \
\hline \text { Finished Goods Inventory, March 1 } & 4,500 \
\hline \text { Finished Goods Inventory, March 31 } & 2,650 \
\hline \text { Work-in-Process Inventory, March 1 } & 9,670 \
\hline \text { Work-in-Process Inventory, March 31 } & 1,250 \
\hline \text { Direct Materials Used } & 25,300 \
\hline
\end{array}$$ What is the cost of goods sold for March?

Accepted Answer

A)  $83,420 
B)  $73,150 
C)  $76,850 
D)  $82,150 
A)  $83,420 
B)  $73,150 
C)  $76,850 
D)  $82,150

Question 19

The accountant for Myra Lido deliberately deferred cash payments for business expenses in order to record a higher operating cash flow for the company. As long as the amount was not material, this would not be considered unethical behavior.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following describes a system in which suppliers deliver materials at the time they are needed and finished units are completed when customer orders need to be filled?

Accepted Answer

A)  Supply chain management 
B)  Just-in-time (JIT) management 
C)  Enterprise resource planning (ERP) 
D)  Total quality management (TQM) 
A)  Supply chain management 
B)  Just-in-time (JIT) management 
C)  Enterprise resource planning (ERP) 
D)  Total quality management (TQM)

Comparing actual performance to previously budgeted amounts is part of the:

Which of the following is true of service companies?

Manufacturing businesses have inventory accounts, but merchandising businesses do not.

Which of the following represents the combined sum of direct materials and direct labor?

Which of the following will be classified as a conversion cost?

Which of the following would be classified as a prime cost?

The cost of goods manufactured includes selling expenses, administrative expenses, and manufacturing overhead.

The whole sequence of activities that add value to a company's products and services is called:

The IMA Standards of Ethical Practice include confidentiality, competence, credibility, and integrity.

Which of the following statements is true of management accounting?

The accountant for Myra Lido deliberately deferred cash payments for business expenses in order to record a higher operating cash flow for the company. As long as the amount was not material, this would not be considered unethical behavior.

Which of the following describes a system in which suppliers deliver materials at the time they are needed and finished units are completed when customer orders need to be filled?

Accounting and the Business Environment

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Merchandising Operations

Merchandise Inventory

Accounting Information Systems

Internal Control and Cash

Receivables

Plant Assets, Natural Resources, and Intangibles

Current Liabilities and Payroll

Partnerships

Corporations

Long-Term Liabilities

Investments

The Statement of Cash Flows

Financial Statement Analysis

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Master Budgets

Flexible Budgets and Standard Cost Systems

Cost Allocation and Responsibility Accounting

Short-Term Business Decisions

Capital Investment Decisions

Filters

Exam 18: Introduction to Managerial Accounting

Comparing actual performance to previously budgeted amounts is part of the:

Which of the following is true of service companies?

Manufacturing businesses have inventory accounts, but merchandising businesses do not.

Which of the following represents the combined sum of direct materials and direct labor?

Which of the following will be classified as a conversion cost?

Which of the following would be classified as a prime cost?

The cost of goods manufactured includes selling expenses, administrative expenses, and manufacturing overhead.

The whole sequence of activities that add value to a company's products and services is called:

The IMA Standards of Ethical Practice include confidentiality, competence, credibility, and integrity.

Which of the following statements is true of management accounting?

The accountant for Myra Lido deliberately deferred cash payments for business expenses in order to record a higher operating cash flow for the company. As long as the amount was not material, this would not be considered unethical behavior.

Which of the following describes a system in which suppliers deliver materials at the time they are needed and finished units are completed when customer orders need to be filled?

Accounting and the Business Environment

Recording Business Transactions

The Adjusting Process

Completing the Accounting Cycle

Merchandising Operations

Merchandise Inventory

Accounting Information Systems

Internal Control and Cash

Receivables

Plant Assets, Natural Resources, and Intangibles

Current Liabilities and Payroll

Partnerships

Corporations

Long-Term Liabilities

Investments

The Statement of Cash Flows

Financial Statement Analysis

Job Order Costing

Process Costing

Cost-Volume-Profit Analysis

Master Budgets

Flexible Budgets and Standard Cost Systems

Cost Allocation and Responsibility Accounting

Short-Term Business Decisions

Capital Investment Decisions

Filters