Exam 18: Introduction to Managerial Accounting

Financial statements prepared for investors and creditors often include forward-looking information because they make decisions based on a company's future prospects.

For a manufacturing business, which of the following would be included as indirect manufacturing costs?

Damsel Inc. is a large manufacturer of auto tires. Damsel has provided the following information: Sales Revenue \ 45,500 Beginning Finished Goods Inventory 1,500 Cost of Goods Sold 32,500 Cost of Goods Manufactured 35,000 Calculate the amount of ending finished goods inventory reported in Damsel's balance sheet.

Star Health Inc. is a fitness center in Oklahoma City. In October, the company earned $550,000 in revenues and incurred the following operating costs from 340 customers: Manager's salary \ 50,000 Gym Rent 60,000 Depreciation Expense-Equipment 25,000 Office Supplies 30,000 Utilities Expense 89,700 Trainer's Salary 25,000 How much is the unit cost per customer service?

Which of the following formulas represents cost of goods sold for a merchandising business?

Manufacturing overhead is also referred to as:

Arturo Manufacturing Company provided the following information for the year 2015: Beginning Balance - Work-in-Process Inventory \ 12,000 Ending Balance - Work-in-Process Inventory 28,000 Beginning Balance - Raw Materials Inventory 42,000 Ending Balance - Raw Materials Inventory 30,000 Purchases-Raw Materials 180,000 Direct Labor 235,000 Indirect Materials 23,500 Indirect Labor 9,500 Depreciation on Factory Plant \& Equipment 12,000 Plant Utilities \& Insurance 135,000 How much is the cost of goods manufactured?

For external reporting purposes, GAAP requires companies to treat period costs as assets.

Factory rent, taxes, and insurance are included in manufacturing overhead.

Crystal Inc. is a merchandiser of stone ornaments. The company sold 15,000 units in 2015. The company has provided the following information: Sales Revenue \ 557,000 Purchases (excluding freight in) 300,000 Selling and Administrative Expenses 69,000 Freight In 15,000 Beginning Merchandise Inventory 45,000 Ending Merchandise Inventory 55,700 What is the cost of goods available for sale for 2015?

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

Wages of factory janitors is considered non-manufacturing overhead, as these are not directly related to the manufacturing process.

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

For a manufacturing firm, which of the following is a product cost?

Star Health Inc. is a fitness center in Oklahoma City. In October, the company earned $550,000 in revenues and incurred the following operating costs from 340 customers: Manager's salary \ 50,000 Gym Rent 60,000 Depreciation Expense-Equipment 25,000 Office Supplies 30,000 Utilities Expense 89,700 Trainer's Salary 25,000 Required: Prepare Star Health's income statement for the month of October.

An enterprise resource planning system (ERP):

In manufacturing, the cost objects are often units of product.

A company used $35,000 of direct materials, incurred $73,000 in direct labor cost, and $114,000 in manufacturing overhead costs during the period. If beginning and ending Work-in-Process Inventories were $28,000 and $21,000 respectively, what is the cost of goods manufactured?

Simons Company sells plastic ware. The following information summarizes Simons' operating activities for 2015: Utilities Expense \ 65,000 Rent Expense 10,000 Sales Commissions Expense 32,500 Purchases of Merchandise 260,000 Inventory on January 1, 2015 65,000 Inventory on December 31, 2015 97,500 Sales Revenue 650,000 Prepare an income statement for Simons Company, a merchandiser, for the year ended December 31, 2015 using the format below: Sales Revenue Cost of Goods Sold Beginning Inventory Purchases Cost of Goods Available for Sale Ending Inventory Cost of Goods Sold Gross Profit Selling Expenses Sales Commissions Expense Administrative Expenses Rent Expense Utilities Expense Total Operating Expenses Operating Income

Fuchsia Inc. provides automobile services in the local community. The company provides the following information for the month of March: Building Rent Expense \ 5,000 Depreciation Expense-Equipment 1,700 Supplies Expense 8,500 Utilities Expense 2,450 Fuchsia provided services to 1,500 clients in the month of March and generated $20,500 as revenue. How much is the cost per service?