Question 1

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

Accepted Answer

A)  Manufacturing overhead 
B)  Direct materials 
C)  Direct labor 
D)  Selling expenses 
A)  Manufacturing overhead 
B)  Direct materials 
C)  Direct labor 
D)  Selling expenses

Question 2

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

Accepted Answer

A)  Direct materials cost 
B)  Indirect materials cost 
C)  Direct labor 
D)  Advertising 
A)  Direct materials cost 
B)  Indirect materials cost 
C)  Direct labor 
D)  Advertising

Question 3

Service companies do not have product costs so they often consider all operating expenses as part of their cost of service.

Accepted Answer

A) True 
 B)False

Question 4

In a manufacturing firm, accounting, legal, and administrative costs are typical examples of product costs.

Accepted Answer

A) True 
 B)False

Question 5

The following information has been provided by Squash Corporation: $$\begin{array} { | l | r | } 
\hline \text { Direct Labor } & \$ 6,500 \
\hline \text { Direct Materials Used } & 2,550 \
\hline \text { Raw Materials Purchased } & 5,000 \
\hline \text { Cost of Goods Manufactured } & 10,500 \
\hline \text { Ending Work-in-Process Inventory } & 1,200 \
\hline \text { Corporate Headquarters' Property taxes } & 350 \
\hline \text { Manufacturing Overhead } & 510 \
\hline
\end{array}$$ The beginning balance of Work-in-Process Inventory account was:

Accepted Answer

A)  $2,400. 
B)  $2,140. 
C)  $18,860. 
D)  $9,560. 
A)  $2,400. 
B)  $2,140. 
C)  $18,860. 
D)  $9,560.

Question 6

Direct costs and indirect costs can be easily traced directly to a cost object.

Accepted Answer

A) True 
 B)False

Question 7

Which of the following is true of finished goods inventory?

Accepted Answer

A)  Finished Goods Inventory is an account used by a manufacturer and includes completed goods that have not yet been sold. 
B)  Finished Goods Inventory is an account used by a merchandiser and includes completed goods that have not yet been sold. 
C)  Finished Goods Inventory is an account used by service companies in lieu of raw materials inventory. 
D)  Finished Goods Inventory is an account used by a manufacturer in lieu of raw materials inventory. 
A)  Finished Goods Inventory is an account used by a manufacturer and includes completed goods that have not yet been sold. 
B)  Finished Goods Inventory is an account used by a merchandiser and includes completed goods that have not yet been sold. 
C)  Finished Goods Inventory is an account used by service companies in lieu of raw materials inventory. 
D)  Finished Goods Inventory is an account used by a manufacturer in lieu of raw materials inventory.

Question 8

Which of the following correctly describes the accounting for indirect labor costs?

Accepted Answer

A)  Indirect labor costs are product costs and are expensed as incurred. 
B)  Indirect labor costs are period costs and are expensed as incurred. 
C)  Indirect labor costs are product costs and are expensed when the manufactured product is sold. 
D)  Indirect labor costs are period costs and are expensed when the manufactured product is sold. 
A)  Indirect labor costs are product costs and are expensed as incurred. 
B)  Indirect labor costs are period costs and are expensed as incurred. 
C)  Indirect labor costs are product costs and are expensed when the manufactured product is sold. 
D)  Indirect labor costs are period costs and are expensed when the manufactured product is sold.

Question 9

The cost of direct materials cannot easily be traced to the manufactured product, and therefore it is a component of manufacturing overhead.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following would appear as a line item on the income statements of both, a merchandiser and a manufacturer?

Accepted Answer

A)  Direct Labor 
B)  Cost of Goods Manufactured 
C)  Direct Materials 
D)  Cost of Goods Sold 
A)  Direct Labor 
B)  Cost of Goods Manufactured 
C)  Direct Materials 
D)  Cost of Goods Sold

Question 11

Repair and maintenance costs of vehicles used to deliver products to the customers are included in manufacturing overhead.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following will most likely be considered an indirect material cost for a bakery?

Accepted Answer

A)  Spices 
B)  Flour 
C)  Milk 
D)  Eggs 
A)  Spices 
B)  Flour 
C)  Milk 
D)  Eggs

Question 13

Manufacturing overhead includes all manufacturing costs, such as direct labor and direct materials.

Accepted Answer

A) True 
 B)False

Question 14

Joshua is the accountant of Seria Inc. Seria has received a bulk order from an overseas client. As a result, the reported earnings of this year will be significantly higher than the estimates of financial analysts. Joshua tells this to one of his friends. Which of the IMA standards has Joshua violated?

Accepted Answer

A)  Objectivity 
B)  Competence 
C)  Confidentiality 
D)  Technicality 
A)  Objectivity 
B)  Competence 
C)  Confidentiality 
D)  Technicality

Question 15

Managerial accounting can be used to calculate costs for service and merchandising companies.

Accepted Answer

A) True 
 B)False

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

The IMA standards of ethical practice require managerial accountants to maintain their professional competence.

Accepted Answer

A) True 
 B)False

Question 18

Salary of a factory manager will be included in manufacturing overhead.

Accepted Answer

A) True 
 B)False

Question 19

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 total manufacturing cost incurred during the year 2015?

Accepted Answer

A)  $744,000 
B)  $360,000 
C)  $1,414,000 
D)  $1,214,000 
A)  $744,000 
B)  $360,000 
C)  $1,414,000 
D)  $1,214,000

Question 20

In a manufacturing firm, advertising and marketing costs are examples of period costs.

Accepted Answer

A) True 
 B)False

Exam 18: Introduction to Managerial Accounting

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

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

Service companies do not have product costs so they often consider all operating expenses as part of their cost of service.

In a manufacturing firm, accounting, legal, and administrative costs are typical examples of product costs.

Direct costs and indirect costs can be easily traced directly to a cost object.

Which of the following is true of finished goods inventory?

Which of the following correctly describes the accounting for indirect labor costs?

The cost of direct materials cannot easily be traced to the manufactured product, and therefore it is a component of manufacturing overhead.

Which of the following would appear as a line item on the income statements of both, a merchandiser and a manufacturer?

Repair and maintenance costs of vehicles used to deliver products to the customers are included in manufacturing overhead.

Which of the following will most likely be considered an indirect material cost for a bakery?

Manufacturing overhead includes all manufacturing costs, such as direct labor and direct materials.

Managerial accounting can be used to calculate costs for service and merchandising companies.

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

The IMA standards of ethical practice require managerial accountants to maintain their professional competence.

Salary of a factory manager will be included in manufacturing overhead.

In a manufacturing firm, advertising and marketing costs are examples of period costs.

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

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