Question 1

Define direct cost.

Accepted Answer

A direct cost is a c

Question 2

Goods that have been started in the manufacturing process but are not yet complete are included in the ________.

Accepted Answer

A) Finished Goods Inventory account 
B) Work-in-Process Inventory account 
C) Raw Materials Inventory account 
D) Cost of Goods Sold account 
A) Finished Goods Inventory account 
B) Work-in-Process Inventory account 
C) Raw Materials Inventory account 
D) Cost of Goods Sold account

Question 3

The officer of the company who has the ultimate responsibility for implementing the company's long and short-term goals is the ________.

Accepted Answer

A) Chief Financial Officer 
B) Chair of the Board 
C) Chief Executive Officer 
D) Chief Officer for Human Relations 
A) Chief Financial Officer 
B) Chair of the Board 
C) Chief Executive Officer 
D) Chief Officer for Human Relations

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

Herrera,Inc.,a merchandiser,sells office supplies.The following information summarizes Herrera's operating activities during the year:
 $$\begin{array} { | l | r | } 
\hline \text { Utilities Expense } & \$ 6,000 \
\hline \text { Rent for Store Expense } & 8,000 \
\hline \text { Sales Commissions Expense } & 4,500 \
\hline \text { Purchases of Merchandise } & 54,000 \
\hline \text { Merchandise Inventory on January 1 } & 30,000 \
\hline \text { Merchandise Inventory on December } 31 & 20,500 \
\hline \text { Sales Revenue } & 108,000 \
\hline
\end{array}$$ Required: Prepare an income statement for Herrera,Inc.for the year ended December 31,using the format below.Include a proper heading.
 $$\begin{array} { | l | l | l | } 
\hline \text { Sales Revenue } & & \
\hline \text { Cost of Goods Sold: } & & \
\hline \text { Beginning Inventory } & & \
\hline \text { Purchases } & & \
\hline \text { Cost of Goods Available for Sale } & & \
\hline \text { Ending Inventory } & & \
\hline \text { Cost of Goods Sold } & & \
\hline \text { Gross Profit } & & \
\hline \text { Selling Expenses: } & & \
\hline \text { Sales Commissions Expense } & & \
\hline \text { Administrative Expenses: } & & \
\hline \text { Rent Expense } & & \
\hline \text { Utilities Expense } & & \
\hline \text { Total Operating Expenses } & & \
\hline \text { Operating Income } & & \
\hline
\end{array}$$

Accepted Answer

The answer of Herrera,Inc.,a merchandiser,sells office supplies.The following information summarizes...

Question 6

Oaktree,Inc.is a merchandiser of inlaid wooden boxes.The company sold 7000 units during the year.The company has provided the following information: $$\begin{array} { | l | r | } 
\hline \text { Sales Revenue } & \$ 550,000 \
\hline \text { Purchases (excluding freight in) } & 304,000 \
\hline \text { Selling and Administrative Expenses } & 69,000 \
\hline \text { Freight In } & 15,000 \
\hline \text { Beginning Merchandise Inventory } & 43,000 \
\hline \text { Ending Merchandise Inventory } & 42,000 \
\hline
\end{array}$$ What is the cost of goods sold for the year?

Accepted Answer

A) $362,000 
B) $320,000 
C) $318,000 
D) $305,000 
A) $362,000 
B) $320,000 
C) $318,000 
D) $305,000

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

Companies that provide healthcare,communication,banking and other benefits to society are called ________.

Accepted Answer

A) service companies 
B) societal organizations 
C) merchandising companies 
D) consumer organizations 
A) service companies 
B) societal organizations 
C) merchandising companies 
D) consumer organizations

Question 9

In a manufacturing company,administrative costs are included in period costs.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following represents the combined sum of direct labor costs and manufacturing overhead costs?

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 11

Which of the following statements is true of the flow of product and period costs for a manufacturer?

Accepted Answer

A) When the manufacturing process is completed,the costs are transferred to the Work-in-Process Inventory account. 
B) The cost of the finished goods that the manufacturer sells becomes its Cost of Goods Sold on the income statement. 
C) Period costs remain in inventory accounts on the balance sheet until the product is sold. 
D) All product costs that have been paid are expensed and reported on the income statement at the end of the accounting period. 
A) When the manufacturing process is completed,the costs are transferred to the Work-in-Process Inventory account. 
B) The cost of the finished goods that the manufacturer sells becomes its Cost of Goods Sold on the income statement. 
C) Period costs remain in inventory accounts on the balance sheet until the product is sold. 
D) All product costs that have been paid are expensed and reported on the income statement at the end of the accounting period.

Question 12

Argento Supplies,Inc.selected cost data for the year are shown below: $$\begin{array} { | l | r | } 
\hline \text { Work-in-Process Inventory, Jan. } 1 & \$ 5920 \
\hline \text { Direct Materials Used } & 101,000 \
\hline \text { Work-in-Process Inventory, Dec. } 31 & 2860 \
\hline \text { Cost of Goods Manufactured } & 193,100 \
\hline
\end{array}$$ Assuming manufacturing overhead costs of $27,800,what is the amount of direct labor incurred by Argento Supplies,Inc.during the year?

Accepted Answer

A) $64,300 
B) $190,040 
C) $61,240 
D) $128,800 
A) $64,300 
B) $190,040 
C) $61,240 
D) $128,800

Question 13

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 14

In the income statements of both manufacturing and merchandising companies,the Cost of Goods Sold account is usually the largest expense.

Accepted Answer

A) True 
 B)False

Question 15

The chief financial officer,controller,and treasurer are all examples of staff positions.

Accepted Answer

A) True 
 B)False

Question 16

Sales commissions are included in manufacturing overhead.

Accepted Answer

A) True 
 B)False

Question 17

The Work-in-Process Inventory account includes the ________.

Accepted Answer

A) goods that are ready to be sold 
B) goods that are partially completed 
C) goods that have been sold in the market 
D) goods that are returned by customers 
A) goods that are ready to be sold 
B) goods that are partially completed 
C) goods that have been sold in the market 
D) goods that are returned by customers

Question 18

The following information has been provided by New Age,Inc.: $$\begin{array} { | l | r | } 
\hline \text { Direct Labor } & \$ 25,100 \
\hline \text { Direct Materials Used } & 11,000 \
\hline \text { Direct Materials Purchased } & 16,710 \
\hline \text { Cost of Goods Manufactured } & 49,000 \
\hline \text { Ending Work-in-Process Inventory } & 11,200 \
\hline \text { Corporate Headquarters' Property Taxes } & 1500 \
\hline \text { Manufacturing Overhead } & 19,350 \
\hline
\end{array}$$ Calculate the beginning balance of the Work-in-Process Inventory account.

Accepted Answer

A) $93,250 
B) $60,200 
C) $4750 
D) $44,250 
A) $93,250 
B) $60,200 
C) $4750 
D) $44,250

Question 19

Enzo Design Corporation reports the following cost information for March: $\begin{array}{|l|r|}
\hline \text { Cost of Goods Manufactured } & \$ 75,000 \
\hline \text { Finished Goods Inventory, March 1 } & 4000 \
\hline \text { Finished Goods Inventory, March 31 } & 2650 \
\hline \text { Work-in-Process Inventory, March 1 } & 9670 \
\hline \text { Work-in-Process Inventory, March 31 } & 1000 \
\hline \text { Direct Labor } & 36,000 \
\hline \text { Direct Materials Used } & 16,900\\hline
\end{array}$ What is the amount of manufacturing overhead incurred by the company in March?

Accepted Answer

A) $30,330 
B) $138,570 
C) $13,430 
D) $12,430 
A) $30,330 
B) $138,570 
C) $13,430 
D) $12,430

Question 20

Manufacturing costs flow from Work-in-Process Inventory to Cost of Goods Sold to Finished Goods Inventory.

Accepted Answer

A) True 
 B)False

Define direct cost.

Goods that have been started in the manufacturing process but are not yet complete are included in the ________.

The officer of the company who has the ultimate responsibility for implementing the company's long and short-term goals is the ________.

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

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

Companies that provide healthcare,communication,banking and other benefits to society are called ________.

In a manufacturing company,administrative costs are included in period costs.

Which of the following represents the combined sum of direct labor costs and manufacturing overhead costs?

Which of the following statements is true of the flow of product and period costs for a manufacturer?

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

In the income statements of both manufacturing and merchandising companies,the Cost of Goods Sold account is usually the largest expense.

The chief financial officer,controller,and treasurer are all examples of staff positions.

Sales commissions are included in manufacturing overhead.

The Work-in-Process Inventory account includes the ________.

Manufacturing costs flow from Work-in-Process Inventory to Cost of Goods Sold to Finished Goods Inventory.

Accounting Information Systems

Job Order Costing

Process Costing

Cost Management Systems: Activity-Based, just-In-Time, and Quality Management Systems

Cost-Volume-Profit Analysis

Variable Costing

Master Budgets

Flexible Budgets and Standard Cost Systems

Responsibility Accounting and Performance Evaluation

Short-Term Business Decisions

Capital Investment Decisions

Filters

Exam 16: Introduction to Managerial Accounting

Define direct cost.

Goods that have been started in the manufacturing process but are not yet complete are included in the ________.

The officer of the company who has the ultimate responsibility for implementing the company's long and short-term goals is the ________.

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

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

Companies that provide healthcare,communication,banking and other benefits to society are called ________.

In a manufacturing company,administrative costs are included in period costs.

Which of the following represents the combined sum of direct labor costs and manufacturing overhead costs?

Which of the following statements is true of the flow of product and period costs for a manufacturer?

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

In the income statements of both manufacturing and merchandising companies,the Cost of Goods Sold account is usually the largest expense.

The chief financial officer,controller,and treasurer are all examples of staff positions.

Sales commissions are included in manufacturing overhead.

The Work-in-Process Inventory account includes the ________.

Manufacturing costs flow from Work-in-Process Inventory to Cost of Goods Sold to Finished Goods Inventory.

Accounting Information Systems

Job Order Costing

Process Costing

Cost Management Systems: Activity-Based, just-In-Time, and Quality Management Systems

Cost-Volume-Profit Analysis

Variable Costing

Master Budgets

Flexible Budgets and Standard Cost Systems

Responsibility Accounting and Performance Evaluation

Short-Term Business Decisions

Capital Investment Decisions

Filters