Exam 2: Building Blocks of Managerial Accounting

Indicate whether each of the following costs is a product cost or a period cost.Assume a manufacturer. A)_________ Direct materials used in factory B)_________ Factory utilities C)_________ Salespersons' commissions D)_________ Salary of plant manager E)_________ Indirect materials used in factory F)_________ Depreciation expense on store equipment G)_________ Indirect labor incurred in factory H)_________ Advertising expense I)_________ Direct labor incurred in factory J)_________ Factory machinery repairs and maintenance K)_________ Depreciation expense on factory machinery L)_________ Supplies used in store M)_________ Plant insurance expired

Collectively,all costs such as design,customer service,etc.are part of:

Period costs are:

You are trying to decide whether or not to sell back your accounting textbook at the end of the class.The cost you paid for the book is relevant to your decision.

All of the following activities are included in the value chain EXCEPT for:

Sunnybrook Orange Groves processes a variety of fresh juices.The company has the following expenses for July: Depreciation expense an bottling machines \ 63,000 Glass juice bottles \ 54,000 Comrissions for salespeople \ 27,000 Salaries of mutrition researchers \ 89,000 Costs of maintaining website used for custamer orders \ 4,000 Wages of factory workers \ 75,000 Freshess seals/caps for juice battles \ 3,000 Reconfiguring the factory layout \ 102,000 Custamer help line \ 2,000 Costs of refrigerated trucks used to deliver juice \ 17,000 - What is the total cost for the marketing category of the value chain?

Decision making is guided only by differential costs.

First Sporting Equipment manufactures sporting goods.Selected costs from the past year include: Plastics used to make products \ 151,000 Heating and lighting costs for factory \ 73,000 Factory janitor wages \ 67,000 Costs of shipping to customers \ 11,000 Lubricants used in factory equipment \ 2,000 Lighting costs for sales office \ 17,000 Depreciation on factory equipment \ 23,000 Office supplies for sales office \ 4,000 Insurance costs for factory \ 15,000 Maintenance worker wages \ 99,000 Freight-in (on plastics) \ 8,000 Aluminum used to make products \ 175,000 Assembly-line worker wages \ 142,000 Salaries of salespeople \ 84,000 - Period costs for First Sporting Equipment totaled:

Which element in the value chain would contain inventoriable costs for a manufacturer?

Which type of company has the highest percentage of labor costs?

Describe a company that has some elements of all three types of companies.It is part service company,part manufacturer,and part merchandiser.

Comfy Furniture Company manufactures furniture at its Akron,Ohio,factory.Some of its costs from the past year include: Depreciation on sales office \ 11,000 Depreciation on factory equipment \ 16,000 Factory supervisor salary \ 52,500 Sales commissions \ 23,000 Lubricants used in factory equipment \ 3,000 Insurance costs for factory \ 21,000 Wages paid to maintenance workers \ 115,000 Fabric used to upholster furniture \ 7,000 Freight-in (on raw materials) \ 2,500 Costs of delivery to customers \ 9,000 Wages paid to assembly-line workers \ 132,500 Lumber used to build product \ 72,000 Utilities in factory \ 44,500 Utilities in sales office \&26,500 -Product costs for Comfy Furniture Company totaled:

Sunnybrook Orange Groves processes a variety of fresh juices.The company has the following expenses for July: Depreciation expense an bottling machines \ 63,000 Glass juice bottles \ 54,000 Comrissions for salespeople \ 27,000 Salaries of mutrition researchers \ 89,000 Costs of maintaining website used for custamer orders \ 4,000 Wages of factory workers \ 75,000 Freshess seals/caps for juice battles \ 3,000 Reconfiguring the factory layout \ 102,000 Custamer help line \ 2,000 Costs of refrigerated trucks used to deliver juice \ 17,000 -What is the total cost for the design category of the value chain?

A company is deciding whether to purchase hybrid cars for its salespeople or gasoline-engine cars.Which of the following costs would NOT be relevant to its decision?

On the line in front of each statement,enter the letter corresponding to the term that best fits that statement.You may use a letter more than once and some letters may not be used at all. A. Materials inventory E. Work in process inventary B. Service companies F. Manufacturing companies C. Merchandise inventory G. Merchandising companies D. Finished egods inventory ____ Typically have a single category of inventory ____ Resell products they previously purchased ready-made from suppliers ____ Do not have inventory for resale ____ Produce its own inventory ____ Transform raw materials into new finished products ____ Ready to sell inventory of manufacturers ____ Partially completed items of manufacturers

Raw materials,work in process and finished goods are the three types of inventory held by which of the following types of companies?

Differentiate between relevant and irrelevant costs and give an example using both.

The balance sheet of a service company has: