Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

Which of the following correctly describes the accounting for factory depreciation?

Accepted Answer

A)  Factory depreciation is a product cost and is expensed as incurred. 
B)  Factory depreciation is a period cost and is expensed as incurred. 
C)  Factory depreciation is a product cost and is expensed when the manufactured product is sold. 
D)  Factory depreciation is a period cost and is expensed when the manufactured product is sold. 
A)  Factory depreciation is a product cost and is expensed as incurred. 
B)  Factory depreciation is a period cost and is expensed as incurred. 
C)  Factory depreciation is a product cost and is expensed when the manufactured product is sold. 
D)  Factory depreciation is a period cost and is expensed when the manufactured product is sold.

Question 3

Which of the following is true of product costs?

Accepted Answer

A)  They are expensed in the period they are paid. 
B)  For external reporting, GAAP requires that they be expensed before the products are sold. 
C)  They are first recorded in an inventory account. 
D)  For merchandising companies, product costs do not include freight costs. 
A)  They are expensed in the period they are paid. 
B)  For external reporting, GAAP requires that they be expensed before the products are sold. 
C)  They are first recorded in an inventory account. 
D)  For merchandising companies, product costs do not include freight costs.

Question 4

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

Accepted Answer

@#IMG-DLM& Cost of Goods Sold

Question 5

Product costs, such as direct materials, are expensed in the period they were paid.

Accepted Answer

A) True 
 B)False

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

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

Accepted Answer

A)  $141,897 
B)  $474,050 
C)  $615,947 
D)  $61,503 
A)  $141,897 
B)  $474,050 
C)  $615,947 
D)  $61,503

Question 8

Management of a company is accountable to ________ for obeying laws and paying taxes.

Accepted Answer

A)  the natural environment 
B)  its asset vendors 
C)  the securities exchange 
D)  the government 
A)  the natural environment 
B)  its asset vendors 
C)  the securities exchange 
D)  the government

Question 9

Product costs are expensed:

Accepted Answer

A)  when the products are consumed or sold. 
B)  at the end of the accounting period they are incurred in. 
C)  when the products are transferred to Work-in-Process Inventory account. 
D)  when the market value of products goes above the recorded value. 
A)  when the products are consumed or sold. 
B)  at the end of the accounting period they are incurred in. 
C)  when the products are transferred to Work-in-Process Inventory account. 
D)  when the market value of products goes above the recorded value.

Question 10

Which of the following is the primary objective of managerial accounting?

Accepted Answer

A)  providing information that managers need to make operational decisions 
B)  providing historical data to investors and creditors 
C)  providing summarized results of operations 
D)  providing information to comply with laws and regulations of government bodies 
A)  providing information that managers need to make operational decisions 
B)  providing historical data to investors and creditors 
C)  providing summarized results of operations 
D)  providing information to comply with laws and regulations of government bodies

Question 11

The income statement of a service company will most likely include:

Accepted Answer

A)  salary expense. 
B)  factory overhead. 
C)  cost of goods sold. 
D)  direct materials. 
A)  salary expense. 
B)  factory overhead. 
C)  cost of goods sold. 
D)  direct materials.

Question 12

Given the following information, determine the cost of goods manufactured. $$\begin{array} { | l | r | } 
\hline \text { Direct Labor Incurred } & \$ 63,000 \
\hline \text { Manufacturing Overhead Incurred } & 179,500 \
\hline \text { Direct Materials Used } & 150,000 \
\hline \text { Finished Goods Inventory, } 1 / 1 / 2015 & 197,500 \
\hline \text { Finished Goods Inventory, } 12 / 31 / 2015 & 221,000 \
\hline \text { Work-in-Process Inventory, } 1 / 1 / 2015 & 96,500 \
\hline \text { Work-in-Process Inventory, } 12 / 31 / 2015 & 109,000 \
\hline
\end{array}$$

Accepted Answer

A)  $243,000 
B)  $380,000 
C)  $867,000 
D)  $160,000 
A)  $243,000 
B)  $380,000 
C)  $867,000 
D)  $160,000

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

Crystal Inc. is a merchandiser of stone ornaments. The company sold 15,000 units in 2015. The company has provided the following information: $$\begin{array} { | l | r | } 
\hline \text { Sales Revenue } & \$ 557,000 \
\hline \text { Purchases (excluding freight in) } & 300,000 \
\hline \text { Selling and Administrative Expenses } & 69,000 \
\hline \text { Freight In } & 15,000 \
\hline \text { Beginning Merchandise Inventory } & 45,000 \
\hline \text { Ending Merchandise Inventory } & 55,700 \
\hline
\end{array}$$ What is the operating income for 2015?

Accepted Answer

A)  $183,700 
B)  $304,300 
C)  $252,700 
D)  $257,000 
A)  $183,700 
B)  $304,300 
C)  $252,700 
D)  $257,000

Question 15

South State Company used $71,000 of direct materials and incurred $37,000 of direct labor costs during 2015. Indirect labor amounted to $2,700 while indirect materials used totaled $1,600. Other operating costs pertaining to the factory included utilities of $3,100; maintenance of $4,500; repairs of $1,800; depreciation of $7,900; and property taxes of $2,600. There was no beginning or ending finished goods inventory, but Work-in-Process inventory began the year with a $5,500 balance and ended the year with a $7,500 balance. How much is the cost of goods manufactured?

Accepted Answer

A)  $124,700 
B)  $130,200 
C)  $137,700 
D)  $132,200 
A)  $124,700 
B)  $130,200 
C)  $137,700 
D)  $132,200

Question 16

Which of the following is a product cost?

Accepted Answer

A)  Sales commissions 
B)  CEO's salary 
C)  Delivery van depreciation 
D)  Depreciation on production equipment 
A)  Sales commissions 
B)  CEO's salary 
C)  Delivery van depreciation 
D)  Depreciation on production equipment

Question 17

Management accounting reporting by a public firm is required to follow the rules of GAAP and guidelines of the Securities Exchange Commission.

Accepted Answer

A) True 
 B)False

Question 18

Financial reporting is typically much more detailed than managerial accounting.

Accepted Answer

A) True 
 B)False

Question 19

Repair and maintenance costs of vehicles used to deliver products to customers are product costs.

Accepted Answer

A) True 
 B)False

Question 20

In which of the following ways is the management of a company accountable to its communities?

Accepted Answer

A)  making timely interest payments to creditors and dividend payments to investors 
B)  ensuring the company's environmental impact is not harmful to its area of operations 
C)  providing a capital return on the shareholders' investment 
D)  repaying principal and interest to the suppliers 
A)  making timely interest payments to creditors and dividend payments to investors 
B)  ensuring the company's environmental impact is not harmful to its area of operations 
C)  providing a capital return on the shareholders' investment 
D)  repaying principal and interest to the suppliers

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

Which of the following correctly describes the accounting for factory depreciation?

Which of the following is true of product costs?

Product costs, such as direct materials, are expensed in the period they were paid.

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

Management of a company is accountable to ________ for obeying laws and paying taxes.

Product costs are expensed:

Which of the following is the primary objective of managerial accounting?

The income statement of a service company will most likely include:

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

Which of the following is a product cost?

Management accounting reporting by a public firm is required to follow the rules of GAAP and guidelines of the Securities Exchange Commission.

Financial reporting is typically much more detailed than managerial accounting.

Repair and maintenance costs of vehicles used to deliver products to customers are product costs.

In which of the following ways is the management of a company accountable to its communities?

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 1: Introduction to Managerial Accounting

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

Which of the following correctly describes the accounting for factory depreciation?

Which of the following is true of product costs?

Product costs, such as direct materials, are expensed in the period they were paid.

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

Management of a company is accountable to ________ for obeying laws and paying taxes.

Product costs are expensed:

Which of the following is the primary objective of managerial accounting?

The income statement of a service company will most likely include:

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

Which of the following is a product cost?

Management accounting reporting by a public firm is required to follow the rules of GAAP and guidelines of the Securities Exchange Commission.

Financial reporting is typically much more detailed than managerial accounting.

Repair and maintenance costs of vehicles used to deliver products to customers are product costs.

In which of the following ways is the management of a company accountable to its communities?

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