Question 1

The cost of wages paid to employees directly involved in converting materials to finished product is classified as direct labor cost.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following is most associated with financial accounting?

Accepted Answer

A)  Can have both objective and subjective information 
B)  Can be prepared periodically, or as needed 
C)  Prepared in accordance with GAAP 
D)  Can be prepared for the entity or segment 
A)  Can have both objective and subjective information 
B)  Can be prepared periodically, or as needed 
C)  Prepared in accordance with GAAP 
D)  Can be prepared for the entity or segment

Question 3

The following data (in thousands of dollars) have been taken from the accounting records of Rayburn Corporation for the current year.
   Required: (Present all reports and calculations in thousands of dollars)
(a) What was the cost of the raw materials used in production during the year?
(b) What was the cost of goods manufactured (finished) for the year?
(c) What was the cost of goods sold for the year?
(d) What was the net income for the year?

Accepted Answer

(a) The cost of the raw materials used i

Question 4

All of the following would be reported on the balance sheet as a current asset except:

Accepted Answer

A)  factory overhead 
B)  materials inventory 
C)  finished goods inventory 
D)  work in process inventory 
A)  factory overhead 
B)  materials inventory 
C)  finished goods inventory 
D)  work in process inventory

Question 5

In order to be useful to managers, management accounting reports should possess all of the following characteristics EXCEPT:

Accepted Answer

A)  provide objective measures of past operations and subjective estimates about future decisions 
B)  be prepared in accordance with generally accepted accounting principles 
C)  be provided at any time management needs information 
D)  be prepared to report information for any unit of the business to support decision making 
A)  provide objective measures of past operations and subjective estimates about future decisions 
B)  be prepared in accordance with generally accepted accounting principles 
C)  be provided at any time management needs information 
D)  be prepared to report information for any unit of the business to support decision making

Question 6

A report analyzing how many products need to be sold to cover operating costs is not typically a managerial accounting report.

Accepted Answer

A) True 
 B)False

Question 7

Managerial accounting reports must be useful to the user of the information.

Accepted Answer

A) True 
 B)False

Question 8

Indirect costs can be specifically identified to a cost object.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following would be least likely to be considered a managerial accounting report?

Accepted Answer

A)  a report to analyze potential efficiencies and savings for the purchase of new production equipment. 
B)  a schedule of total manufacturing costs incurred 
C)  a statement of cost of goods manufactured 
D)  a statement of stockholders' equity 
A)  a report to analyze potential efficiencies and savings for the purchase of new production equipment. 
B)  a schedule of total manufacturing costs incurred 
C)  a statement of cost of goods manufactured 
D)  a statement of stockholders' equity

Question 10

Prime costs are the combination of direct materials and direct labor costs.

Accepted Answer

A) True 
 B)False

Question 11

Conversion cost is the combination of direct materials cost and factory overhead cost.

Accepted Answer

A) True 
 B)False

Question 12

Sineath Industries had a fire and some of its accounting records were destroyed. Available information is presented below for the year ended December 31, 2011.
  
 Additional information is as follows:
Factory overhead is 150% of direct labor cost.
Finished goods inventory decreased by $18,000 during the year.
Work in process inventory increased by $12,000 during the year.
Calculate:
a) materials inventory, January 1, 2011
b) direct labor cost
c) factory overhead incurred
d) cost of goods sold

Accepted Answer

a) $15,000 + $22,900 - $28,000 = $9,900

Question 13

A company used $35,000 of direct materials, incurred $73,000 in direct labor cost, and $114,000 in factory overhead costs during the period. If beginning and ending work in process inventories were $28,000 and $32,000 respectively, the cost of goods manufactured was:

Accepted Answer

A)  $218,000 
B)  $226,000 
C)  $190,000 
D)  $222,000 
A)  $218,000 
B)  $226,000 
C)  $190,000 
D)  $222,000

Question 14

Which of the following is an example of direct labor cost for an airplane manufacturer?

Accepted Answer

A)  Cost of oil lubricants for factory machinery 
B)  Cost of wages of assembly worker 
C)  Salary of plant supervisor 
D)  Cost of jet engines 
A)  Cost of oil lubricants for factory machinery 
B)  Cost of wages of assembly worker 
C)  Salary of plant supervisor 
D)  Cost of jet engines

Question 15

Factory overhead includes all manufacturing costs except direct materials and direct labor.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following is the principle reason for preparing managerial accounting reports?

Accepted Answer

A)  Usefulness to management 
B)  Cost of preparation 
C)  Clarity 
D)  GAAP 
A)  Usefulness to management 
B)  Cost of preparation 
C)  Clarity 
D)  GAAP

Question 17

Identify the following costs as (a) direct materials, (b) direct labor, or (c) factory overhead for a cake manufacturer.
1. _____ Frosting
2. _____ Depreciation on oven
3. _____ Wages of bakers
4. _____ Sprinkles for topping

Accepted Answer

1. Direct material
2

Question 18

Which of the following is an example of direct materials cost for an automobile manufacturer?

Accepted Answer

A)  Cost of oil lubricants for factory machinery 
B)  Cost of wages of assembly worker 
C)  Salary of production supervisor 
D)  Cost of interior upholstery 
A)  Cost of oil lubricants for factory machinery 
B)  Cost of wages of assembly worker 
C)  Salary of production supervisor 
D)  Cost of interior upholstery

Question 19

Accounting is an information system that provides essential data about the economic activities of an entity to various users to aid them in making informed judgments and decisions.

Accepted Answer

A) True 
 B)False

Question 20

Cost of goods manufactured during 2011 is $240, work in process inventory on December 31, 2011, is $50. Work in process inventory during 2011 decreased by 60%. Total manufacturing costs incurred during 2011 amount to:

Accepted Answer

A)  $190 
B)  $165 
C)  $290 
D)  $315 
A)  $190 
B)  $165 
C)  $290 
D)  $315

Exam 16: Managerial Accounting Concepts and Principles

The cost of wages paid to employees directly involved in converting materials to finished product is classified as direct labor cost.

Which of the following is most associated with financial accounting?

All of the following would be reported on the balance sheet as a current asset except:

In order to be useful to managers, management accounting reports should possess all of the following characteristics EXCEPT:

A report analyzing how many products need to be sold to cover operating costs is not typically a managerial accounting report.

Managerial accounting reports must be useful to the user of the information.

Indirect costs can be specifically identified to a cost object.

Which of the following would be least likely to be considered a managerial accounting report?

Prime costs are the combination of direct materials and direct labor costs.

Conversion cost is the combination of direct materials cost and factory overhead cost.

A company used $35,000 of direct materials, incurred $73,000 in direct labor cost, and $114,000 in factory overhead costs during the period. If beginning and ending work in process inventories were $28,000 and $32,000 respectively, the cost of goods manufactured was:

Which of the following is an example of direct labor cost for an airplane manufacturer?

Factory overhead includes all manufacturing costs except direct materials and direct labor.

Which of the following is the principle reason for preparing managerial accounting reports?

Identify the following costs as (a) direct materials, (b) direct labor, or (c) factory overhead for a cake manufacturer. 1. _____ Frosting 2. _____ Depreciation on oven 3. _____ Wages of bakers 4. _____ Sprinkles for topping

Which of the following is an example of direct materials cost for an automobile manufacturer?

Accounting is an information system that provides essential data about the economic activities of an entity to various users to aid them in making informed judgments and decisions.

Cost of goods manufactured during 2011 is $240, work in process inventory on December 31, 2011, is $50. Work in process inventory during 2011 decreased by 60%. Total manufacturing costs incurred during 2011 amount to:

Introduction to Accounting and Business

Analyzing Transactions

The Adjusting Process

Completing the Accounting Cycle

Accounting for Merchandising Businesses

Inventories

Sarbanes-Oxley, Internal Control, and Cash

Receivables

Fixed Assets and Intangible Assets

Current Liabilities and Payroll

Corporations: Organization, Stock Transactions, and Dividends

Long-Term Liabilities: Bonds and Notes

Investments and Fair Value Accounting

Statement of Cash Flows

Financial Statement Analysis

Job Order Costing

Process Cost Systems

Cost Behavior and Cost-Volume-Profit Analysis

Variable Costing for Management Analysis

Budgeting

Performance Evaluation Using Variances From Standard Costs

Performance Evaluation for Decentralized Operations

Differential Analysis and Product Pricing

Capital Investment Analysis

Cost Allocation and Activity-Based Costing

Cost Management for Just-In-Time Environments

Filters

Identify the following costs as (a) direct materials, (b) direct labor, or (c) factory overhead for a cake manufacturer. 1. ___ Frosting 2. _ Depreciation on oven 3. _ Wages of bakers 4. ___ Sprinkles for topping