Exam 18: Managerial Accounting Concepts and Principles

Conversion costs consist of product costs and period costs.

Which of the following is false in regards to direct materials for an auto manufacturer?

Classify the following costs as either a product cost or a period cost:

Conversion costs are the combination of direct labor, direct material and factory overhead costs.

All of the following would probably be considered a direct material except:

At the beginning of 2011, the Gilbert Company's work in process inventory account had a balance of $30,000. During 2011, $68,000 of direct materials were used in production, and $66,000 of direct labor costs were incurred. Factory overhead in 2011 amounted to $90,000. Cost of goods manufactured is $230,000 in 2011. The balance in work in process inventory on December 31, 2011, is:

A company manufactured 50,000 units of a product at a cost of $450,000. They sold 40,000 units for $15 each. What is the gross margin?

A staff department or unit is one that provides services, assistance, and advice to the departments with line or other staff responsibilities.

The following information is available for Carter Corporation for 2012: 1) Materials inventory decreased $4,000 during 2012. 2) Materials inventory on December 31, 2012, was 50% of materials inventory on January 1, 2012. 3) Beginning work in process inventory was $145,000. 4) Ending finished goods inventory was $65,000. 5) Purchases of direct materials were $154,700. 6) Direct materials used were 2.5 times the cost of direct labor. 7) Total manufacturing costs incurred were $246,400, 80% of cost of goods manufactured and $156,000 less than cost of goods sold. Compute: a) finished goods inventory on January 1, 2012 b) work in process inventory on December 31, 2012 c) direct labor incurred d) factory overhead incurred e) direct materials used f) materials inventory on January 1, 2012 g) materials inventory on December 31, 2012 Note to students: The answers are not necessarily calculated in alphabetical order.

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:

Period costs are operating costs that are expensed in the period in which the goods are sold.

Controlling deals with choosing goals and deciding how to achieve them.

Manufacturers use labor, plant, and equipment to convert direct materials into finished products.

If the cost of materials is not a significant portion of the total product cost, the materials may be classified as part of factory overhead cost.

Cost of goods manufactured is equal to:

Reedy Company reports the following information for 2012: Factory overhead is 75% of the cost of direct labor. Work in process inventory on December 31, 2012, is:

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

Planning is the process of monitoring operating results and comparing actual results with the expected results.

Rent expense on a factory building would be treated as a(n):

Conversion costs are