Exam 10: An Introduction to Management Accounting

Jarvis Company provided the following information regarding its first year of operations: Administrative salaries \ 60,000 Depreciation on factory equipment 16,000 Indirect materials 4,000 Marketing costs 40,000 Salaries for factory supervisors 28,000 Wages for production workers 80,000 Raw materials used 100,000 Research and development 32,000 Rent on factory building 18,000 Sales revenues 432,000 Sales salaries and other selling costs 56,000 Beginning inventory 0 units Number of units produced 20,000 Number of units sold 18,000 Required: Determine the following amounts: (a) Total overhead costs. (b) Total product costs. (c) Product cost per unit. (d) Total cost of ending finished goods inventory. (e) Total cost of goods sold.

Period costs are initially recorded in asset accounts and are later expensed in the period when the related units are sold.

Unlike direct material and direct labor costs, overhead costs must be allocated to products.

Assuming a company's inventory increased during the period, which of the following misclassifications may increase net income?

The benefits of a just-in-time system would include all of the following except:

Which of the following is not a provision of the Sarbanes-Oxley Act of 2002?

As a Certified Management Accountant, Steven is bound by the Institute of Management Accountant's Standards of Ethical Conduct. Describe the actions Steven should take when faced with an ethical dilemma at work.

Cash paid to production workers should be recorded as Wages Expense in the income statement for the period incurred.

Managerial accounting is designed to satisfy needs of external users including creditors, investors, and governmental agencies.

Product costs flow from the balance sheet to the income statement.

Which of the following transactions would cause net income for the period to decrease?

What is the effect on the balance sheet of making cash sales of inventory to customers on profit?

Anton believes his company's overhead costs are driven (affected) by the number of machine hours because the production process is heavily automated. During the period, the company produced 3,000 units of Product A requiring a total of 100 machine hours and 2,000 units of Product B requiring a total of 25 machine hours. What allocation rate should be used if the company incurs overhead costs of $10,000?

Choose the answer that is not a distinguishing characteristic of financial accounting information.

Distinguishing between product and period costs is sometimes guided by the value-added principle.

According to the Sarbanes-Oxley Act, a company's audit committee is responsible for its system of internal controls.

As a Certified Management Accountant, Grace is bound by the standards of ethical conduct issued by the Institute of Management Accountants. If she accepts an expensive gift from a vendor trying to win a contract with her firm, which of the following standards will she violate?

The time spent moving a product from one processing department to the next processing department is an example of a value-added activity.

A just-in-time system can lower inventory holding costs and increase customer satisfaction.

Cruz Tools produces scissors in a two-stage production process. The following production times are provided: a) Casting and shaping process 16 minutes b) Inspection time in casting 8 minutes c) Move time to finishing 15 minutes d) Waiting for the finishing operation 22 minutes e) Finishing process 14 minutes f) Inspection time in finishing 5 minutes Required: 1) Identify the non-value-added activities. 2) What percentage of the total time to complete is actually value-added time? 3) How could this production operation be improved?