Question 1

How does the level of aggregation differ between financial accounting information and managerial accounting information?

Accepted Answer

Most financial accounting information is

Question 2

A company that uses a just in time inventory system:

Accepted Answer

A)  has finished goods inventory on hand at all times in order to speed up shipments of customer orders. 
B)  may find that having less inventory actually leads to increased customer satisfaction. 
C)  assesses its value chain to create new value-added activities. 
D)  adopts a systematic, problem-solving attitude. 
A)  has finished goods inventory on hand at all times in order to speed up shipments of customer orders. 
B)  may find that having less inventory actually leads to increased customer satisfaction. 
C)  assesses its value chain to create new value-added activities. 
D)  adopts a systematic, problem-solving attitude.

Question 3

Costs that are not classified as product costs are normally expensed in the period incurred.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following statements concerning manufacturing costs is incorrect?

Accepted Answer

A)  All salaries incurred by the sales department are expensed as incurred. 
B)  Direct labor costs are recorded initially in an inventory account. 
C)  Depreciation on manufacturing equipment is a period cost. 
D)  The cost of direct materials can be readily traced to products. 
A)  All salaries incurred by the sales department are expensed as incurred. 
B)  Direct labor costs are recorded initially in an inventory account. 
C)  Depreciation on manufacturing equipment is a period cost. 
D)  The cost of direct materials can be readily traced to products.

Question 5

The Carson Company was started at the beginning of the current year when it acquired $20,000 by issuing common stock to its owners. During the year, the company incurred the following cash costs: $$\begin{array} { |l | r| } \hline
\text { Direct material costs } & \$ 10,000 \
\hline \text { Direct labor costs } & 8,000 \
\hline \text { Overhead costs } & 4,000 \
\hline \text { Selling and administrative costs } & 2,000\\hline
\end{array}$$ 
The company produced 5,000 units of product and sold 4,500 units. The average selling price was $7.00 per unit. The accountant who prepared the firm's financial statements misclassified the selling and administrative costs as product costs.
Required:
Demonstrate the impact of the error on the company's financial statements by completing the following schedule. $$\begin{array} { | l | l | l | } 
\hline & \text { Seenario 1: With the error } & \text { Seenario 2: Without the error } \
\hline \text { Income stabement: } & & \
\hline \text { Revenuo } & & \
\hline \text { Less: Cest of goods sold } & \
\hline \text { Gross margin } & \
\hline \begin{array} { l } 
\text { Less: Selling general, and } \
\text { administrative expenses }
\end{array} & \
\hline \text { Net income } & & \
\hline & & \
\hline \text { Balance sheet: } & & \
\hline \text { Assets } & & \
\hline \text { Cash } & & \
\hline \text { Inventory } & & \
\hline \text { Total assets } & & \
\hline \text { Equity } & \
\hline \text { Common stock } & \
\hline \text { Retained earnings } & \
\hline \text { Total equity } & \
\hline
\end{array}$$

Accepted Answer

The answer of The Carson Company was started at the...

Question 6

Managerial accounting systems consider economic and non-financial data as well as financial statement data.

Accepted Answer

A) True 
 B)False

Question 7

Randall Company manufactures chocolate bars. The following were among Randall's 2013 manufacturing costs: Wages
Machine operators $ \quad \$ 300,000 $
Selling and administrative personnel $ \quad \$ 75,000 $

Materials used
Lubricant for oiling machinery $ \quad \$ 25,000 $
Cocoa, sugar, and other raw materials $ \quad \$ 225.000 $
Packaging materials$\quad \quad \quad  \$ 190,000 $ Randall's 2013 direct materials amounted to:

Accepted Answer

A)  $25,000 
B)  $225,000 
C)  $250,000 
D)  $475,000 
A)  $25,000 
B)  $225,000 
C)  $250,000 
D)  $475,000

Question 8

Discuss the regulation of financial accounting, and compare to the level of regulation of managerial accounting information.

Accepted Answer

The financial accounting information pre

Question 9

Which of the following is a product cost for a construction company?

Accepted Answer

A)  Cost of transporting raw materials to the job site 
B)  Wages paid to the company's payroll clerk 
C)  Rent of the company's main office 
D)  All of these. 
A)  Cost of transporting raw materials to the job site 
B)  Wages paid to the company's payroll clerk 
C)  Rent of the company's main office 
D)  All of these.

Question 10

Does the term "cost" mean the same thing as the term "expense?" Explain your answer.

Accepted Answer

The term "cost" can be used to refer to

Question 11

A systematic problem-solving philosophy that encourages front line workers to achieve zero defects is known as:

Accepted Answer

A)  just-in-time (JIT). 
B)  total quality management (TQM). 
C)  activity based management (ABM). 
D)  None of these. 
A)  just-in-time (JIT). 
B)  total quality management (TQM). 
C)  activity based management (ABM). 
D)  None of these.

Question 12

Levenworth Company incurs unnecessary costs each period because of the excess quantities of inventory maintained to meet unexpected customer demand. The costs of inventory financing, storage, supervision, and obsolescence could most likely be reduced by which of the following practices?

Accepted Answer

A)  Activity-based costing 
B)  Just-in-time inventory 
C)  Total quality management 
D)  Benchmarking 
A)  Activity-based costing 
B)  Just-in-time inventory 
C)  Total quality management 
D)  Benchmarking

Question 13

Why do accountants normally calculate cost per unit as an average?

Accepted Answer

A)  Determining the exact cost of a product is virtually impossible. 
B)  Some manufacturing-related costs cannot be accurately traced to specific units of product. 
C)  Even when producing multiple units of the same product, normal variations occur in the amount of materials and labor used. 
D)  All of these are justifications for computing average unit costs. 
A)  Determining the exact cost of a product is virtually impossible. 
B)  Some manufacturing-related costs cannot be accurately traced to specific units of product. 
C)  Even when producing multiple units of the same product, normal variations occur in the amount of materials and labor used. 
D)  All of these are justifications for computing average unit costs.

Question 14

Which of the following practices is not considered an effective means of reengineering business systems?

Accepted Answer

A)  Identifying the best practices used by world-class competitors 
B)  Improving the accuracy of cost allocations 
C)  Increasing non-value added activities 
D)  All of these are effective means of reengineering business systems. 
A)  Identifying the best practices used by world-class competitors 
B)  Improving the accuracy of cost allocations 
C)  Increasing non-value added activities 
D)  All of these are effective means of reengineering business systems.

Question 15

Howard Lumber Company mistakenly classified a product cost as an expense that totaled $20,000. The company produced 2,000 units of product and sold 1,000 of them during the year. Management is paid a bonus equal to 2% of net income. In the year in which the mistake was made:

Accepted Answer

A)  product costs were overstated. 
B)  management bonuses were underpaid. 
C)  the company's income statement portrayed a more favorable position than actually existed. 
D)  the company's net income was overstated. 
A)  product costs were overstated. 
B)  management bonuses were underpaid. 
C)  the company's income statement portrayed a more favorable position than actually existed. 
D)  the company's net income was overstated.

Question 16

Randall Company manufactures chocolate bars. The following were among Randall's 2013 manufacturing costs: Wages
Machine operators $ \quad \$ 300,000 $
Selling and administrative personnel $ \quad \$ 75,000 $

Materials used
Lubricant for oiling machinery $ \quad \$ 25,000 $
Cocoa, sugar, and other raw materials $ \quad \$ 225.000 $
Packaging materials$\quad \quad \quad  \$ 190,000 $ Randall's 2013 direct labor costs amounted to:

Accepted Answer

A)  $400,000 
B)  $300,000 
C)  $175,000 
D)  $375,000 
A)  $400,000 
B)  $300,000 
C)  $175,000 
D)  $375,000

Question 17

Costs such as transportation-out, sales commissions, uncollectible accounts receivable, and advertising costs are sometimes called:

Accepted Answer

A)  upstream costs. 
B)  downstream costs. 
C)  direct costs. 
D)  indirect costs. 
A)  upstream costs. 
B)  downstream costs. 
C)  direct costs. 
D)  indirect costs.

Question 18

All costs incurred prior to delivery of the product to the customer are referred to as upstream costs.

Accepted Answer

A) True 
 B)False

Question 19

The following information relates to Marshall Manufacturing's 2013 accounting period: $\begin{array}{lr}
\text { Raw materials used } & \$ 34,000 \
 \text { Direct labor wages } & 66,000 \
\text { Sales salaries and commissions } & 50,000 \
\text { Depreciation on production equipment } & 6,000 \
 \text { Rent on manufacturing facilities } & 4,000 \
 \text { Administrative supplies and utilities } & 10,000 \
\text { Sales revenue } & 210,000 \
 \text { Units produced } & 10,000 \
 \text { Units sold } & 10,000
\end{array}$ Based on this information, what is the company's net income for 2013?

Accepted Answer

A)  $40,000 
B)  $70,000 
C)  $30,000 
D)  $42,000 
A)  $40,000 
B)  $70,000 
C)  $30,000 
D)  $42,000

Question 20

During its first year of operations, Silverman Company paid $14,000 for direct materials and $19,000 for production workers' wages. Lease payments and utilities on the production facilities amounted to $17,000 while general, selling, and administrative expenses totaled $8,000. The company produced 5,000 units and sold 3,000 units at a price of $15.00 a unit.
What is Silverman's cost of goods sold for the year?

Accepted Answer

A)  $50,000 
B)  $24,600 
C)  $30,000 
D)  $41,000 
A)  $50,000 
B)  $24,600 
C)  $30,000 
D)  $41,000

How does the level of aggregation differ between financial accounting information and managerial accounting information?

A company that uses a just in time inventory system:

Costs that are not classified as product costs are normally expensed in the period incurred.

Which of the following statements concerning manufacturing costs is incorrect?

Managerial accounting systems consider economic and non-financial data as well as financial statement data.

Discuss the regulation of financial accounting, and compare to the level of regulation of managerial accounting information.

Which of the following is a product cost for a construction company?

Does the term "cost" mean the same thing as the term "expense?" Explain your answer.

A systematic problem-solving philosophy that encourages front line workers to achieve zero defects is known as:

Levenworth Company incurs unnecessary costs each period because of the excess quantities of inventory maintained to meet unexpected customer demand. The costs of inventory financing, storage, supervision, and obsolescence could most likely be reduced by which of the following practices?

Why do accountants normally calculate cost per unit as an average?

Which of the following practices is not considered an effective means of reengineering business systems?

Howard Lumber Company mistakenly classified a product cost as an expense that totaled $20,000. The company produced 2,000 units of product and sold 1,000 of them during the year. Management is paid a bonus equal to 2% of net income. In the year in which the mistake was made:

Costs such as transportation-out, sales commissions, uncollectible accounts receivable, and advertising costs are sometimes called:

All costs incurred prior to delivery of the product to the customer are referred to as upstream costs.

An Introduction to Accounting

Accounting for Accruals and Deferrals

Accounting for Merchandising Businesses

Internal Controls, Accounting for Cash, and Ethics

Accounting for Receivables and Inventory Cost Flow

Accounting for Long-Term Operational Assets

Accounting for Liabilities

Proprietorships, Partnerships, and Corporations

Financial Statement Analysis

Cost Behavior, Operating Leverage, and Profitability Analysis

Cost Accumulation, Tracing, and Allocation

Relevant Information for Special Decisions

Planning for Profit and Cost Control

Performance Evaluation

Planning for Capital Investments

Filters

Exam 10: An Introduction to Management Accounting

How does the level of aggregation differ between financial accounting information and managerial accounting information?

A company that uses a just in time inventory system:

Costs that are not classified as product costs are normally expensed in the period incurred.

Which of the following statements concerning manufacturing costs is incorrect?

Managerial accounting systems consider economic and non-financial data as well as financial statement data.

Discuss the regulation of financial accounting, and compare to the level of regulation of managerial accounting information.

Which of the following is a product cost for a construction company?

Does the term "cost" mean the same thing as the term "expense?" Explain your answer.

A systematic problem-solving philosophy that encourages front line workers to achieve zero defects is known as:

Levenworth Company incurs unnecessary costs each period because of the excess quantities of inventory maintained to meet unexpected customer demand. The costs of inventory financing, storage, supervision, and obsolescence could most likely be reduced by which of the following practices?

Why do accountants normally calculate cost per unit as an average?

Which of the following practices is not considered an effective means of reengineering business systems?

Howard Lumber Company mistakenly classified a product cost as an expense that totaled $20,000. The company produced 2,000 units of product and sold 1,000 of them during the year. Management is paid a bonus equal to 2% of net income. In the year in which the mistake was made:

Costs such as transportation-out, sales commissions, uncollectible accounts receivable, and advertising costs are sometimes called:

All costs incurred prior to delivery of the product to the customer are referred to as upstream costs.

An Introduction to Accounting

Accounting for Accruals and Deferrals

Accounting for Merchandising Businesses

Internal Controls, Accounting for Cash, and Ethics

Accounting for Receivables and Inventory Cost Flow

Accounting for Long-Term Operational Assets

Accounting for Liabilities

Proprietorships, Partnerships, and Corporations

Financial Statement Analysis

Cost Behavior, Operating Leverage, and Profitability Analysis

Cost Accumulation, Tracing, and Allocation

Relevant Information for Special Decisions

Planning for Profit and Cost Control

Performance Evaluation

Planning for Capital Investments

Filters