Exam 10: An Introduction to Management Accounting

Which of the following items would be reported directly on the income statement as a period cost?

What are upstream costs? What upstream costs would be incurred by a company that produces and sells computer software programs?

Which of the following is not a reason management might be tempted to classify costs as assets rather than expensing them during periods in which production exceeds sales?

The following information relates to Cruz Manufacturing for 2013: Raw materials used \ 20,000 Direet hbor wages 60,000 Sales salaries and commissions 50,000 Depreciation on producticn equipment 4,000 Rent on manufacturing facilities 30,000 Packaging and shipping supplies 6,000 Sales revenue 190,000 Unis produced and sold 10,000 Selling price per unit \ 20.00 Based on this information, what is the company's cost of goods sold for 2013?

Costs associated with holding inventory include hidden costs, such as low employee motivation.

The Giga Company produces tablet computers. The following information is provided: a) Materials used \ 216,000 b) Advertising \ 40,000 c) Insurance, factory \ 20,000 d) Admunistrative salaries \ 50,000 e) Property taxes, factory \ 12,000 f) Utilities, admunistrative building \ 22,000 g) Factory bbor \ 80,000 h) Sales commissions \ 56,000 i) Factory superviso's salary \ 60,000 j) Research and development \ 18,000 k) Depreciation. factory \ 12,000 l) Depreciation, office \ 8,000 m) Indirect materials \ 14,000 Required: Classify each of the company's costs as a period cost (general, selling, and administrative cost) or as a direct or indirect product cost. Enter the dollar amount of the cost in the appropriate column. After entering all amounts, calculate the total general, selling, and administrative cost, the total direct product cost, and the total indirect product cost. Item Period cost Direct product cost lnderect product cost a) b) c) d) e) f) g) h) i) j) k) l) m) Total

Misclassifying a product cost as a period cost will usually cause the income statement to be incorrect, but the balance sheet will not be affected.

Steuben Company produces dog houses. During 2013, Steuben Company incurred the following costs: Rent on manufacturing facility \ 250,000 Office manager's salary 150,000 Wages of factory machine operators 110,000 Depreciation on manufacturing equipment 50,000 Insurance and taxes on selling and administrative offices 30,000 Direct materials purchased and used 170,000 Based on the above information, which of the following would not be treated as a product cost:

Which of the following costs would be classified as a direct cost for a company that produces motorcycles?

Arizona Company provided the following information regarding its most recent year of operations: Administrative salaries \ 24,000 Direct labor 48,000 Direct raw material 80,000 Marketing and distribution costs 60,000 Overhead costs 36,000 Product design and testing 30,000 Research and development 40,000 Sales revenues 410,000 Sales salaries and commissions 54,000 Warranty costs 4,000 Number of units produced 20,000 Number of units sold 20,000 Required: Determine the following amounts: (a) Total product costs (b) Total upstream costs (c) Total downstream costs (d) Product cost per unit (e) Total cost per unit, including product costs and upstream and downstream costs (f) The selling price per unit that would be required if the company wishes to earn a profit margin equal to 25% of total cost (g) Comment on the company's profitability at its current selling price

The philosophy of encouraging workers to achieve zero defects and high customer satisfaction is known as total quality management.

Product costs are immediately recorded in expense accounts when the products are manufactured.

The Sarbanes-Oxley Act allows, but does not require, a corporation to establish a whistleblower policy.

Karen is a Certified Management Accountant and is bound by the IMA's Standards of Ethical Conduct. Her superior has asked her to try to influence the firm's outside auditors with expensive gifts and favors. If Karen complies, she will violate the competence standard.

What is the effect on the balance sheet of recording a $200 cash purchase of raw materials?

As a Certified Management Accountant, Derek is bound by the standards of ethical conduct issued by the Institute of Management Accountants. According to the standards, Derek has a responsibility to:

Steuben Company produces dog houses. During 2013, Steuben Company incurred the following costs: Rent on manufacturing facility \ 250,000 Office manager's salary 150,000 Wages of factory machine operators 110,000 Depreciation on manufacturing equipment 50,000 Insurance and taxes on selling and administrative offices 30,000 Direct materials purchased and used 170,000 Based on the above information, the amount of period costs shown on Steuben's 12/31/2013 income statement is:

Is McDonald's a manufacturing company or a service company? How do they record the cost of materials, labor, and overhead?

Which of the following statements is true with regard to product costs versus general, selling, and administrative costs?

Managerial accounting focuses primarily on the performance of the company as a whole.