Question 1

The following information pertains to the Hewett Corporation. Calculate the cost of goods sold for the period:

Accepted Answer

A)  $250,000. 
B)  $290,000. 
C)  $242,000. 
D)  $258,000. 
E)  $246,000. 
A)  $250,000. 
B)  $290,000. 
C)  $242,000. 
D)  $258,000. 
E)  $246,000.

Question 2

Cost concepts such as variable, fixed, mixed, direct and indirect apply only to manufacturers and not to service companies.

Accepted Answer

A) True 
 B)False

Question 3

Products that are in the process of being manufactured but are not yet complete are called:

Accepted Answer

A)  Raw materials inventory. 
B)  Conversion costs. 
C)  Cost of goods sold. 
D)  Goods in process inventory. 
E)  Finished goods inventory. 
A)  Raw materials inventory. 
B)  Conversion costs. 
C)  Cost of goods sold. 
D)  Goods in process inventory. 
E)  Finished goods inventory.

Question 4

The process of identifying costs as direct or indirect is referred to as classifying costs by ____________.

Accepted Answer

The answer of The process of identifying costs as direct...

Question 5

An out-of-pocket cost requires a future cash outlay and is relevant for decision making.

Accepted Answer

A) True 
 B)False

Question 6

A company's prime costs total $3,000,000 and its conversion costs total $7,000,000. If direct materials are $1,000,000 and factory overhead is $5,000,000, then direct labor is:

Accepted Answer

A)  $4,000,000. 
B)  $14,000,000. 
C)  $2,000,000. 
D)  $1,000,000. 
E)  $3,000,000. 
A)  $4,000,000. 
B)  $14,000,000. 
C)  $2,000,000. 
D)  $1,000,000. 
E)  $3,000,000.

Question 7

The management concept of customer orientation encourages a company to set up its production system to produce large quantities of the same product for all customers.

Accepted Answer

A) True 
 B)False

Question 8

A management concept that encourages all managers and employees to be in tune with the wants and needs of customers, and which leads to flexible product designs and production processes, is called:

Accepted Answer

A)  Continuous improvement. 
B)  Customer orientation. 
C)  Just-in-time. 
D)  Theory of constraints. 
E)  Total quality management. 
A)  Continuous improvement. 
B)  Customer orientation. 
C)  Just-in-time. 
D)  Theory of constraints. 
E)  Total quality management.

Question 9

Factory overhead includes selling and administrative expenses because they are indirect costs of a product.

Accepted Answer

A) True 
 B)False

Question 10

All of the following statements regarding manufacturing costs are True except:

Accepted Answer

A)  Direct material costs that increase with production are called variable costs. 
B)  The reporting of fixed and variable costs separately is not helpful to managers in analyzing cost behavior. 
C)  When overhead costs vary with production, they are called variable costs. 
D)  When overhead costs don't vary with production, they are called fixed overhead. 
E)  Overhead can be both variable and fixed. 
A)  Direct material costs that increase with production are called variable costs. 
B)  The reporting of fixed and variable costs separately is not helpful to managers in analyzing cost behavior. 
C)  When overhead costs vary with production, they are called variable costs. 
D)  When overhead costs don't vary with production, they are called fixed overhead. 
E)  Overhead can be both variable and fixed.

Question 11

Which of the following costs is not included in factory overhead?

Accepted Answer

A)  Payroll taxes on the wages of supervisory factory workers. 
B)  Indirect labor. 
C)  Depreciation of manufacturing equipment. 
D)  Manufacturing supplies used. 
E)  Direct materials. 
A)  Payroll taxes on the wages of supervisory factory workers. 
B)  Indirect labor. 
C)  Depreciation of manufacturing equipment. 
D)  Manufacturing supplies used. 
E)  Direct materials.

Question 12

Materials that are used in support of the production process but are not clearly identified with units or batches of product are called:

Accepted Answer

A)  Secondary materials. 
B)  General materials. 
C)  Direct materials. 
D)  Indirect materials. 
E)  Materials inventory. 
A)  Secondary materials. 
B)  General materials. 
C)  Direct materials. 
D)  Indirect materials. 
E)  Materials inventory.

Question 13

Whitman Products and Rockland Industries report the following information at December 31:   Required:
(a) Which company is a manufacturer? Explain.
(b) Prepare the Current Asset Section of the Balance Sheet for the manufacturer.

Accepted Answer

The answer of Whitman Products and Rockland Industries report the...

Question 14

A manufacturer's inventory that is not completely finished is called __________________.

Accepted Answer

The answer of A manufacturer's inventory that is not completely...

Question 15

Period costs are incurred by purchasing merchandise or manufacturing finished goods.

Accepted Answer

A) True 
 B)False

Question 16

Goods a company acquires to use in making products are called:

Accepted Answer

A)  Cost of goods sold. 
B)  Raw materials inventory. 
C)  Finished goods inventory. 
D)  Goods in process inventory. 
E)  Conversion costs. 
A)  Cost of goods sold. 
B)  Raw materials inventory. 
C)  Finished goods inventory. 
D)  Goods in process inventory. 
E)  Conversion costs.

Question 17

Product costs can be classified as one of three types: direct materials, direct labor, or overhead.

Accepted Answer

A) True 
 B)False

Question 18

The management concept of customer orientation causes a company to spend large amounts on advertising to convince customers to buy the company's standard products.

Accepted Answer

A) True 
 B)False

Question 19

Under a just-in-time manufacturing system, large quantities of inventory are accumulated throughout the factory to be certain that needed components are available each time that they are needed.

Accepted Answer

A) True 
 B)False

Question 20

Identify the three categories of manufacturing costs.

Accepted Answer

The three basic cost elements

Exam 18: Managerial Accounting Concepts and Principles

The following information pertains to the Hewett Corporation. Calculate the cost of goods sold for the period:

Cost concepts such as variable, fixed, mixed, direct and indirect apply only to manufacturers and not to service companies.

Products that are in the process of being manufactured but are not yet complete are called:

The process of identifying costs as direct or indirect is referred to as classifying costs by ____________.

An out-of-pocket cost requires a future cash outlay and is relevant for decision making.

A company's prime costs total $3,000,000 and its conversion costs total $7,000,000. If direct materials are $1,000,000 and factory overhead is $5,000,000, then direct labor is:

The management concept of customer orientation encourages a company to set up its production system to produce large quantities of the same product for all customers.

A management concept that encourages all managers and employees to be in tune with the wants and needs of customers, and which leads to flexible product designs and production processes, is called:

Factory overhead includes selling and administrative expenses because they are indirect costs of a product.

All of the following statements regarding manufacturing costs are True except:

Which of the following costs is not included in factory overhead?

Materials that are used in support of the production process but are not clearly identified with units or batches of product are called:

Whitman Products and Rockland Industries report the following information at December 31: Required: (a) Which company is a manufacturer? Explain. (b) Prepare the Current Asset Section of the Balance Sheet for the manufacturer.

A manufacturer's inventory that is not completely finished is called __________________.

Period costs are incurred by purchasing merchandise or manufacturing finished goods.

Goods a company acquires to use in making products are called:

Product costs can be classified as one of three types: direct materials, direct labor, or overhead.

The management concept of customer orientation causes a company to spend large amounts on advertising to convince customers to buy the company's standard products.

Under a just-in-time manufacturing system, large quantities of inventory are accumulated throughout the factory to be certain that needed components are available each time that they are needed.

Identify the three categories of manufacturing costs.

Accounting in Business

Analyzing and Recording Transactions

Adjusting Accounts and Preparing Financial Statements

Completing the Accounting Cycle

Accounting for Merchandising Operations

Inventories and Cost of Sales

Accounting Information Systems

Cash and Internal Controls

Accounting for Receivables

Plant Assets, Natural Resources, and Intangibles

Current Liabilities and Payroll Accounting

Accounting for Partnerships

Accounting for Corporations

Long-Term Liabilities

Investments and International Operations

Reporting the Statement of Cash Flows

Analysis of Financial Statements

Job Order Cost Accounting

Process Cost Accounting

Cost Allocation and Performance Measurement

Cost-Volume-Profit Analysis

Master Budgets and Planning

Flexible Budgets and Standard Costs

Capital Budgeting and Managerial Decisions

Time Value of Money

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