Deck 2: Basic Managerial Accounting Concepts

Question 1

Which of the following is an example of a tangible product?

A) funeral care
B) legal services
C) furniture
D) video rental

Answer 1

C

Question 2

Which of the following is included in nonmanufacturing costs?

A) marketing
B) direct materials
C) indirect materials
D) overhead

Answer 2

A

Question 3

Which of the following is an example of a direct materials cost?

A) wood used to make furniture
B) nails used to construct furniture
C) glue used to build furniture
D) screws used to manufacture furniture

Answer 3

A

Question 4

Which of the following is an example of an intangible product?

A) hamburgers
B) computers
C) automobiles
D) dental care

Question 5

Which of the following is a characteristic of price per unit?

A) It is equal to the revenue.
B) It must be less than cost for the firm to earn income.
C) It is the same as total cost.
D) It is the same as cost per unit plus income per unit.

Question 6

What is the definition of opportunity cost?

A) a cost that increases as output increases and decreases as output decreases
B) a cost that does not increase as output increases and does not decrease as output decreases
C) a benefit given up or sacrificed when one alternative is chosen over another
D) a benefit that cannot be easily and accurately traced to a cost object

Question 7

What type of cost is direct labour?

A) a nonproduction cost
B) a period cost
C) a nonmanufacturing cost
D) a product cost

Question 8

Which of the following job positions is an example of direct labour?

A) production line worker
B) maintenance person
C) security guard
D) management accountant

Question 9

When do materials in the raw materials account become direct materials?

A) when they are withdrawn from inventory for use in production
B) when they are returned to the supplier
C) when they are spoiled
D) when they are put into production

Question 10

Which of the following is an example of a direct materials cost?

A) the nails in a dining room table
B) the engine in an airplane
C) the glue used to manufacture furniture
D) the paint on a new car

Question 11

What is the behaviour pattern of a variable cost?

A) It increases in total as output increases.
B) It remains constant in total at all levels of output.
C) It increases per unit as output increases.
D) It decreases per unit as output increases.

Question 12

Into which two major functional categories are costs subdivided?

A) production and nonproduction
B) selling and administration
C) prime and conversion
D) opportunity and direct

Question 13

Which of the following is characteristic of indirect costs?

A) Indirect costs can be easily and accurately traced to a cost object.
B) Indirect costs are shared between or among more than one cost object.
C) Indirect costs should always be assigned to a cost object.
D) Indirect costs include all labour.

Question 14

Which of the following statements best describes product costs?

A) Product costs are direct materials and direct labour costs only.
B) Product costs are manufacturing costs.
C) Product costs do not include overhead.
D) Product costs do not include direct materials.

Question 15

In terms of managerial accounting,which of the following is the best definition of cost?

A) the cash sacrificed for goods expected to bring future benefit to the organization
B) a dollar measure of the cash used to achieve a given benefit
C) the asset incurred to produce future benefits
D) the equivalent of the cost of goods sold

Question 16

What is one of the main purposes of assigning costs to cost objects?

A) It provides information on why money was spent.
B) It records the historical events of the organization.
C) It allows management to incorporate products in marketing.
D) It facilitates service businesses in following financial regulations.

Question 17

What is the definition of assigning costs?

A) the way costs are measured and recorded
B) the way companies can tell what money was spent
C) the allocation applied to a cost object using a reasonable method
D) the benefit given up when one choice is made over another

Question 18

What are expired costs?

A) assets
B) expenses
C) revenues
D) profit

Question 19

What type of organization is the Hudson Bay Company?

A) production organization
B) service organization
C) manufacturing organization
D) merchandising organization

Question 20

Which of the following are production costs?

A) selling costs,administrative costs,and period costs
B) indirect materials,indirect labour,and administrative costs
C) direct materials,direct labour,and selling costs
D) direct materials,direct labour,and overhead

Question 21

Which of the following expenses is included in overhead?

A) advertising and marketing costs
B) property taxes on the factory
C) utility costs at the head office
D) computers used at the head office

Question 22

$$\begin{array} { l c c } & \text { January 1 } & \text { December } 31 \\\text { Materials } & \$ 10,000 & \$ 8,000 \\\text { Work in Process } & \$ 18,000 & \$ 17,000 \\\text { Finished Goods } & \$ 21,000 & \$ 16,500\end{array}$$

-Refer to the Figure.What was the amount of cost of goods sold for the year?

A) $97,500
B) $102,000
C) $106,500
D) $128,500

Question 23

$$\begin{array} { l c c } & \text { January 1 } & \text { December } 31 \\\text { Materials } & \$ 10,000 & \$ 8,000 \\\text { Work in Process } & \$ 18,000 & \$ 17,000 \\\text { Finished Goods } & \$ 21,000 & \$ 16,500\end{array}$$

-Refer to the Figure.What was ComPrint's operating income or loss for the year?

A) $(3,500)
B) $5,500
C) $18,500
D) $125,000

Question 24

Which of the following expenses is included in manufacturing overhead?

A) production line supervisor salary
B) steel used to manufacture a car
C) production line worker wages
D) advertising for the product

Question 25

What is characteristic of a period cost?

A) They include selling costs and administrative costs.
B) They are used to compute product cost.
C) They can be included in overhead costs.
D) They are carried in inventory until the goods are sold.

Question 26

Refer to the Figure.What was the per-unit conversion cost last month?

A) $100.00
B) $140.00
C) $162.50
D) $218.00

Question 27

Which of the following is a period cost?

A) direct materials
B) indirect labour
C) indirect materials
D) depreciation on an office building

Question 28

$\begin{array}{ll}\text { January } 1 & 1,260 \\\text { December } 31 & 1,040\end{array}$

-Refer to the Figure.How many sets of portable speakers did Ballard sell during the year?

A) 96,780
B) 97,000
C) 97,220
D) 100,220

Question 29

Refer to the Figure.What was the amount of cost of goods manufactured last month?

A) $1,250,000
B) $1,300,000
C) $1,750,000
D) $2,000,000

Question 30

How is unit cost calculated?

A) total product costs divided by the number of units produced
B) period costs divided by the total number of units produced
C) total prime costs divided by the number of units produced
D) total conversion costs divided by the number of units produced

Question 31

Which of the following labour costs is included in indirect labour?

A) the salary of the vice-president of marketing
B) the salary of the CEO
C) the salary of factory supervisor
D) the wages of the production line worker

Question 32

How is conversion cost calculated?

A) direct materials cost plus prime costs
B) indirect labour cost plus opportunity costs
C) product costs plus period costs
D) direct labour cost plus overhead cost

Question 33

Refer to the Figure.What were the total product costs last month?

A) $1,250,000
B) $1,300,000
C) $1,750,000
D) $2,000,000

Question 34

How is prime cost calculated?

A) indirect materials cost plus indirect labour cost
B) direct materials cost plus direct labour cost
C) period costs plus overhead cost
D) selling cost plus administrative cost

Question 35

Refer to the Figure.What was the total per-unit prime cost last month?

A) $62.50
B) $150.00
C) $162.50
D) $263.75

Question 36

HaulAll Inc.had a per-unit conversion cost of $4.00 during April and incurred a direct materials cost of $100,000,direct labour costs of $110,000,and overhead costs of $50,000.How many units did HaulAll manufacture during May?

A) 18,000
B) 30,000
C) 48,000
D) 70,000

Question 37

Which of the following is an example of a period cost?

A) direct materials
B) direct labour
C) general accounting
D) manufacturing overhead

Question 38

$$\begin{array} { l c c } & \text { January 1 } & \text { December } 31 \\\text { Materials } & \$ 10,000 & \$ 8,000 \\\text { Work in Process } & \$ 18,000 & \$ 17,000 \\\text { Finished Goods } & \$ 21,000 & \$ 16,500\end{array}$$

-Refer to the Figure.What were the total manufacturing costs for the year?

A) $101,000
B) $102,000
C) $106,500
D) $123,000

Question 39

$$\begin{array} { l c c } & \text { January 1 } & \text { December } 31 \\\text { Materials } & \$ 10,000 & \$ 8,000 \\\text { Work in Process } & \$ 18,000 & \$ 17,000 \\\text { Finished Goods } & \$ 21,000 & \$ 16,500\end{array}$$

-Refer to the Figure.What was the amount of Cost of Goods Manufactured for the year?

A) $100,000
B) $101,000
C) $102,000
D) $124,000

Question 40

Global Inc.manufactured 6,000 units during the month of April and incurred a direct materials cost of $110,000 and an overhead cost of $50,000.Suppose the per-unit prime cost was $30.00 per unit.How much direct labour cost did Global incur during April?

A) $20,000
B) $70,000
C) $85,000
D) $90,000

Question 41

$\begin{array}{lr}\text { Direct materials } & \$ 15 \\\text { Direct labour } & 10 \\\text { Overhead } & 15\end{array}$

-Refer to the Figure.What was the prime cost per unit?

A) $11
B) $25
C) $30
D) $34

Question 42

$\begin{array}{lr}\text { Direct materials } & \$ 15 \\\text { Direct labour } & 10 \\\text { Overhead } & 15\end{array}$

-Refer to the Figure.What was the total operating income last year?

A) $3,500
B) $25,500
C) $29,000
D) $51,000

Question 43

During the month of May,Blackburn Inc.had cost of goods manufactured of $120,000,direct materials cost of $60,000,direct labour cost of $37,000,and overhead cost of $26,000.The work-in-process balance at May 31 equalled $10,000.What was the work-in-process balance on May 1?

A) $7,000
B) $10,000
C) $13,000
D) $115,000

Question 44

$\begin{array}{lr}\text { Sales } & \$ 1,230,000 \\\text { Selling and administrative expenses } & 210,00 0\\\text { Direct materials used } & 300,000 \\\text { Direct labour } & 350,000 \\\text { Factory overhead } & 455,000\end{array}$

$\begin{array}{lrr}&\text { Inventories }\\\text { Direct materials } & \text { Dec. } 1 & \text { Dec. } 31 \\\text { Work in process } & \$ 36,000 & \$ 42,000 \\\text { Finished goods } & 75,000 & 84,000 \\\text { Fin } & 69,000 & 57,000\end{array}$

-Refer to the Figure.What are the conversion costs?

A) $564,000
B) $805,000
C) $960,000
D) $1,179,000

Question 45

$\begin{array}{lr}\text { Direct materials } & \$ 15 \\\text { Direct labour } & 10 \\\text { Overhead } & 15\end{array}$

-Refer to the Figure.What was the cost of goods sold last year?

A) $14,250
B) $30,000
C) $47,500
D) $51,000

Question 46

$\begin{array}{ll}\text { January } 1 & 1,260 \\\text { December } 31 & 1,040\end{array}$

-Refer to the Figure.Suppose each set of portable speakers has a per-unit product cost of $112.What would be the cost of goods sold last year?

A) $10,839,360
B) $10,864,000
C) $11,222,400
D) $11,555,120

Question 47

$$\begin{array} { l r } \text { Direct materials } & \$ 40,000 \\\text { Direct labour } & 60,000 \\\text { Overhead } & 90,000 \\\text { Selling expenses } & 24,000 \\\text { Administrative expenses } & 22,000\end{array}$$

-Refer to the Figure.What were the total product costs?

A) $100,000
B) $150,000
C) $190,000
D) $236,000

Question 48

$$\begin{array} { l r } \text { Direct materials } & \$ 40,000 \\\text { Direct labour } & 60,000 \\\text { Overhead } & 90,000 \\\text { Selling expenses } & 24,000 \\\text { Administrative expenses } & 22,000\end{array}$$

-Refer to the Figure.What was Quest's total period expense?

A) $24,000
B) $46,000
C) $190,000
D) $250,000

Question 49

How is the cost of goods manufactured calculated?

A) total product costs incurred during the current period + beginning work in process − ending work in process
B) direct materials cost + direct labour cost + overhead cost
C) sales − cost of goods sold
D) gross margin - other expenses

Question 50

$\begin{array}{ll}\text { January } 1 & 1,260 \\\text { December } 31 & 1,040\end{array}$

-Refer to the Figure.Suppose each set of portable speakers has a per-unit product cost of $112.What would be the cost of finished goods inventory on December 31?

A) $24,640
B) $116,480
C) $124,640
D) $141,120

Question 51

What is the definition of cost of goods manufactured?

A) the cost of direct materials used in production
B) the product cost of goods completed during the current period
C) the product cost of goods sold during the current period
D) the cost remaining in ending work-in-process inventory

Question 52

Which of the following would be found on the balance sheet of a manufacturer?

A) cost of goods sold
B) cost of goods manufactured
C) work in progress inventory
D) revenue

Question 53

Which of the following would be found on the balance sheet of a manufacturer and not on the balance sheet of a service business?

A) cost of goods manufactured
B) work in process
C) cost of goods sold
D) gross profit

Question 54

$$\begin{array} { l r } \text { Direct materials } & \$ 40,000 \\\text { Direct labour } & 60,000 \\\text { Overhead } & 90,000 \\\text { Selling expenses } & 24,000 \\\text { Administrative expenses } & 22,000\end{array}$$

-Refer to the Figure.What was the gross margin per unit?

A) $7
B) $30
C) $95
D) $125

Question 55

What is the formula to calculate gross margin percent?

A) gross margin / cost of goods sold
B) operating income / sales revenue
C) gross margin / sales revenue
D) sales revenue / gross margin

Question 56

A company's beginning work-in-process inventory is $120,000,its ending work-in-process inventory is $160,000,its cost of goods manufactured is $400,000,and its direct materials used are $100,000.What are the conversion costs?

A) $140,000
B) $280,000
C) $300,000
D) $340,000

Question 57

What is the term for the cost of the partially completed goods at the end of the period?

A) the beginning work-in-process inventory
B) the cost of goods manufactured
C) the ending work-in-process inventory
D) the ending finished goods inventory

Question 58

$\begin{array}{lr}\text { Sales } & \$ 1,230,000 \\\text { Selling and administrative expenses } & 210,00 0\\\text { Direct materials used } & 300,000 \\\text { Direct labour } & 350,000 \\\text { Factory overhead } & 455,000\end{array}$

$\begin{array}{lrr}&\text { Inventories }\\\text { Direct materials } & \text { Dec. } 1 & \text { Dec. } 31 \\\text { Work in process } & \$ 36,000 & \$ 42,000 \\\text { Finished goods } & 75,000 & 84,000 \\\text { Fin } & 69,000 & 57,000\end{array}$

-Refer to the Figure.What are the prime costs?

A) $564,000
B) $650,000
C) $805,000
D) $969,000

Question 59

$$\begin{array} { l r } \text { Direct materials } & \$ 40,000 \\\text { Direct labour } & 60,000 \\\text { Overhead } & 90,000 \\\text { Selling expenses } & 24,000 \\\text { Administrative expenses } & 22,000\end{array}$$

-Refer to the Figure.What was the conversion cost per unit?

A) $50
B) $75
C) $95
D) $125

Question 60

Assuming a separate schedule of cost of goods manufactured,which of the following is found on a manufacturer's income statement?

A) cost of goods sold
B) work in process
C) direct materials
D) direct labour

Question 61

When are product costs expensed?

A) when the product is finished
B) when the product unit cost is calculated
C) when the product is sold
D) when the product begins production

Question 62

Blue Water Inc.had a gross margin for the month of February totalling $92,000.The company sold 6,000 units during the month at a sales price of $30 per unit.What was the amount of cost of goods sold for the month?

A) $42,000
B) $88,000
C) $100,000
D) $158,000

Question 63

Which of the following is characteristic of cost of goods sold?

A) Cost of goods sold is the total product cost for the units sold during a period.
B) Cost of goods sold is the total product cost on the balance sheet.
C) Cost of goods sold is a cost that will be more than the revenue.
D) Cost of goods sold does not include the direct materials cost of the product.

Question 64

$$\begin{array} { l l l } & \text { July 1 } & \text { July } 31 \\\text { Materials } & \$ 6,200 & \$ 7,100 \\\text { Work in process } & \$ 700 & \$ 1,200 \\\text { Finished goods } & \$ 3,300 & \$ 2,700\end{array}$$

-Refer to the Figure.What was the cost of goods sold for July?

A) $69,600
B) $70,200
C) $71,100
D) $71,300

Question 65

Book City had cost of goods sold of $140,000 for the year ended December 31.The finished goods inventory on January 1 was $35,000 and the finished goods inventory on December 31was $17,000.What was the amount of cost of goods manufactured for the year?

A) $52,000
B) $157,000
C) $158,000
D) $175,000

Question 66

$$\begin{array} { l r } \text { Per-unit product cost: } & \$ 30 \\\text { Gross margin percentage: } & 40 \% \\\text { Selling and admini strative expenses } & \$ 30,000 \\\text { Operating income } & \$ 10,000\end{array}$$

-Refer to the Figure.What was the sales price per unit?

A) $10
B) $20
C) $30
D) $50

Question 67

$$\begin{array} { l l l } & \text { July 1 } & \text { July } 31 \\\text { Materials } & \$ 6,200 & \$ 7,100 \\\text { Work in process } & \$ 700 & \$ 1,200 \\\text { Finished goods } & \$ 3,300 & \$ 2,700\end{array}$$

-Refer to the Figure.Suppose Econo Company sold 10,000 units during July and gross margin totalled $29,800.What would be the sales price per unit?

A) $9.94
B) $10.00
C) $10.09
D) $10.11

Question 68

Ganz,Inc.had materials inventory at July 1 of $12,000.The materials inventory at July 31 was $15,000,and the cost of direct materials used in production was $20,000.What was the cost of materials purchased during the month?

A) $17,000
B) $20,000
C) $23,000
D) $35,000

Question 69

What is the formula to calculate gross margin?

A) sales revenue − selling and administrative expenses
B) sales revenue − cost of goods sold
C) cost of goods manufactured + beginning finished goods inventory − ending finished goods inventory
D) total product costs + beginning work in process − ending work in process

Question 70

$$\begin{array} { l r } \text { Per-unit product cost: } & \$ 30 \\\text { Gross margin percentage: } & 40 \% \\\text { Selling and admini strative expenses } & \$ 30,000 \\\text { Operating income } & \$ 10,000\end{array}$$

-Refer to the Figure.How many units were sold during the year?

A) 1,000
B) 1,500
C) 2,000
D) 3,333

Question 71

$$\begin{array} { l l l } & \text { July 1 } & \text { July } 31 \\\text { Materials } & \$ 6,200 & \$ 7,100 \\\text { Work in process } & \$ 700 & \$ 1,200 \\\text { Finished goods } & \$ 3,300 & \$ 2,700\end{array}$$

-Refer to the Figure.What were the total manufacturing costs in July?

A) $50,000
B) $69,600
C) $70,100
D) $71,000

Question 72

How many inventory accounts does a typical manufacturer have?

A) 1
B) 2
C) 3
D) 4

Question 73

Which of the following is characteristic of a manufacturer?

A) It will show the ending balance of work in process.
B) It contains only manufacturing costs.
C) It will show the ending balance of materials inventory.
D) It covers a certain period of time.

Question 74

Selected data concerning the past year's operations of the Intelligent Creatures Corporation are as follows: $\begin{array}{lr}\text { Selling and administrative expenses } & \$ 225,000 \\\text { Direct materials used } & 397,500 \\\text { Direct labour } & 450,000\end{array}$

$\begin{array}{lrr} &\text { Inventories }\\& \text { Dec. } 1 & \text { Dec. } 31 \\\text { Direct materials } & \$ 36,000 & \$ 42,000 \\\text { Work in process } & 75,000 & 84,000 \\\text { Finished goods } & 69,000 & 57,000\end{array}$ What is the cost of direct materials purchased?

A) $367,500
B) $397,500
C) $403,500
D) $405,000

Question 75

$$\begin{array} { l r } \text { Per-unit product cost: } & \$ 30 \\\text { Gross margin percentage: } & 40 \% \\\text { Selling and admini strative expenses } & \$ 30,000 \\\text { Operating income } & \$ 10,000\end{array}$$

-Refer to the Figure.What was the gross margin for the year?

A) $40,000
B) $50,000
C) $60,000
D) $100,000

Question 76

What three categories separate the expenses on a manufacturer's income statement?

A) production,period,and indirect
B) materials,work in process,and finished goods
C) production,selling,and administrative
D) variable,fixed,and direct

Question 77

$$\begin{array} { l l l } & \text { July 1 } & \text { July } 31 \\\text { Materials } & \$ 6,200 & \$ 7,100 \\\text { Work in process } & \$ 700 & \$ 1,200 \\\text { Finished goods } & \$ 3,300 & \$ 2,700\end{array}$$

-Refer to the Figure.What was the cost of direct materials used in July?

A) $20,100
B) $20,500
C) $21,000
D) $21,900

Question 78

$$\begin{array} { l r } \text { Per-unit product cost: } & \$ 30 \\\text { Gross margin percentage: } & 40 \% \\\text { Selling and admini strative expenses } & \$ 30,000 \\\text { Operating income } & \$ 10,000\end{array}$$

-Refer to the Figure.What was the cost of goods sold for the year?

A) $40,000
B) $50,000
C) $60,000
D) $100,000

Question 79

During the month of March,Cara,Inc.had total manufacturing costs of $130,000 and incurred $40,000 in direct labour costs and $30,000 in overhead costs.The materials inventory on January 1 was $3,000 less than the materials inventory on March 31.What was the cost of materials purchased during the month?

A) $37,000
B) $40,000
C) $63,000
D) $70,000

Question 80

$$\begin{array} { l l l } & \text { July 1 } & \text { July } 31 \\\text { Materials } & \$ 6,200 & \$ 7,100 \\\text { Work in process } & \$ 700 & \$ 1,200 \\\text { Finished goods } & \$ 3,300 & \$ 2,700\end{array}$$

-Refer to the Figure.What was the cost of goods manufactured for July?

A) $69,100
B) $69,600
C) $70,500
D) $70,700