Question 1

Which of the following costs is not considered a period cost?

Accepted Answer

A)  Warehousing costs 
B)  Depreciation of delivery vehicles 
C)  Salaries paid to company executives 
D)  Freight paid on a purchase of raw materials

Question 2

During its first year of operations, Silverman Company paid $10,000 for direct materials and $11,500 for production workers' wages. Lease payments and utilities on the production facilities amounted to $10,500 while general, selling, and administrative expenses totaled $3,000. The company produced 8,000 units and sold 5,000 units at a price of $6.50 a unit. What is the amount of gross margin for the first year?

Accepted Answer

A)  $12,000 
B)  $11,000 
C)  $32,500 
D)  $12,500

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

Travis Company had no beginning work in process or finished goods. Its total manufacturing costs for the year were $427,000. If cost of goods manufactured was $332,000 and cost of goods sold was $250,000, the amount of ending work in process would have been:

Accepted Answer

A)  $82,000. 
B)  $105,000. 
C)  $95,000. 
D)  $127,000.

Question 5

For the month of January, Year 1, Ghent Corporation had a beginning balance of $103,200 in work in process. During the month, the company added the following costs to work in process: direct materials, $90,900; direct labor, $54,000; and manufacturing overhead, $81,000. The ending amount of work in process was $37,400. What was the cost of goods manufactured for the period? Prepare a schedule that shows the calculation of the cost of goods manufactured.

Accepted Answer

The answer of For the month of January, Year 1,...

Question 6

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.

Question 7

Jarvis Company provided the following information regarding its first year of operations:
  Required:Determine the following amounts:Total overhead costs.Total product costs.Product cost per unit.Total cost of ending finished goods inventory.Total cost of goods sold.

Accepted Answer

The answer of Jarvis Company provided the following information regarding...

Question 8

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?

Accepted Answer

A)  $2 per unit 
B)  $2 per machine hour 
C)  $80 per unit 
D)  $80 per machine hour

Question 9

Product costs are reported on the income statement above gross margin.

Accepted Answer

A) True 
 B)False

Question 10

During its first year of operations, Silverman Company paid $13,840 for direct materials and $10,100 for production workers' wages. Lease payments and utilities on the production facilities amounted to $9,100 while general, selling, and administrative expenses totaled $4,600. The company produced 5,900 units and sold 3,600 units at a price of $8.10 a unit. What is Silverman's cost of goods sold for the year?

Accepted Answer

A)  $20,160 
B)  $33,040 
C)  $28,540 
D)  $17,414

Question 11

The sequence of activities through which an organization provides products to its customers is called a supply chain.

Accepted Answer

A) True 
 B)False

Question 12

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.

Accepted Answer

The answer of As a Certified Management Accountant, Steven is...

Question 13

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

Accepted Answer

A)  Selling and administrative salaries 
B)  Cost of lubricant for oiling machinery 
C)  Wages paid to machine operators 
D)  All of these

Question 14

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 the amount of finished goods inventory on the balance sheet at year-end?

Accepted Answer

A)  $10,000 
B)  $20,000 
C)  $4,000 
D)  $15,000

Question 15

Steuben Company produces dog houses. During the current year, Steuben Company incurred the following costs: $\begin{array}{llr}
  \text {  Rent on manufacturing facility} &\$250,000\
 \text {office manager's salary  } &150,000\
 \text {  Wages of factory machine operators} &110,000\
 \text {Depreciation on manufacturing equipment  } &50,000\
 \text {Insurance and taxes on selling and administrative  } &30,000\
 \text { offices } &\
 \text { Direct materials murchased and used } &170,000
\end{array}$
 Wages paid to factory machine operators in producing the dog houses should be categorized as:

Accepted Answer

A)  a product cost and recorded in the inventory account 
B)  a period cost and recorded on the income statement 
C)  a product cost and recorded on the income statement 
D)  a period cost and recorded in the inventory account

Exam 10: An Introduction to Management Accounting

Which of the following costs is not considered a period cost?

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

Travis Company had no beginning work in process or finished goods. Its total manufacturing costs for the year were $427,000. If cost of goods manufactured was $332,000 and cost of goods sold was $250,000, the amount of ending work in process would have been:

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

Jarvis Company provided the following information regarding its first year of operations: Required:Determine the following amounts:Total overhead costs.Total product costs.Product cost per unit.Total cost of ending finished goods inventory.Total cost of goods sold.

Product costs are reported on the income statement above gross margin.

The sequence of activities through which an organization provides products to its customers is called a supply chain.

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.

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