Question 1

Fuchsia Inc. provides automobile services in the local community. The company provides the following information for the month of March: $$\begin{array} { | l | r | } 
\hline \text { Building Rent Expense } & \$ 5,000 \
\hline \text { Depreciation Expense-Equipment } & 1,700 \
\hline \text { Supplies Expense } & 8,500 \
\hline \text { Utilities Expense } & 2,450 \
\hline
\end{array}$$ Fuchsia provided services to 1,500 clients in the month of March and generated $20,500 as revenue.
How much is the cost per service?

Accepted Answer

A)  $11.77 
B)  $5.18 
C)  $13.67 
D)  $10.63

Question 2

In a manufacturing firm, accounting, legal, and administrative costs are typical examples of product costs.

Accepted Answer

A) True 
 B)False

Question 3

What is total quality management (TQM)?

Accepted Answer

A)  a philosophy of supplying customers with superior products and services 
B)  an exchange of information with suppliers and customers to create efficient and effective processes 
C)  a software system that integrates a company's functions, departments and data into a single system 
D)  a system which speeds the transformation of raw materials into finished products

Question 4

Salary of a factory manager will be included in manufacturing overhead.

Accepted Answer

A) True 
 B)False

Question 5

The accountant for Myra Lido deliberately deferred cash payments for business expenses in order to record a higher operating cash flow for the company. As long as the amount was not material, this would not be considered unethical behavior.

Accepted Answer

A) True 
 B)False

Question 6

Excellent Company sells accounting textbooks. The following information summarizes Excellent's operating activities for 2015:
 $\begin{array}{|l|r|}
\hline \text { Merchandise Inventory, January 1, 2015 } & \$ 10,000 \
\hline \text { Merchandise Inventory, December 31, 2015 } & 7,000 \
\hline \text { Purchases } & 95,000 \
\hline \text { Selling and Administrative Expenses } & 65,000 \
\hline \text { Sales Revenue } & 180,000 \
\hline
\end{array}$ Required: Prepare Excellent Company's income statement for the year ended December 31, 2015.

Accepted Answer

The answer of Excellent Company sells accounting textbooks. The following...

Question 7

Wages of factory janitors is considered non-manufacturing overhead, as these are not directly related to the manufacturing process.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is an example of direct labor cost in a factory?

Accepted Answer

A)  Wages of assembly line personnel 
B)  Salary of vice president of production 
C)  Wages of factory security guard 
D)  Salary of production manager

Question 9

Transportation costs paid to ship raw materials to a company warehouse are considered product costs.

Accepted Answer

A) True 
 B)False

Question 10

Merchandiser's inventory consists of raw materials inventory, work-in-process inventory, and finished goods inventory.

Accepted Answer

A) True 
 B)False

Question 11

The cost of goods manufactured includes selling expenses, administrative expenses, and manufacturing overhead.

Accepted Answer

A) True 
 B)False

Question 12

For external reporting purposes, GAAP requires companies to treat period costs as assets.

Accepted Answer

A) True 
 B)False

Question 13

Repair and maintenance costs of vehicles used to deliver products to the customers are included in manufacturing overhead.

Accepted Answer

A) True 
 B)False

Question 14

Arturo Manufacturing Company provided the following information for the year 2015: $$\begin{array} { | l | r | } 
\hline \text { Beginning Balance - Work-in-Process Inventory } & \$ 12,000 \
\hline \text { Ending Balance - Work-in-Process Inventory } & 28,000 \
\hline \text { Beginning Balance - Raw Materials Inventory } & 42,000 \
\hline \text { Ending Balance - Raw Materials Inventory } & 30,000 \
\hline \text { Purchases - Raw Materials } & 180,000 \
\hline \text { Direct Labor } & 235,000 \
\hline \text { Indirect Materials } & 23,500 \
\hline \text { Indirect Labor } & 9,500 \
\hline \text { Depreciation on Factory Plant \& Equipment } & 12,000 \
\hline \text { Plant Utilities \& Insurance } & 135,000 \
\hline
\end{array}$$ How much is the cost of goods manufactured?

Accepted Answer

A)  $591,000 
B)  $607,000 
C)  $619,000 
D)  $579,000

Question 15

Amber Corporation has provided the following information of its operating activities for 2015:
 $$\begin{array} { | l | r } 
\hline \text { Merchandise Inventory, January 1, 2015 } & \$ 150,000 \
\hline \text { Merchandise Inventory, December } 31,2015 & 75,000 \
\hline \text { Purchases } & 854,000 \
\hline \text { Selling and Administrative Expenses } & 65,000 \
\hline \text { Sales Revenue } & 1,000,000 \
\hline
\end{array}$$ Required: Prepare Amber's income statement for the year ended December 31, 2015. Use the format provided below:
 $$\begin{array} { | l | l | l | } 
\hline \text { Sales Revenue } & \quad\quad&\quad\quad \
\hline \text { Cost of Goods Sold } & & \
\hline \text { Beginning Inventory } & & \
\hline \text { Purchases } & & \
\hline \text { Cost of Goods Available for Sale } & & \
\hline \text { Ending Inventory } & & \
\hline \text { Cost of Goods Sold } & & \
\hline \text { Gross Profit } & & \
\hline \text { Selling and Administrative Expenses } & & \
\hline \text { Operating Income } & & \
\hline
\end{array}$$

Accepted Answer

The answer of Amber Corporation has provided the following information...

Question 16

Total manufacturing costs to account for during the year minus the ending work-in-process inventory equals the cost of goods manufactured.

Accepted Answer

A) True 
 B)False

Question 17

In a manufacturing firm, which of the following is an example of a period cost?

Accepted Answer

A)  Advertising expense 
B)  Depreciation on factory equipment 
C)  Indirect materials 
D)  Property taxes for the factory

Question 18

Manufacturing overhead is also referred to as:

Accepted Answer

A)  indirect manufacturing costs. 
B)  direct costs. 
C)  prime costs. 
D)  period costs.

Question 19

For a manufacturing business, which of the following would be considered a product cost?

Accepted Answer

A)  Salary of the sales manager 
B)  Salary of the CEO 
C)  Salaries of the accounting staff 
D)  Salary of the production manager

Question 20

Damsel Inc. is a large manufacturer of auto tires. Damsel has provided the following information: $$\begin{array} { | l | r | } 
\hline \text { Sales Revenue } & \$ 45,500 \
\hline \text { Beginning Finished Goods Inventory } & 1,500 \
\hline \text { Cost of Goods Sold } & 32,500 \
\hline \text { Cost of Goods Manufactured } & 35,000 \
\hline
\end{array}$$ Calculate the amount of ending finished goods inventory reported in Damsel's balance sheet.

Accepted Answer

A)  $10,500 
B)  $36,500 
C)  $4,000 
D)  $3,500

Exam 1: Introduction to Managerial Accounting

In a manufacturing firm, accounting, legal, and administrative costs are typical examples of product costs.

What is total quality management (TQM) ?

Salary of a factory manager will be included in manufacturing overhead.

The accountant for Myra Lido deliberately deferred cash payments for business expenses in order to record a higher operating cash flow for the company. As long as the amount was not material, this would not be considered unethical behavior.

Wages of factory janitors is considered non-manufacturing overhead, as these are not directly related to the manufacturing process.

Which of the following is an example of direct labor cost in a factory?

Transportation costs paid to ship raw materials to a company warehouse are considered product costs.

Merchandiser's inventory consists of raw materials inventory, work-in-process inventory, and finished goods inventory.

The cost of goods manufactured includes selling expenses, administrative expenses, and manufacturing overhead.

For external reporting purposes, GAAP requires companies to treat period costs as assets.

Repair and maintenance costs of vehicles used to deliver products to the customers are included in manufacturing overhead.

Total manufacturing costs to account for during the year minus the ending work-in-process inventory equals the cost of goods manufactured.

In a manufacturing firm, which of the following is an example of a period cost?

Manufacturing overhead is also referred to as:

For a manufacturing business, which of the following would be considered a product cost?