Question 1

Which of the following is a prime cost and a conversion cost?

Accepted Answer

A)  manufacturing overhead 
B)  direct materials 
C)  direct labor 
D)  selling expenses

Question 2

Which of the following correctly describes the accounting for administrative expenses of a manufacturing company?

Accepted Answer

A)  Administrative expenses are product costs and are expensed as incurred. 
B)  Administrative expenses are period costs and are expensed as incurred. 
C)  Administrative expenses are product costs and are expensed when the manufactured product is sold. 
D)  Administrative expenses are period costs and are expensed when the manufactured product is sold.

Question 3

The primary activity of manufacturing companies is to purchase goods from a wholesaler and resell them.

Accepted Answer

A) True 
 B)False

Question 4

Repair and maintenance costs for manufacturing equipment are included in manufacturing overhead.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following correctly describes Just-in-Time (JIT)Management?

Accepted Answer

A)  It is a production approach that maintains surplus goods at each stage of manufacture. 
B)  It is an inventory purchase approach that seeks purchase discounts on buying large quantities. 
C)  It is a cost management approach that focuses on maintaining lean inventory levels. 
D)  It is an inventory approach that stockpiles raw materials to protect against supply interruptions.

Question 6

________ is a philosophy of continuous improvement of products and processes.

Accepted Answer

A)  Just-in-Time (JIT) Management 
B)  Enterprise Resource Planning (ERP) 
C)  Supply Chain Management (SCM) 
D)  Total Quality Management (TQM)

Question 7

Which of the following is true of product costs?

Accepted Answer

A)  They are expensed in the period they are paid. 
B)  For external reporting, GAAP requires that they be expensed before the products are sold. 
C)  They are first recorded in an inventory account. 
D)  For merchandising companies, product costs do not include freight costs.

Question 8

How does a merchandise company calculate unit cost per item? Why do managers need to know the unit cost per item?

Accepted Answer

The answer of How does a merchandise company calculate unit...

Question 9

Kyanite Corporation,a manufacturer,reports costs for the year as follows: $$\begin{array} { | l | r | } 
\hline \text { Direct Materials Used } & \$ 535,000 \
\hline \text { Wages to Line Workers } & 470,000 \
\hline \text { Office Rent } & 29,000 \
\hline \text { Indirect Materials Used } & 370,000 \
\hline
\end{array}$$
 How much is the total period costs for Kyanite?

Accepted Answer

A)  $535,000 
B)  $470,000 
C)  $29,000 
D)  $370,000

Question 10

Fuchsia,Inc.provides automobile repair services in the local community.The company provides the following information for the month of March: $$\begin{array} { | l | r | } 
\hline \text { Building Rent Expense } & \$ 5,100 \
\hline \text { Depreciation Expense-Equipment } & 1,500 \
\hline \text { Supplies Expense } & 9,000 \
\hline \text { Utilities Expense } & 2,450 \
\hline
\end{array}$$ 
Fuchsia provided services to 1,400 clients in the month of March and generated $24,000 as revenue.
How much is the cost per service? (Round your answer to the nearest cent.)

Accepted Answer

A)  $12.89 
B)  $3.64 
C)  $9.80 
D)  $6.46

Question 11

The Work-in-Process Inventory account includes the ________.

Accepted Answer

A)  goods that are ready to be sold 
B)  goods that are partially completed 
C)  goods that have been sold in the market 
D)  goods that are damaged during production

Question 12

Samson,Inc.reported the following information for the year: $$\begin{array} { | l | r | } 
\hline \text { Service Revenue } & \$ 40,000 \
\hline \text { Operating Expenses } & 22,500 \
\hline \text { Net Income } & 17,500 \
\hline \text { Number of Services Provided for the Year } & 12,000 \
\hline
\end{array}$$
 How much was the unit cost per service? (Round your answer to the nearest cent.)

Accepted Answer

A)  $3.33 
B)  $1.46 
C)  $1.88 
D)  $5.21

Question 13

Which of the following is the primary focus of financial accounting?

Accepted Answer

A)  providing information that managers need to make operational decisions 
B)  providing summarized information on operational results to investors and creditors 
C)  providing budgets for future periods 
D)  providing highly detailed information on product lines, regions, and divisions

Question 14

The following information was obtained from MCB Manufacturing,Inc.: $$\begin{array} { | l | r | } 
\hline \text { Advertising Costs } & \$ 9,800 \
\hline \text { Indirect Labor } & 36,000 \
\hline \text { CEO's Salary } & 480,000 \
\hline \text { Direct Labor } & 50,000 \
\hline \text { Indirect Materials Used } & 4,000 \
\hline \text { Direct Materials Used } & 65,000 \
\hline \text { Factory Utilities } & 920 \
\hline \text { Factory Janitorial Costs } & 2,100 \
\hline \text { Manufacturing Equipment Depreciation } & 1,000 \
\hline \text { Delivery Vehicle Depreciation } & 2,700 \
\hline \text { Administrative Wages and Salaries } & 22,000 \
\hline
\end{array}$$ Calculate MCB Manufacturing's total product costs.

Accepted Answer

A)  $159,020 
B)  $514,500 
C)  $115,000 
D)  $155,000

Question 15

Viva,Inc.has provided the following information for the year: $$\begin{array} { | l | r | } 
\hline \text { Cost of Goods Manufactured } & \$ 1,293,000 \
\hline \text { Beginning Balance - Finished Goods Inventory } & 98,000 \
\hline \text { Ending Balance - Finished Goods Inventory } & 80,000 \
\hline
\end{array}$$ How much is the cost of goods sold?

Accepted Answer

A)  $178,000 
B)  $1,311,000 
C)  $1,293,000 
D)  $1,275,000

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

You did not understand what the term accrual meant and failed to accrue the interest due at the end of the year on the company's bonds.Which of the IMA standards appears to have been violated here?

Accepted Answer

A)  integrity 
B)  confidentiality 
C)  competence 
D)  objectivity

Question 18

Mason Cabinet Company sells standard kitchen cabinets.The following information summarizes Mason's operating activities for the year:
 $$\begin{array} { | l | r | } 
\hline \text { Selling and Administrative Expenses } & \$ 42,750 \
\hline \text { Purchases } & 85,700 \
\hline \text { Sales Revenue } & 154,500 \
\hline \text { Merchandise Inventory, January 1 } & 12,500 \
\hline \text { Merchandise Inventory, December 31 } & 16,200 \
\hline
\end{array}$$ 
Mason sold 950 cabinets during the year.
Calculate the operating income for the year.
Compute the unit cost for one cabinet (Round to two decimal places.)

Accepted Answer

The answer of Mason Cabinet Company sells standard kitchen cabinets.The...

Question 19

Which of the following would be classified as a prime cost?

Accepted Answer

A)  cost of direct materials used 
B)  depreciation on factory equipment 
C)  salary of sales personnel 
D)  depreciation on office furniture

Question 20

Robbinsdale,Inc.is a merchandiser of stone ornaments.The company sold 8,000 units during the year.The company has provided the following information: $$\begin{array} { | l | r | } 
\hline \text { Sales Revenue } & \$ 593,000 \
\hline \text { Purchases (excluding freight in) } & 300,000 \
\hline \text { Selling and Administrative Expenses } & 66,000 \
\hline \text { Freight In } & 15,000 \
\hline \text { Beginning Merchandise Inventory } & 46,000 \
\hline \text { Ending Merchandise Inventory } & 43,000 \
\hline
\end{array}$$ What is the cost of goods available for sale for the year?

Accepted Answer

A)  $361,000 
B)  $318,000 
C)  $346,000 
D)  $331,000

Exam 18: Introduction to Managerial Accounting

Which of the following is a prime cost and a conversion cost?

Which of the following correctly describes the accounting for administrative expenses of a manufacturing company?

The primary activity of manufacturing companies is to purchase goods from a wholesaler and resell them.

Repair and maintenance costs for manufacturing equipment are included in manufacturing overhead.

Which of the following correctly describes Just-in-Time (JIT) Management?

________ is a philosophy of continuous improvement of products and processes.

Which of the following is true of product costs?

How does a merchandise company calculate unit cost per item? Why do managers need to know the unit cost per item?

The Work-in-Process Inventory account includes the ________.

Which of the following is the primary focus of financial accounting?

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

You did not understand what the term accrual meant and failed to accrue the interest due at the end of the year on the company's bonds.Which of the IMA standards appears to have been violated here?

Which of the following would be classified as a prime cost?