Deck 2: Building Blocks of Managerial Accounting

Question 1

Before these materials are used to manufacture cabinets, a woodworker classifies lumber, paint, and glue as

A)finished goods inventory.
B)work in process inventory.
C)raw materials inventory.
D)merchandise inventory.

Answer 1

C

Question 2

Merchandising companies include both wholesalers and retailers.

Answer 2

True

Question 3

Which type of company typically produces its own inventory?

A)Manufacturer
B)Service company
C)Retailer
D)Wholesaler

Answer 3

A

Question 4

The balance sheet of a service company has

A)raw materials inventory.
B)little or no inventory.
C)three categories of inventory.
D)two categories of inventory.

Question 5

Which of the following is a characteristic of a service company?

A)Service companies make a product.
B)Service companies have a single category of inventory.
C)Service companies generally have no tangible products to sell.
D)Service companies transform raw materials into finished goods.

Question 6

Macy's (the department store chain)classifies its clothing held for sale as

A)merchandise inventory.
B)raw materials inventory.
C)work in process inventory.
D)finished goods inventory.

Question 7

Before these materials are used to manufacture its cars, Toyota classifies steel, glass, and plastic as

A)raw materials inventory.
B)finished goods inventory.
C)work in process inventory.
D)merchandise inventory.

Question 8

Schlabig & Associates, a public accounting firm that provides business consulting to a consumer, is what type of company?

A)Manufacturer
B)Retailer
C)Service
D)Wholesaler

Question 9

Which of the following types of companies has raw materials, work in process and finished goods inventory?

A)Retailers
B)Manufacturers
C)Wholesalers
D)Service companies

Question 10

Which type of company makes up the largest sector of the United States economy?

A)Manufacturers
B)Merchandising
C)Wholesalers
D)Service companies

Question 11

Which of the following are merchandising companies?

A)Manufacturers
B)Retailers
C)Wholesalers
D)Both retailers and wholesalers

Question 12

Only manufacturing companies have finished goods inventory.

Question 13

Service companies must carry a large amount of inventory to meet consumer demand.

Question 14

Retailers sell their products to consumers.

Question 15

How would Chevrolet classify its partially completed vehicles?

A)Finished goods inventory
B)Raw materials inventory
C)Work in process inventory
D)Supplies inventory

Question 16

Jiffy Lube, an automotive maintenance company, is primarily what type of company?

A)Manufacturer
B)Retailer
C)Wholesaler
D)Service

Question 17

Among other products, Nabisco makes Oreo cookies. Which type of company is Nabisco?

A)Service
B)Manufacturer
C)Retailer
D)Wholesaler

Question 18

All companies have the same types of inventories.

Question 19

Manufacturing companies usually have three types of inventory.

Question 20

American Eagle Outfitters classifies the denim jeans on the shelves at its retail locations as

A)finished goods inventory.
B)work in process inventory.
C)merchandise inventory.
D)raw materials inventory.

Question 21

Describe a company that has some elements of all three types of companies. It is part service company, part manufacturer, and part merchandiser.

Question 22

Research and development is needed to improve products and to design new products.

Question 23

Explain the difference between raw materials inventory, work in process inventory, and finished goods inventory.

Question 24

On the line in front of each statement, enter the letter corresponding to the term that best fits that statement. You may use a letter more than once and some letters may not be used at all.
________ has a single category of inventory
________ resells products previously purchased ready-made from a supplier
________ does not sell inventory as a way to earn profit
________ produces its own inventory
________ transforms raw materials into a new finished product
________ completed goods that have not been sold
________ partially completed items of manufacturers
________ steel, glass, tires, upholstery, and fabric that Toyota uses to manufacture products

Question 25

All of the components of manufacturing - from research and development through customer service after the sale - are part of a firm's value chain.

Question 26

All of the following items would be found in raw materials inventory for a furniture manufacturer except

A)wood.
B)fabric.
C)steel framing.
D)assembly worker wages.

Question 27

Toshiba Corporation makes computer chips. Toshiba Corporation would be classified as a

A)merchandising company.
B)manufacturing company.
C)service company.
D)simple company.

Question 28

The activities in the value chain must take place in a specific order.

Question 29

Which of the following items could be found in work in process inventory at a candy bar manufacturer?

A)Candy bars made but not coated in chocolate
B)Cocoa products to make candy bars
C)Sugar products to make candy bars
D)Candy bars completed but not yet sold

Question 30

A ________ company's balance sheet reports just one inventory called "Inventory."

A)service
B)merchandising
C)manufacturing
D)All of these types of companies

Question 31

Enter the letter of the type of each company category on the line in front of each statement. Letters may be used more than once or not at all.
A. service company
B. merchandising company
C. manufacturing company
________ generally has no or minimal inventory
________ has three types of inventory
________ has one class of inventory only
________ Ford Motor Company is an example of this company category
________ Wal-Mart is an example of this company category

Question 32

The value chain concept helps companies control costs over the value chain as a whole.

Question 33

Explain the type of inventory that is characteristic at a service company.

Question 34

Controlling costs across the whole value chain often requires a trade-off between the individual elements of the value chain.

Question 35

A snow removal business would be classified as a

A)manufacturing company.
B)merchandising company.
C)simple company.
D)service company.

Question 36

Which type of company has three categories of inventory?

A)A manufacturing company
B)A merchandising company
C)A service company
D)All of these companies

Question 37

Describe service, merchandising, and manufacturing companies.

Question 38

A company's distribution system is an important part of the value chain.

Question 39

An accounting firm would be classified as a

A)manufacturing company.
B)merchandising company.
C)simple company.
D)service company.

Question 40

Receipt of materials is part of the firm's value chain.

Question 41

Collectively, all costs such as distribution, marketing, and design are part of

A)downstream activities.
B)fixed costs.
C)the value chain.
D)manufacturing costs.

Question 42

Lucky Cow Dairy provided the following expense information for May: What is the total cost for the production category of the value chain?

A)$501,200
B)$203,500
C)$234,500
D)$332,000

Question 43

All of the following relate to part of the value chain for a clothing company except

A)cost of advertising new products.
B)administrative costs.
C)cost of shipping products to retailers.
D)salaries of clothing designers.

Question 44

Testing ways to increase the strength of your product would be classified as which element of the value chain?

A)Design
B)Distribution
C)Production
D)Research and development

Question 45

The value chain is used by

A)service, manufacturing, and merchandising businesses.
B)only service and manufacturing businesses.
C)only service and merchandising businesses.
D)only manufacturing and merchandising businesses.

Question 46

Which element of the value chain would a technical support hotline for customers be considered?

A)Design
B)Customer service
C)Distribution
D)Marketing

Question 47

The costs associated with reengineering machinery and its location within the factory to increase efficiency would be considered which element of the value chain?

A)Customer service
B)Marketing
C)Research and development
D)Design

Question 48

Which of the following value chain elements is associated with the costs of shipping inventory to the retail outlet in a merchandising company?

A)Design
B)Distribution
C)Production and Purchases
D)Customer Service

Question 49

All of the following activities are included in the value chain except

A)customer service.
B)design.
C)safety.
D)production.

Question 50

Lucky Cow Dairy provided the following expense information for May: What is the total cost for the marketing category of the value chain?

A)$70,000
B)$188,800
C)$198,700
D)$269,200

Question 51

Lucky Cow Dairy provided the following expense information for May: What is the total cost of research and development of the value chain?

A)$74,000
B)$70,000
C)$55,300
D)$195,300

Question 52

Which of the following activities is not included in the value chain?

A)Reporting
B)Design
C)Production
D)Customer service

Question 53

What is the promotion of products and services known as?

A)Customer service
B)Marketing
C)Distribution
D)Design

Question 54

Which element of the value chain would depreciation on a factory be classified as?

A)Design
B)Distribution
C)Research and development
D)Production

Question 55

Lucky Cow Dairy provided the following expense information for May: What is the total cost for the distribution category of the value chain?

A)$218,400
B)$24,300
C)$20,500
D)$153,500

Question 56

Lucky Cow Dairy provided the following expense information for May: What is the total cost for the design category of the value chain?

A)$268,100
B)$188,900
C)$197,800
D)$125,700

Question 57

Which of the following would not be included in the value chain?

A)Website development costs
B)Costs to deliver product to retail outlets
C)Costs of print advertisements
D)All of these costs would be included as part of the value chain.

Question 58

All of the following are part of a company's value chain except

A)design.
B)distribution.
C)administration.
D)marketing.

Question 59

The costs incurred to transport merchandise to a company's retail store would be considered to be what element of the value chain?

A)Marketing
B)Customer service
C)Production or purchases
D)Research and development

Question 60

Advertising expenses would be considered which element of the value chain?

A)Customer service
B)Marketing
C)Production
D)Research and development

Question 61

Delivery expenses are charged to which of the following areas?

A)Distribution
B)Customer service
C)Production or purchases
D)Marketing

Question 62

Joe's Bottling Company provided the following expense information for July: What is the total cost for the marketing category of the value chain?

A)$72,000
B)$180,600
C)$187,400
D)$246,300

Question 63

Place the value chain elements in the correct order by numbering them from 1 to 6.
________ Design
________ Customer Service
________ Marketing
________ Research and Development
________ Distribution
________ Production or Purchases

Question 64

Sneider Family Orange Groves processes a variety of fresh juices. The company has the following expenses for July: What is the total cost for the production category of the value chain?

A)$466,200
B)$60,900
C)$305,300
D)$202,700

Question 65

Classify each of the following business costs into one of the six value chain elements.
A. cost of a commercial during a TV program
B. cost of shipping goods to customers
C. costs associated with repairing products under warranty
D. costs of developing a new product
E. cost of making a prototype of a new product
F. cost of labor for machine operator in factory

Question 66

Lucky Cow Dairy provided the following expense information for May: What is the total cost for the customer service category of the value chain?

A)$82,800
B)$16,400
C)$73,600
D)$10,300

Question 67

The total cost of a cost object can only include the direct costs that are directly traced to that cost object.

Question 68

Lucas Family Orange Groves processes a variety of fresh juices. The company has the following expenses for July: What is the total cost for the customer service category of the value chain?

A)$2400
B)$34,100
C)$80,800
D)$10,800

Question 69

Joe's Bottling Company provided the following expense information for July: What is the total cost for the production category of the value chain?

A)$462,600
B)$310,000
C)$148,800
D)$148,100

Question 70

Sneider Family Orange Groves processes a variety of fresh juices. The company has the following expenses for July: What is the total cost for the distribution category of the value chain?

A)$28,700
B)$25,700
C)$223,400
D)$152,700

Question 71

A product support hotline would be considered

A)marketing.
B)distribution.
C)production or purchases.
D)customer service.

Question 72

Sneider Family Orange Groves processes a variety of fresh juices. The company has the following expenses for July: What is the total cost for the marketing category of the value chain?

A)$275,000
B)$34,900
C)$152,600
D)$199,500

Question 73

Sneider Family Orange Groves processes a variety of fresh juices. The company has the following expenses for July: What is the total cost for the design category of the value chain?

A)$122,600
B)$197,900
C)$153,400
D)$273,100

Question 74

Sneider Family Orange Groves processes a variety of fresh juices. The company has the following expenses for July: What is the total cost for the research and development category of the value chain?

A)$75,900
B)$81,100
C)$46,900
D)$198,700

Question 75

Name and briefly describe the activities that make up the value chain.

Question 76

Joe's Bottling Company provided the following expense information for July: What is the total cost for the distribution category of the value chain?

A)$40,300
B)$43,400
C)$220,700
D)$173,700

Question 77

Place the letter for the appropriate value chain activity on the line in front of each item. Letters may be used more than once or not at all. Assume a manufacturer.
________ depreciation expense on equipment in factory
________ delivery expense
________ toll free line for customer orders
________ customer support hot line
________ assembly line workers' wages

Question 78

Joe's Bottling Company provided the following expense information for July: What is the total cost for the customer service category of the value chain?

A)$61,700
B)$12,400
C)$21,200
D)$76,100

Question 79

Joe's Bottling Company provided the following expense information for July: What is the total cost for the design category of the value chain?

A)$246,500
B)$187,800
C)$180,600
D)$123,900

Question 80

Joe's Bottling Company provided the following expense information for July: What is the total cost of research and development?

A)$58,200
B)$78,400
C)$65,700
D)$189,600