Deck 2: Building Blocks of Managerial Accounting

Question 1

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

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

Answer 1

B

Question 2

A company which is in the business of providing intangible services is what type of company?

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

Answer 2

B

Question 3

The balance sheet of a service company has

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

Answer 3

A

Question 4

________ has three types of inventory.

A) A service company
B) A merchandising company
C) A manufacturing company
D) A wholesale company

Question 5

All companies are either classified as service, merchandising, or manufacturing companies.

Question 6

Walmart classifies its clothing held for sale as

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

Question 7

Among other things, General Mills makes breakfast cereal. Which type of company is General Mills?

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

Question 8

A law firm would be classified as a

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

Question 9

Which type of company has the highest percentage of labour costs?

A) Service company
B) Merchandising company
C) Manufacturing company
D) Wholesale company

Question 10

A company which is in the business of reselling tangible products purchased from supplier to businesses which resell the product is what type of company?

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

Question 11

Which type(s) of companies prepare income statements and balance sheets?

A) Service company
B) Merchandising company
C) Manufacturing company
D) All types of companies

Question 12

How would Honda classify its partially completed vehicles?

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

Question 13

Which of the following costs could be found in work in process inventory for an ice cream manufacturer?

A) Utilities for administrative offices
B) Assembly worker wages
C) Depreciation on sales office
D) Customer order forms

Question 14

Which type of company typically produces its own inventory?

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

Question 15

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

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

Question 16

Which of the following is characteristic of a service company?

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

Question 17

A company which is in the business of reselling tangible products purchased from suppliers to final users is what type of company?

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

Question 18

The flow of inventory costs in a manufacturing company is

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

Question 19

H & R Block, an income tax preparation service, is what type of company?

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

Question 20

A lawn mowing business would be classified as a

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

Question 21

Progressive companies incorporate environmental sustainability throughout every function of the value chain.

Question 22

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

Question 23

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

Question 24

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

Question 25

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

Question 26

Collectively, all costs such as design, customer service, etc. are part of

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

Question 27

The value chain is used by

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

Question 28

The costs associated with re-engineering machinery and its location within the factory to increase efficiency would be considered which part of the value chain?

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

Question 29

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

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

Question 30

Why do most service firms not have inventory costs pertaining to items to be sold? What type of costs do they generally have?

Question 31

Providing customer service past the warrantee date can be part of incorporating environmental sustainability practices.

Question 32

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

Question 33

Match the following:

A) Service company
B) Manufacturing company
C) Merchandising company
1) Generally has no inventory
2) Has three types of inventory
3) Inventory consists of freight-in and the purchase cost of the finished product
4) Has the highest percentage of labour costs
5) Walmart is this type of company

Question 34

A technical support hotline for customers would be considered which part of the value chain?

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

Question 35

Describe service, merchandising, and manufacturing companies.

Question 36

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 37

The value chain helps companies control costs of products only.

Question 38

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

Question 39

Depreciation on a factory would be classified as a cost in which part of the value chain?

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

Question 40

The promotion of products and services is known as

A) customer service.
B) design.
C) distribution.
D) marketing.

Question 41

Use the information below to answer the following question(s).
Farm Fresh Dairy provided the following expense information for May:


-What is the total cost for the design category of the value chain at Farm Fresh Dairy?

A) $88,000
B) $84,000
C) $155,000
D) $239,000

Question 42

Use the information below to answer the following question(s).
Farm Fresh Dairy provided the following expense information for May:


-What is the total cost for the distribution category of the value chain at Farm Fresh Dairy?

A) $19,000
B) $17,000
C) $21,000
D) $29,000

Question 43

A company decision as to where to locate a new store would be considered

A) customer service.
B) marketing.
C) production.
D) research and development.

Question 44

Use the information below to answer the following question(s).
Sunnybrook 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 at Sunnybrook Orange Groves?

A) $436,000
B) $54,000
C) $195,000
D) $293,000

Question 45

Use the information below to answer the following question(s).
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 marketing category of the value chain at Lucas Family Orange Groves?

A) $40,000
B) $36,000
C) $57,000
D) $53,000

Question 46

Use the information below to answer the following question(s).
Sunnybrook 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 at Sunnybrook Orange Groves?

A) $29,000
B) $33,000
C) $31,000
D) $27,000

Question 47

Use the information below to answer the following question(s).
Sunnybrook 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 at Sunnybrook Orange Groves?

A) $20,000
B) $21,000
C) $17,000
D) $19,000

Question 48

Use the information below to answer the following question(s).
Farm Fresh Dairy provided the following expense information for May:


-What is the total cost for the customer service category of the value chain at Farm Fresh Dairy?

A) $80,000
B) $8,000
C) $71,000
D) $12,000

Question 49

Use the information below to answer the following question(s).
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 production category of the value chain at Lucas Family Orange Groves?

A) $132,000
B) $137,000
C) $108,000
D) $141,000

Question 50

Use the information below to answer the following question(s).
Sunnybrook 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 at Sunnybrook Orange Groves?

A) $177,000
B) $89,000
C) $102,000
D) $191,000

Question 51

Use the information below to answer the following question(s).
Sunnybrook 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 at Sunnybrook Orange Groves?

A) $93,000
B) $102,000
C) $89,000
D) $191,000

Question 52

Use the information below to answer the following question(s).
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 at Lucas Family Orange Groves?

A) $14,000
B) $18,000
C) $45,000
D) $4,000

Question 53

Use the information below to answer the following question(s).
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 distribution category of the value chain at Lucas Family Orange Groves?

A) $4,000
B) $47,000
C) $21,000
D) $17,000

Question 54

Use the information below to answer the following question(s).
Farm Fresh Dairy provided the following expense information for May:


-What is the total cost for the marketing category of the value chain at Farm Fresh Dairy?

A) $71,000
B) $92,000
C) $67,000
D) $63,000

Question 55

Use the information below to answer the following question(s).
Farm Fresh Dairy provided the following expense information for May:


-What is the total cost for the production category of the value chain at Farm Fresh Dairy?

A) $200,000
B) $205,000
C) $207,000
D) $126,000

Question 56

Use the information below to answer the following question(s).
Farm Fresh Dairy provided the following expense information for May:


-What is the total cost of research and development at Farm Fresh Dairy?

A) $84,000
B) $155,000
C) $88,000
D) $239,000

Question 57

Use the information below to answer the following question(s).
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 research and development category of the value chain at Lucas Family Orange Groves?

A) 102,000
B) 216,000
C) $114,000
D) 118,000

Question 58

Use the information below to answer the following question(s).
Sunnybrook 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 at Sunnybrook Orange Groves?

A) $29,000
B) $6,000
C) $2,000
D) $31,000

Question 59

Delivery expenses are charged to which of the following areas?

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

Question 60

Use the information below to answer the following question(s).
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 design category of the value chain at Lucas Family Groves?

A) $4,000
B) $106,000
C) $216,000
D) $102,000

Question 61

Provide a description of an activity or process that a company could undertake to integrate sustainability into the value chain.

Question 62

Indirect costs can be traced to specific units.

Question 63

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

Question 64

Direct costs are allocated to cost objects.

Question 65

Costs can be either direct or indirect, depending upon the cost object.

Question 66

Place the six business functions in the order they appear along the value chain: A = Customer service
B = Design
C = Distribution
D = Production or purchases
E = Research and Development
F = Marketing

A) A, E, B, D, C, F
B) A, C, D, B, F, E
C) E, B, D, F, C, A
D) E, B, A, D, F, C

Question 67

When determining the cost of a manufactured product, a salesperson's salary would be classified as

A) a direct cost.
B) an indirect cost.
C) a period cost.
D) a conversion cost.

Question 68

Match the following:

A) Research and Development
B) Customer Service
C) Marketing
D) Design
E) Production
F) Distribution
1) Cost of a commercial during a TV program
2) Cost of shipping goods to customers
3) Costs associated with repairing costs under warrantee
4) Costs of developing a new produce
5) Cost of making a prototype of a new product
6) Cost of labour for machine operator in factory

Question 69

When determining the cost of a manufactured product, the cost of lighting the factory would be classified as

A) a direct cost.
B) an indirect cost.
C) a period cost.
D) a conversion cost.

Question 70

What is the meaning of the term "cost object"? Give an example of a cost object that would be used in a manufacturing company, a merchandising company, and a service sector company.

Question 71

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

Question 72

An inventoriable cost could be the cost of the marketing and distribution of a product.

Question 73

Cost tracing is

A) the assignment of direct costs to the chosen cost object.
B) a function of cost allocation.
C) the process of determining the actual cost of the cost object.
D) the assignment of both direct and indirect costs associated with a cost object.

Question 74

When determining the cost of a manufactured product, a factory janitor's wages would be classified as

A) a direct cost.
B) an indirect cost.
C) a period cost.
D) a conversion cost.

Question 75

Indirect costs cannot be traced to the cost objects, so they are allocated.

Question 76

Which function of the value chain incorporates the most opportunity to create sustainability for manufacturing companies?

A) Research & development
B) Design
C) Distribution
D) Marketing

Question 77

A product support hot line would be considered

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

Question 78

If a company wants to determine a product's cost, they must assign only direct costs.

Question 79

The determination of a cost as being either direct or indirect depends upon

A) the accounting system.
B) the allocation system.
C) the cost tracing system.
D) the cost object chosen to determine its individual costs.

Question 80

What are the differences between direct costs and indirect costs? Give an example of each.