Q&A Hero

Q: Describe the three types of inventories that are carried by manufacturers..

Q: Define and contrast period costs and product costs. How are they reported in the financial statements of a manufacturing company?

Q: Identify the three categories of manufacturing costs.

Q: Braintree Ltd. manufactures coats in a large facility. One area in the production facility is an underused storage space. The company has twice turned down offers to lease out this facility. This situation is an example of what costing concept? How should Braintree handle the costing for this situation?

Q: How does fraud affect managerial accounting?

Q: List the four elements found in all fraud schemes.

Q: What is fraud as it relates to the business environment?

Q: Explain what is meant by the "lean business model" and why many businesses have adopted it.

Q: There are many differences between financial and managerial accounting. Identify and explain at least three of these.

Q: What is managerial accounting and how is it used to aid decision makers?

Q: Match the following terms to the appropriate definitions. __________ (1) Managerial accounting __________ (2) Continuous improvement __________ (3) Raw materials inventory __________ (4) Customer orientation __________ (5) Just-in-time manufacturing __________ (6) Goods in process inventory __________ (7) Lean business model __________ (8) Balanced scorecard __________ (9) Prime costs __________(10) Raw Materials Inventory Turnover (a) An idea that rejects the notions of "good enough" and "acceptable" and challenges employees and managers to continually experiment with new and improved business practices. (b) Goods a company acquires to use in making products. (c) The ratio which computes how many times a company turns over its raw materials inventory in a period. (d) A system that acquires inventory and produces only when needed. (e) An approach that aids continuous improvement by augmenting financial measures with information on the drivers or indicators of future financial performance along the four dimensions of (1) financial; (2) customer; (3) internal business processes; (4) learning and growth. (f) Expenditures directly associated with the manufacture of finished goods; includes direct materials and direct labor. (g) An idea that means that employees understand the changing needs and wants of their customers and align their management and operating practices accordingly. (h) Products in the process of being manufactured but not yet complete. (i) A model whose goal is to eliminate waste while satisfying the customer and providing a positive return to the company. (j) An activity that provides financial and nonfinancial information to an organization's managers and other internal decision makers.

Q: Match the following terms with the appropriate definition. __________ (1) Sunk costs __________ (2) Indirect costs __________ (3) Product costs __________ (4) Prime costs __________ (5) Fixed costs __________ (6) Opportunity costs __________ (7) Period costs __________ (8) Conversion costs __________ (9) Factory overhead __________ (10) Variable costs (a) Costs that flow directly to the current income statement as expenses. (b) Costs that change in proportion to changes in volume of activity. (c) The potential benefit lost by choosing a specific action from two or more alternatives. (d) Manufacturing expenditures that cannot be separately or readily traced to finished goods. (e) Expenditures necessary and integral to finished products. (f) Expenditures incurred in the process of converting raw materials to finished products; include direct labor and factory overhead. (g) Costs that have already been incurred and cannot be avoided or changed. (h) Expenditures directly associated with the manufacture of finished products; include direct materials and direct labor. (i) Costs that do not change with changes in the volume of activity. (j) Costs that are incurred for the benefit of more than one cost object.

Q: What is the correct amount of cost of goods manufactured? A. $398,500. B. $386,000. C. $309,000. D. $306,000. E. $296,500.

Q: What is the total amount of manufacturing costs added to Goods In Process? A. $393,000. B. $325,000. C. $389,500. D. $397,000. E. $307,500.

Q: What is the correct amount of overhead? A. $192,000. B. $110,500. C. $200,000. D. $150,000. E. $ 77,500.

Q: What is the correct amount of direct materials used? A. $141,000. B. $125,000. C. $137,000. D. $129,000. E. $138,000.

Q: Use the following information to compute the cost of goods manufactured: Beginning finished goods inventory $ 9,250 Beginning goods in process inventory 8,700 Beginning raw materials 7,500 Depreciation on factory equipment 6,000 Direct labor 75,000 Ending finished goods inventory 8,750 Ending goods in process inventory 9,300 Ending raw materials 8,500 Factory Supervisors salary 50,000 Raw material purchases 14,000 A. $143,400 B. $13,000 C. $143,000 D. $144,500 E. $93,400

Q: Use the following information to compute the cost of goods manufactured: Beginning finished goods inventory $65,000 Beginning goods in process inventory 81,000 Beginning raw materials 73,000 Depreciation on factory equipment 7,000 Direct labor 25,000 Ending finished goods inventory 67,000 Ending goods in process inventory 79,000 Ending raw materials 60,000 Factory repairs and maintenance 12,000 Raw material purchases 50,000 A. $63,000 B. $105,000 C. $107,000 D. $90,000 E. $109,000

Q: Use the following information to compute the cost of goods sold for the period: Beginning raw materials $ 5,500 Ending raw materials 4,000 Direct labor 12,250 Raw material purchases 7,400 Depreciation on factory equipment 6,500 Factory repairs and maintenance 3,300 Beginning finished goods inventory 10,200 Ending finished goods inventory 8,900 Beginning goods in process inventory 5,700 Ending goods in process inventory 6,300 A. $36,650 B. $30,950 C. $30,650 D. $30,350 E. $31,650

Q: Use the following information to compute the total manufacturing costs incurred during the period: Beginning raw materials $ 5,500 Ending raw materials 4,000 Direct labor 12,250 Raw material purchases 7,400 Depreciation on factory equipment 6,500 Factory repairs and maintenance 3,300 Beginning finished goods inventory 10,200 Ending finished goods inventory 8,900 Beginning goods in process inventory 5,700 Ending goods in process inventory 6,300 A. $36,650 B. $30,950 C. $30,650 D. $30,350 E. $31,650

Q: Use the following information to compute the cost of goods manufactured: Beginning raw materials $ 5,500 Ending raw materials 4,000 Direct labor 12,250 Raw material purchases 7,400 Depreciation on factory equipment 6,500 Factory repairs and maintenance 3,300 Beginning finished goods inventory 10,200 Ending finished goods inventory 8,900 Beginning goods in process inventory 5,700 Ending goods in process inventory 6,300 A. $36,650 B. $30,950 C. $30,650 D. $30,350 E. $31,650

Q: Use the following data to determine the cost of goods manufactured. Beginning finished goods inventory $ 6,200 Direct labor 15,100 Beginning goods in process inventory 1,500 General and administrative expenses 20,000 Direct materials used 20,500 Ending goods in process inventory 4,000 Indirect labor 7,300 Ending finished goods inventory 5,000 Indirect materials 3,400 Depreciation factory equipment 2,000 A. $65,800 B. $45,800 C. $49,500 D. $52,300 E. $47,100

Q: Use the following data to determine the cost of goods manufactured: Beginning finished goods inventory $10,800 Direct labor 30,600 Beginning goods in process inventory 7,200 General and administrative expenses 13,500 Direct materials used 40,500 Ending goods in process inventory 9,000 Indirect labor 6,300 Ending finished goods inventory 9,500 Indirect materials 13,500 Depreciation factory equipment 7,500 A. $102,000 B. $110,100 C. $ 96,600 D. $113,700 E. $100,200

Q: Current information for the Austin Company follows: Beginning raw materials inventory $15,200 Beginning goods in process inventory 22,400 Ending raw materials inventory 16,600 Ending goods in process inventory 28,000 Direct labor 42,800 Total factory overhead 30,000 Raw material purchases 60,000 All raw materials used were traceable to specific batches of product. Austin Company's cost of goods manufactured for the year is: A. $125,800 B. $128,600 C. $131,400 D. $137,000 E. $139,000

Q: The total cost of goods manufactured for the year was: A. $13,000 B. $44,500 C. $57,500 D. $94,500. E. $52,000

Q: The total manufacturing costs incurred during the year were: A. $13,000 B. $44,500 C. $57,500 D. $94,500 E. $89,000

Q: If beginning and ending goods in process inventories are $5,000 and $15,000, respectively, and cost of goods manufactured is $170,000, what is the total manufacturing cost for the period? A. $180,000 B. $155,000 C. $160,000 D. $175,000 E. $165,000

Q: Total manufacturing costs incurred during the year do not include: A. Direct materials used. B. Factory supplies used. C. Goods in process inventory, beginning balance. D. Direct labor. E. Depreciation of factory machinery.

Q: Hardy Co.'s cost of goods manufactured for the current year is: A) $12,000 B) $16,100 C) $17,100 D) $18,100 E) $13,600

Q: The total of Hardy Co.'s manufacturing costs added during the current year is: A. $12,000 B. $16,100 C. $17,100 D. $18,100 E. $13,600

Q: Which of the following accounts would appear on a manufacturing statement? A. Raw materials, factory insurance expired, indirect labor. B. Raw materials, goods in process, finished goods. C. Factory buildings, delivery equipment, and depreciation on factory equipment. D. Direct labor, indirect labor, sales salaries. E. Direct labor, factory repairs and maintenance, wages payable.

Q: A financial report that summarizes the amounts and types of costs that were incurred in the manufacturing process during the period is a: A. Materiality statement B. Managerial statement C. Manufacturing statement D. Merchandise statement E. Monetary statement

Q: The following information is available for the year ended December 31: Beginning raw materials inventory $2,500 Raw materials purchases 4,000 Ending raw materials inventory 3,000 Office supplies expense 1,000 The amount of raw materials used in production for the year is: A. $4,100 B. $5,100 C. $3,500 D. $6,500 E. $4,000

Q: Ajax Company accumulated the following account information for the year: Beginning raw materials inventory $6,000 Indirect materials cost 2,000 Indirect labor cost 5,000 Maintenance of factory equipment 2,800 Direct labor cost 7,000 Using the above information, total factory overhead costs would be: A. $9,800 B. $16,800 C. $15,800 D. $13,000 E. $7,800

Q: The following information relates to the manufacturing operations of the IMH Publishing Corporation for the year: Beginning Ending Raw materials inventory $ 57,000 $60,000 Finished goods 68,000 60,000 The raw materials used in manufacturing during the year totaled $118,000. Raw materials purchased during the year amount to: A. $107,000 B. $115,000 C. $118,000 D. $121,000 E. $126,000

Q: A manufacturing statement is also known as a schedule or listing of the: A. Raw materials processed. B. Factory supplies used. C. Cost of goods manufactured. D. Total finished goods. E. Cost of goods sold.

Q: The beginning and ending finished goods inventories of a company were $91,000 and $94,000 respectively. If cost of goods sold equaled $800,000, what is the amount of cost of goods manufactured for this period? A. $706,000 B. $709,000 C. $797,000 D. $803,000 E. $3,000

Q: Compute cost of goods manufactured for this period given the following amounts. Ending finished goods inventory $66,000 Cost of goods sold 54,000 Beginning finished goods inventory 60,000 A. $72,000 B. $48,000 C. $60,000 D. $66,000 E. $180,000.

Q: The beginning and ending finished goods inventories of the Prize Ring manufacturing company were $75,000 and $73,000 respectively. If cost of goods sold equaled $66,000, what is the amount of cost of goods manufactured for this period? A. $2,000 B. $64,000 C. $68,000 D. $82,000 E. $214,000

Q: A manufacturing company has a beginning finished goods inventory of $14,600, raw material purchases of $18,000, cost of goods manufactured of $32,500, and an ending finished goods inventory of $17,800. The cost of goods sold for this company is: A. $21,200 B. $29,300 C. $32,500 D. $47,100 E. $27,600

Q: Juliet Corporation has accumulated the following accounting data for the year: Finished goods inventory, January 1 $3,200 Finished goods inventory, December 31 4,000 Total cost of goods sold 4,200 The cost of goods manufactured for the year is: A. $200 B. $1,000 C. $5,000 D. $6,400 E. $8,200

Q: Which one of the following items is normally not a manufacturing cost? A. Direct materials. B. Factory overhead. C. General and administrative expenses. D. Direct labor. E. Conversion cost.

Q: A manufacturing firm's cost of goods manufactured is equivalent to a merchandising firm's: A. Cost of goods sold. B. Cost of goods purchased. C. Cost of goods available. D. Beginning merchandise inventory. E. Ending merchandise inventory.

Q: The total cost of goods completed during the accounting period for a manufacturer is called: A, Ending finished goods inventory. B, Total manufacturing costs. C, Ending goods in process inventory. D, Cost of goods manufactured. E, Cost of goods sold.

Q: Which of the following items appears only in a manufacturing company's financial statements? A. Cost of goods sold. B. Cost of goods manufactured. C. Goods available for sale. D. Gross profit. E. Net income.

Q: The following costs are included in a recent summary of data for a company: advertising expense, $85,000; depreciation expense factory building, $133,000; direct labor, $250,000; direct material used, $300,000; factory utilities, $105,000; and sales salaries expense, $150,000. Determine the dollar amount of overhead costs. A. $1,023,000 B. $550,000 C. $488,000 D. $235,000 E. $238,000

Q: Factory overhead costs normally include all of the following except: A. Indirect labor costs B. Indirect material costs C. Selling costs D. Factory machinery oil E. Factory rent

Q: The cost of labor that is not clearly associated with specific units or batches of product is called: A. Unspecified labor B. Direct labor C. Indirect labor D. Basic labor E. Joint labor

Q: Companies A, B, C, and D are competitors in the same industry. Assume that all have adequate quantities of raw materials to meet production needs. Company AA Company BB Company CC Company DD Company EE Raw materials used in a year $10,000 $20,000 $30,000 $30,000 $40,000 Beginning raw materials inventory $700 $600 $500 $400 $800 Ending raw materials inventory $1,100 $1,000 $900 $800 $1,000 Which company has the best raw materials inventory turnover? A. Company A B. Company B C. Company C D. Company D E. Company E

Q: A company reports raw materials used of $42,750 for a year, with beginning raw materials inventory of $4,000 and an ending raw materials inventory of $4,500. Compute days sales in raw materials inventory based on this data. A. 10.52 days. B. 34.15 days C. 10.06 days D. 38.42 days E. 9.35 days

Q: Assuming production needs can be met, companies usually prefer: A. A lower number of days sales in raw materials inventory. B. A higher number of days sales in raw materials inventory. C. That days sales in inventory be higher than the days in the accounting period. D. That days sales in inventory be greater than the operating cycle E. That days sales in inventory be equal to the days in the accounting period

Q: Days sales in raw materials inventory is a measure of: A. How much raw materials are needed for the company to earn a profit. B. How long it takes the company to pay for raw materials.. C. How many times a company turns over its raw materials during a period. D. How long it takes raw materials to be used in production. E. The product costs a company has incurred during a period.

Q: Another title for goods in process inventory is: A. Indirect materials inventory. B. Work in process inventory. C. Conversion costs. D. Direct materials inventory. E. Raw materials inventory.

Q: Products that are in the process of being manufactured but are not yet complete are called: A. Raw materials inventory. B. Conversion costs. C. Cost of goods sold. D. Goods in process inventory. E. Finished goods inventory.

Q: Goods a company acquires to use in making products are called: A. Cost of goods sold. B. Raw materials inventory. C. Finished goods inventory. D. Goods in process inventory. E. Conversion costs.

Q: Products that have been completed and are ready to be sold by the manufacturer are called: A. Finished goods inventory. B. Goods in process inventory. C. Raw materials inventory. D. Cost of goods sold. E. Factory supplies.

Q: The following are all examples of product costs: A. Direct material, direct labor and indirect labor. B. Direct labor, VP of sales salary, and insurance on the factory. C. Depreciation on the factory equipment, depreciation on the office building, and depreciation on the factory building. D. Factory insurance, interest expense, and property taxes on the factory. E. Office supplies, sales commissions, and maintenance costs on office copier.

Q: Product costs: A. Are expenditures necessary and integral to finished products. B. Are expenditures identified more with a time period rather than with finished products. C. Include selling and administrative expenses. D. Are only costs that vary with the volume of activity. E. Are only costs that do not vary with the volume of activity.

Q: Costs that flow directly to the current income statement are called: A. Period costs. B. Product costs. C. General costs. D. Balance sheet costs. E. Capitalized costs.

Q: Costs that are first assigned to inventory are called: A. Period costs B. Product costs C. General costs D. Administrative costs E. Fixed costs

Q: Period costs for a manufacturing company would flow directly to: A, The current income statement. B, Factory overhead. C, The current balance sheet. D, Job cost sheet. E, The current manufacturing statement.

Q: Which of the following costs would not be classified as factory overhead? A. Property taxes on maintenance machinery. B. Expired insurance on factory equipment. C. Wages of the factory janitor. D. Metal doorknobs used on wood cabinets produced. E. Small tools used in production.

Q: The three major cost components of a manufactured product are: A. Marketing, selling, and administrative costs. B. Indirect labor, indirect materials, and miscellaneous factory expenses. C. Direct materials, direct labor, and factory overhead. D. Differential costs, opportunity costs, and sunk costs. E. General, selling, and administrative costs.

Q: Which of the following costs is not included in factory overhead? A. Payroll taxes on the wages of supervisory factory workers. B. Indirect labor. C. Depreciation of manufacturing equipment. D. Manufacturing supplies used. E. Direct materials.

Q: A fixed cost: A. Requires the future outlay of cash and is relevant for future decision making. B. Does not change with changes in the volume of activity within the relevant range. C. Is directly traceable to a cost object. D. Changes with changes in the volume of activity within the relevant range. E. Has already been incurred and cannot be avoided so it is irrelevant for decision making.

Q: The following costs are included in a recent summary of data for a company: advertising expense, $85,000; depreciation expense factory building, $133,000; direct labor, $250,000; direct material used, $300,000; factory utilities, $105,000; and sales salaries expense, $150,000. Determine the dollar amount of conversion costs. A. $1,023,000 B. $550,000 C. $488,000 D. $235,000 E. $238,000

Q: The following costs are included in a recent summary of data for a company: advertising expense, $85,000; depreciation expense factory building, $133,000; direct labor, $250,000; direct material used, $300,000; factory utilities, $105,000; and sales salaries expense, $150,000. Determine the dollar amount of prime costs. A. $1,023,000 B. $550,000 C. $488,000 D. $235,000 E. $238,000

Q: Raw materials that physically become part of the product and can be traced to specific units or batches of product are called: A. Raw materials sold B. Chargeable materials C. Goods in process D. Indirect materials E. Direct materials

Q: Which of the following is never included in direct materials costs? A) Invoice costs of direct materials. B) Outgoing delivery charges. C) Materials storage costs. D) Materials handling costs. E) Insurance on stored material.

Q: Costs classified by controllability are useful for: A. The balance sheet B. The income statement C. The budgeting process D. Evaluation reports E. Determining product cost

Q: Classifying costs by behavior involves: A. Identifying fixed cost and variable cost. B. Identifying cost of goods sold and operating costs. C. Identifying all costs. D. Identifying costs in a physical manner. E. Identifying both quantitative and qualitative cost factors.

Q: The salary paid to the supervisor of an assembly line would normally be classified as: A. Direct labor B. Indirect labor C. A period cost D. A general cost E. An assembly cost

Q: Materials that are used in support of the production process but that do not become a part of the product and are not clearly identified with units or batches of product are called: A. Secondary materials B. General materials C. Direct materials D. Indirect materials E. Materials inventory

Q: Costs that are incurred as part of the manufacturing process but are not clearly associated with specific units of product or batches of production, including all manufacturing costs other than direct material and direct labor costs, are called: A. Administrative expenses B. Nonmanufacturing costs C. Sunk costs D. Factory overhead E. Preproduction costs

Q: Labor costs that are clearly associated with specific units or batches of product because the labor is used to convert raw materials into finished products called are: A. Sunk labor B. Direct labor C. Indirect labor D. Finished labor E. Supervisory labor

Q: An opportunity cost is: A. An uncontrollable cost. B. A cost of potential benefit lost. C. A change in the cost of a component. D. A direct cost. E. A sunk cost.

Q: A direct cost is a cost that is: A. Identifiable as controllable. B. Recorded as part of manufacturing overhead. C. Fixed with respect to the volume of activity. D. Traceable to a cost object. E. Sunk with respect to a cost object.

Q: The Institute of Management Accountants has developed a code of ethics that requires management accountants to behave in certain ways. Which of the following behaviors is not required? A. Competence. B. Integrity. C. Maintenance of confidentiality. D. Communication of information in credible manner. E. Timeliness.

Q: Which of the following statements is true? A. The IMAs Statement of Ethical Professional Practice requires management accountants to be incompetent, maintain confidentiality, act with integrity, and communicate information in a fair and credible manner. B. The IMAs Statement of Ethical Professional Practice requires management accountants to be competent, maintain confidentiality, eliminate all fraud, and communicate information in a fair and credible manner. C. The IMAs Statement of Ethical Professional Practice requires management accountants to be incompetent, maintain confidentiality, act with integrity, and miscommunicate information in a credible manner. D. The IMAs Statement of Ethical Professional Practice requires management accountants to be competent, maintain confidentiality, act with integrity, and communicate information in a fair and credible manner. E. The IMAs Statement of Ethical Professional Practice requires management accountants to perform certain checks for fraud, act with integrity, and communicate information in a fair and credible manner.

Q: Which of the following statements regarding fraud is true? A. Fraud is a deliberate act. B. Fraud can be deliberate or unintentional. C. A company with a strong code of ethics can eliminate fraud. D. A company with strong internal controls can eliminate fraud. E. The most common type of fraud is financial statement fraud.