Deck 2: Building Blocks of Managerial Accounting

Question 1

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

Answer 1

False

Question 2

Merchandising companies include both wholesalers and retailers.

Answer 2

True

Question 3

Schlabig & Associates, a public accounting firm, is what type of company?

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

Answer 3

C

Question 4

What type of company resells products it purchases ready-made from suppliers?

A)Merchandiser
B)Retailer
C)Wholesaler
D)All of the above

Question 5

Which type of company typically produces its own inventory?

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

Question 6

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 7

Which of the following are merchandising companies?

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

Question 8

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 9

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

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

Question 10

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 11

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

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

Question 12

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 13

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 14

Manufacturing companies usually have three types of inventory.

Question 15

Retailers sell their products to consumers.

Question 16

All companies have the same types of inventories.

Question 17

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

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

Question 18

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.

Question 19

How would Chevrolet classify its partially completed vehicles?

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

Question 20

Only manufacturing companies have finished goods inventory.

Question 21

In the United States, the fastest growing type of company is

A)merchandising.
B)service.
C)manufacturing.
D)none of the above.

Question 22

Enter the letter of the type of company 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 inventory
____ has three types of inventory
____ inventory consists of freight-in and the cost of the product
____ has the highest percentage of labor costs
____ Wal-Mart is this type of company

Question 23

Describe service, merchandising, and manufacturing companies.

Question 24

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 25

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

Question 26

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 27

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

Question 28

A snow removal business would be classified as a

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

Question 29

For a ________, inventory consists of freight-in and the cost of the product which is to be resold.

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

Question 30

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

Question 31

An accounting firm would be classified as a

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

Question 32

Which type of company has three types of inventory?

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

Question 33

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

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

Question 34

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 35

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

Question 36

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 37

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

Question 38

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

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

Question 39

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

Question 40

A ________ company has the highest percentage of labor costs as compared to the other types of companies.

A)merchandising
B)service
C)manufacturing
D)All companies have a high percentage of labor costs.

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 of research and development?

A)$73,000
B)$70,000
C)$55,000
D)$195,000

Question 43

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

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

Question 44

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

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

Question 45

The costs associated with reengineering 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)Research and development
D)Design

Question 46

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

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

Question 47

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 48

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

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

Question 49

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

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

Question 50

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

Question 51

What is the promotion of products and services known as?

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

Question 52

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

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

Question 53

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

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

Question 54

For a merchandising company, the costs of shipping inventory to the retail outlet is associated with which element of the value chain?

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

Question 55

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

Question 56

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

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

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

A)$496,000
B)$202,000
C)$180,000
D)$330,000

Question 59

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

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

Question 60

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

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

Question 61

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)$75,000
B)$78,000
C)$63,000
D)$197,000

Question 62

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)$82,000
B)$16,000
C)$73,000
D)$10,000

Question 63

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)$462,000
B)$60,000
C)$302,000
D)$201,000

Question 64

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 65

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

Question 66

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

A)$267,000
B)$188,000
C)$197,000
D)$125,000

Question 67

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)$68,000
B)$12,000
C)$20,000
D)$75,000

Question 68

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)$40,000
B)$43,000
C)$219,000
D)$171,000

Question 69

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

A)$69,000
B)$188,000
C)$197,000
D)$267,000

Question 70

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)$71,000
B)$179,000
C)$186,000
D)$244,000

Question 71

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)$244,000
B)$186,000
C)$179,000
D)$123,000

Question 72

A product support hot line would be considered

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

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 marketing category of the value chain?

A)$272,000
B)$34,000
C)$152,000
D)$197,000

Question 74

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

A)$55,000
B)$68,000
C)$65,000
D)$188,000

Question 75

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)$122,000
B)$197,000
C)$152,000
D)$272,000

Question 76

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)$28,000
B)$29,000
C)$222,000
D)$151,000

Question 77

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)$457,000
B)$307,000
C)$148,000
D)$146,000

Question 78

Delivery expenses are charged to which of the following areas?

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

Question 79

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

A)$217,000
B)$23,000
C)$20,000
D)$151,000

Question 80

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)$2,000
B)$35,000
C)$80,000
D)$ 9,000