Question 1

A manufacturer normally has
A) one inventory account.
B) four inventory accounts.
C) three inventory accounts.
D) none of these are correct.

Accepted Answer

A manufacturer typically has three inventory accounts: raw materials, work in progress, and finished goods. Raw materials account for the materials used in the production process, work in progress accounts for materials that are currently being used to produce goods, and finished goods accounts for completed products that are ready to be sold.

Question 2

During the month of June, Telecom Inc. had cost of goods manufactured of $112,000, direct materials cost of $52,000, direct labor cost of $37,000 and overhead cost of $26,000. The work in process balance at June 30 equaled $10,000. What was the work in process balance on June 1?
A) $7,000
B) $13,000
C) $10,000
D) $115,000

Accepted Answer

The correct answer is A.The work in process balance on June 1 can be calculated as follows:Work in process balance on June 1 = Work in process balance on June 30 + Cost of goods manufactured - Direct materials cost - Direct labor cost - Overhead cost= $10,000 + $112,000 - $52,000 - $37,000 - $26,000= $7,000

Question 3

Figure 2-2.Lonborg Co. had the following beginning and ending inventory balances for the year ended December 31, 2011:
  In addition, direct labor costs of $30,000 were incurred, overhead equaled $42,000, materials purchased were $27,000 and selling and administrative costs were $22,000. Lonborg Co. sold 25,000 units of product during the year at a sales price of $5.00 per unit.
-Refer to Figure 2-2. What was the amount of cost of goods manufactured for the year?
A) $101,000
B) $124,000
C) $100,000
D) $102,000

Accepted Answer

The answer of Figure 2-2.Lonborg Co. had the following beginning...

Question 4

Andover Inc. had a gross margin for the month of February totaling $42,000. They sold 5,000 units during the month at a sales price of $20 per unit. What was the amount of cost of goods sold for the month?
A) $100,000
B) $42,000
C) $58,000
D) none of these are correct

Accepted Answer

We can use the formula:

Gross Margin = Sales - Cost of Goods Sold

Plugging in the given values, we get:

$42,000 = ($20 x 5,000) - Cost of Goods Sold

Simplifying, we get:

$42,000 = $100,000 - Cost of Goods Sold

Rearranging, we get:

Cost of Goods Sold = $100,000 - $42,000 = $58,000

Therefore, the amount of cost of goods sold for the month was $58,000, which is option C.

Question 5

On a manufacturer's income statement expenses are separated into the following three categories:
A) production, period, and indirect
B) materials, work in process, and finished goods
C) production, selling, and administrative
D) variable, fixed, and direct

Accepted Answer

The three categories of expenses on a manufacturer's income statement are production, selling, and administrative. This categorization is commonly used to distinguish between expenses incurred in the manufacturing process (production), those incurred in the selling and distribution of products (selling), and those incurred in the general management of the business (administrative).

Question 6

Which of the following would not be found on an income statement of a service organization?
A) selling expenses
B) cost of goods sold
C) operating income
D) sales revenue

Accepted Answer

Cost of goods sold is a cost that is associated with manufacturing or purchasing products for resale. Service organizations do not sell products, so they do not have a cost of goods sold. The other options would be found on an income statement of a service organization, as they are all related to the services provided by the organization.

Question 7

Kutlow Inc. had cost of goods sold of $112,000 for the year ended December 31, 2011. The finished goods inventory on January 1, 2011 was $28,000 and the finished goods inventory on December 31, 2011 was $17,000. What was the amount of cost of goods manufactured for the year?
A) $129,000
B) $101,000
C) $67,000
D) $113,000

Accepted Answer

The answer of Kutlow Inc. had cost of goods sold...

Question 8

Which of the following would be found on the balance sheet of a manufacturer?
A) sales revenue
B) selling expenses
C) factory equipment
D) all of these are correct

Accepted Answer

Sales revenue and selling expenses are found on the income statement, not the balance sheet. Factory equipment, however, would be found on the balance sheet as a fixed asset.

Question 9

Which of the following would not be found on the income statement of a manufacturer?
A) cost of goods sold
B) work in process
C) sales revenue
D) operating income

Accepted Answer

Work in process is a component of inventory and is not reported on the income statement. Cost of goods sold, sales revenue, and operating income are all key components of the income statement for a manufacturer.

Question 10

Figure 2-2.Lonborg Co. had the following beginning and ending inventory balances for the year ended December 31, 2011:
  In addition, direct labor costs of $30,000 were incurred, overhead equaled $42,000, materials purchased were $27,000 and selling and administrative costs were $22,000. Lonborg Co. sold 25,000 units of product during the year at a sales price of $5.00 per unit.
-Refer to Figure 2-2. What was the amount of cost of goods sold for the year?
A) $102,000
B) $97,500
C) $106,500
D) $128,500

Accepted Answer

Beginning inventory + Purchases - Ending inventory = Cost of goods sold
$18,000 + $27,000 - $15,000 = $30,000 (cost of goods sold)
To find the total cost, we need to add direct labor costs ($30,000), overhead ($42,000), and selling and administrative costs ($22,000):
$30,000 + $42,000 + $22,000 = $94,000
Therefore, the cost of goods sold for the year is $94,000.

Question 11

Talcum Inc. had materials inventory at July 1 of $12,000. The materials inventory at July 31 was $15,000 and the cost of direct materials used in production was $20,000. What was the cost of materials purchased during the month?
A) $23,000
B) $17,000
C) $35,000
D) $20,000

Accepted Answer

The cost of materials purchased is calculated by adding the cost of direct materials used in production to the ending inventory and then subtracting the beginning inventory: $20,000 + $15,000 - $12,000 = $23,000.

Question 12

Figure 2-2.Lonborg Co. had the following beginning and ending inventory balances for the year ended December 31, 2011:
  In addition, direct labor costs of $30,000 were incurred, overhead equaled $42,000, materials purchased were $27,000 and selling and administrative costs were $22,000. Lonborg Co. sold 25,000 units of product during the year at a sales price of $5.00 per unit.
-Refer to Figure 2-2. What were the total manufacturing costs for the year?
A) $101,000
B) $102,000
C) $123,000
D) $106,500

Accepted Answer

The total manufacturing costs for the year are $101,000. This is the sum of the direct materials, direct labor, and manufacturing overhead costs.

Question 13

Cost of goods sold
A) represents all costs associated with research, development, and general administration of the organization.
B) is found on the Balance Sheet.
C) is the cost of the partially completed goods that are still on the factory floor at the end of the period.
D) is the total product cost for the units sold during a period.

Accepted Answer

Cost of goods sold (COGS) is the total product cost for the units sold during a period. It includes direct materials, direct labor, and manufacturing overhead. COGS is reported on the Income statement, not the Balance sheet. It does not include costs associated with research, development, or general administration. It also does not include the cost of partially completed goods that are still on the factory floor at the end of the period.

Question 14

Operating income equals
A) sales revenue - cost of goods sold - selling and administrative expense
B) gross margin - selling expenses
C) sales revenue - cost of goods sold
D) sales revenue - selling and administrative expenses

Accepted Answer

Operating income is calculated by subtracting both cost of goods sold and selling and administrative expenses from sales revenue.

Question 15

An income statement of a manufacturer
A) will show the ending balance of work in process.
B) contains only manufacturing costs.
C) will show the ending balance of materials inventory.
D) covers a certain period of time.

Accepted Answer

An income statement covers a certain period of time, typically a month, quarter, or year. It reports a company's revenues, expenses, and net income for that time period. Options A, B, and C are not typically included on an income statement but are found on a balance sheet or in the cost accounting system.

Question 16

Gross margin equals
A) cost of goods sold - selling and administrative expenses.
B) direct materials + direct labor + manufacturing overhead.
C) sales revenue - cost of goods sold.
D) cost of goods manufactured + selling and administrative expenses.

Accepted Answer

Gross margin is calculated by subtracting the cost of goods sold from the sales revenue. Therefore, option C (sales revenue - cost of goods sold) is the correct answer. Option A includes selling and administrative expenses, which are not a part of the calculation of gross margin. Option B includes only the manufacturing costs and does not take into account the selling and administrative expenses. Option D includes the cost of goods manufactured, which is a part of the calculation of cost of goods sold and hence, not relevant to the calculation of gross margin.

Question 17

Which of the following would be found on the balance sheet of a manufacturer?
A) work in process
B) raw materials
C) finished goods
D) All of the these are correct

Accepted Answer

All three items, work in process, raw materials, and finished goods, are typically found on the balance sheet of a manufacturer. Work in process represents partially completed products that are still being worked on, raw materials are the materials used to make the products, and finished goods are the completed products waiting to be sold.

Question 18

Gross margin percent equals
A) gross margin/cost of goods sold.
B) operating income/sales revenue.
C) gross margin/sales revenue.
D) sales revenue/gross margin.

Accepted Answer

Gross margin percent is calculated by dividing the gross margin (which is the difference between sales revenue and cost of goods sold) by the sales revenue. Therefore, the correct choice is C, gross margin divided by sales revenue.

Question 19

Which of the following can be found on the income statements of both a manufacturing and service organization?
A) revenues
B) operating income
C) administrative expenses
D) all of these can be found on both.

Accepted Answer

All of these items—revenues, operating income, and administrative expenses—are common to the income statements of both manufacturing and service organizations. Revenues represent the income earned from the sale of goods or services, operating income reflects the profit from operations after deducting operating expenses, and administrative expenses are the overhead costs not directly tied to a specific function like manufacturing or sales but necessary for the overall administration of the business.

Question 20

Figure 2-2.Lonborg Co. had the following beginning and ending inventory balances for the year ended December 31, 2011: In addition, direct labor costs of $30,000 were incurred, overhead equaled $42,000, materials purchased were $27,000 and selling and administrative costs were $22,000. Lonborg Co. sold 25,000 units of product during the year at a sales price of $5.00 per unit. -Refer to Figure 2-2. What was Lonborg's operating income for the year? A) $18,500 B) $125,000 C) $<3,500> D) $5,500

Accepted Answer

Operating income or loss is calculated by subtracting operating expenses from gross profit. Without the specific figures from Figure 2-2, it's impossible to calculate or verify the correct answer. However, based on the question, the correct answer is indicated as a loss of $3,500, which suggests that operating expenses exceeded gross profits by this amount.

Quiz 2: Basic Managerial Accounting Concepts

A manufacturer normally has

During the month of June, Telecom Inc. had cost of goods manufactured of $112,000, direct materials cost of $52,000, direct labor cost of $37,000 and overhead cost of $26,000. The work in process balance at June 30 equaled $10,000. What was the work in process balance on June 1?

Andover Inc. had a gross margin for the month of February totaling $42,000. They sold 5,000 units during the month at a sales price of $20 per unit. What was the amount of cost of goods sold for the month?

On a manufacturer's income statement expenses are separated into the following three categories:

Which of the following would not be found on an income statement of a service organization?

Kutlow Inc. had cost of goods sold of $112,000 for the year ended December 31, 2011. The finished goods inventory on January 1, 2011 was $28,000 and the finished goods inventory on December 31, 2011 was $17,000. What was the amount of cost of goods manufactured for the year?

Which of the following would be found on the balance sheet of a manufacturer?

Which of the following would not be found on the income statement of a manufacturer?

Talcum Inc. had materials inventory at July 1 of $12,000. The materials inventory at July 31 was $15,000 and the cost of direct materials used in production was $20,000. What was the cost of materials purchased during the month?

Cost of goods sold

Operating income equals

An income statement of a manufacturer

Gross margin equals

Which of the following would be found on the balance sheet of a manufacturer?

Gross margin percent equals

Which of the following can be found on the income statements of both a manufacturing and service organization?