Question 1

Which of the following is exclusive to a production-oriented company?

Accepted Answer

The Statement of Cost of Goods Manufactured is exclusive to a production-oriented company as it shows the cost involved in the production process. The balance sheet, income statement, and statement of cash flows are common financial statements used by all types of companies.

Question 2

Which of the following equations is correct?

Accepted Answer

Total Manufacturing Costs consists of the expenses incurred during production, which include Direct Materials, Direct Labor, and Overhead costs. Selling costs and administrative costs are not included in manufacturing costs. Option D is partially correct, as Total Manufacturing Costs are a part of Product Costs, which also include Direct Materials and Direct Labor, while Period Costs are separate expenses incurred during a specific time period. However, B is the best choice as it accurately represents Total Manufacturing Costs.

Question 3

In a manufacturing environment,direct labor costs initially flow

Accepted Answer

Direct labor costs are a part of the cost of producing a product or providing a service. They are incurred during the manufacturing process as workers directly handle the materials to produce a product. These costs flow into the Work in Process Inventory account, as they are a part of the cost of the product that is still in the process of being manufactured. Once the product is completed, the cost of direct labor is transferred to the Finished Goods Inventory account. Therefore, choice C is the correct answer.

Question 4

Which of the following is a source document for purchase of materials?

Accepted Answer

All of the given options are source documents for purchase of materials. A vendor's invoice is a document sent by the vendor to the buyer indicating the details of materials purchased. A purchase request is a document prepared by the department or employee requesting the purchase of materials. A receiving report is a document prepared by the receiving department indicating the details of the materials received. Therefore, all of these options are source documents for the purchase of materials.

Question 5

In a manufacturing environment,costs of materials initially flow

Accepted Answer

When materials are purchased for manufacturing, their costs are initially recorded in the Materials Inventory account. As the materials are used in production, their costs are then transferred to the Work in Process Inventory account. Once a finished product is completed, its cost (including the cost of materials) is transferred to the Finished Goods Inventory account. When the finished product is sold, its cost is transferred from Finished Goods Inventory to Cost of Goods Sold.

Question 6

The income statement for a manufacturing company usually contains a detailed computation of the

Accepted Answer

The cost of goods sold represents the cost incurred to produce the goods sold during a period, including the cost of direct materials, direct labor, and manufacturing overhead. Therefore, the income statement for a manufacturing company usually contains a detailed computation of the cost of goods sold. While the total manufacturing cost, total cost of materials used, and total overhead are important components of the cost of goods sold, they are not typically broken out in detail on the income statement.

Question 7

Total manufacturing costs incurred during a period are transferred to the

Accepted Answer

Total manufacturing costs incurred during a period are transferred to the Work in Process Inventory account. This account represents the cost of unfinished products that are still in the manufacturing process. Once the products are completed, the cost is transferred to the Finished Goods Inventory account. When the products are sold, the cost is then transferred to the Cost of Goods Sold account.

Question 8

Which of the following types of product costs appear in the financial statements?

Accepted Answer

Actual costs appear in the financial statements, while predetermined overhead costs, estimated costs, and standard costs are used for budgeting and cost control purposes but do not appear in the financial statements.

Question 9

From Jolier's year-end income statement,you observe that the finished goods inventory has doubled during the year.This would indicate that during the year Jolier

Accepted Answer

If the finished goods inventory has doubled, it means that Jolier produced more goods than were sold during the year. This is because the finished goods inventory represents the goods that have been produced but not yet sold.

Question 10

To calculate the total cost of goods manufactured from total manufacturing costs

Accepted Answer

To calculate the total cost of goods manufactured, we need to add the beginning work in process inventory to total manufacturing costs and then subtract the ending work in process inventory. This will give us the cost of goods that were completed during the period. Subtracting period costs (choice A) is not relevant to calculating the cost of goods manufactured. Knowing how many goods were sold (choice C) is relevant to calculating the cost of goods sold, but not the cost of goods manufactured. Adding beginning and subtracting ending finished goods inventory (choice B) is relevant to calculating the cost of goods sold, but not the cost of goods manufactured.

Question 11

All manufacturing costs that are assigned to completed (but unsold)products should be classified as

Accepted Answer

Completed but unsold products are classified as finished goods inventory. Therefore, all manufacturing costs that are assigned to these products should be classified as finished goods inventory costs.

Question 12

Consider the following information: direct materials used totaled $124,700;direct labor amounted to $412,000;overhead was computed to be $789,600;Work in Process Inventory on March 1,2014,was $482,500;and Work in Process Inventory on March 31,2014,was $597,100.What was the cost of goods manufactured?

Accepted Answer

The answer of Consider the following information: direct materials used...

Question 13

Which of the following accounts contain only one type of product cost?

Accepted Answer

Materials Inventory contains only the cost of direct and indirect materials used in the manufacturing process. Work in Process Inventory, Finished Goods Inventory, and Cost of Goods Sold include multiple types of product costs including direct materials, direct labor, and manufacturing overhead.

Question 14

Cost of goods manufactured is equal to

Accepted Answer

Cost of goods manufactured is the total cost of producing goods that are ready for sale during a specific period. It includes all direct materials, direct labor, and overhead costs incurred to manufacture the goods. Beginning work in process inventory, total manufacturing costs, and ending work in process inventory are all components used to calculate the cost of goods manufactured. Therefore, choice B is the correct answer.

Question 15

Which of the following documents initiates the purchasing of materials?

Accepted Answer

The answer of Which of the following documents initiates the...

Question 16

Which of the following accounts includes the cost of completed but unsold units of a manufacturing firm?

Accepted Answer

Finished Goods Inventory includes completed but unsold units of a manufacturing firm, whereas Cost of Goods Sold includes the cost of goods that have been sold to customers, Work in Process Inventory includes the cost of partially completed units, and Materials Inventory includes the cost of raw materials and supplies used in manufacturing.

Question 17

Which of the following should not be included in the computation of cost of goods manufactured?

Accepted Answer

Cost of goods manufactured includes direct material, direct labor, and manufacturing overhead costs incurred in making the finished goods. Selling costs are not part of the cost of goods manufactured but are instead considered period costs and are expensed in the period in which they are incurred.

Question 18

Which of the following accounts decreases when cost of goods manufactured is recorded?

Accepted Answer

When cost of goods manufactured is recorded, it means that the production process is complete and the products are moved from the work in process inventory to the finished goods inventory. This transfer decreases the balance in the work in process inventory account, as the costs associated with the production of the goods have now been transferred to the finished goods inventory. Therefore, the correct answer is A) Work in Process Inventory.

Question 19

The presentation of merchandise inventory on the balance sheet of a merchandising company most nearly resembles the presentation of __________ inventory on the balance sheet of a manufacturing company.

Accepted Answer

Merchandising companies buy finished products for resale, so their inventory is most similar to a manufacturing company's finished goods inventory. Materials inventory is used by manufacturing companies in the production process, while work in process represents partially completed products and manufacturing supplies are used to support the production process.

Question 20

Overhead costs are

Accepted Answer

Overhead costs are not charged directly to the Finished Goods Inventory account. Instead, they are allocated to the Cost of Goods Sold account when the goods are sold.

Quiz 15: Managerial Accounting and Cost Concepts