Deck 15: Introduction to Management Accounting

Question 1

Management accounting is influenced significantly by the Securities Exchange Commission.

Answer 1

False

Question 2

Financial accounting and managerial accounting both utilize the accrual basis of accounting.

Answer 2

True

Question 3

Which statement is correct?

A) Management accounting uses the cash basis and financial accounting uses the accrual basis to record transactions.
B) Management accounting uses the cash basis to record transactions.
C) Financial accounting uses the cash basis to record transactions.
D) Both management accounting and financial accounting use the accrual basis to record transactions.

Answer 3

Both management accounting and financial accounting use the accrual basis to record transactions.

Question 4

Which of the following statements is incorrect?

A) Management uses accounting information to determine the cost of products and services.
B) Management uses accounting information to plan and control business operations.
C) Management uses accounting information to report the company's financial position and results of operations to external parties.
D) Financial accounting is more relevant to use for internal decision making purposes than is management accounting.

Question 5

Which of the following reports must be audited by certified public accountants?

A) Annual financial reports
B) Federal tax returns
C) State tax returns
D) Management accounting reports

Question 6

Period costs, such as direct materials, are expensed during the period that they were incurred.

Question 7

Which of the following costs do NOT go directly into manufacturing overhead?

A) Factory overhead
B) Indirect labor
C) Factory janitorial costs
D) The purchase of raw materials

Question 8

Which of the following statements is correct?

A) A decrease in finished goods means that cost of goods manufactured is greater than cost of goods sold.
B) A decrease in work in process means that cost of goods sold is greater than cost of goods manufactured.
C) A decrease in raw materials implies that the cost of materials used in production exceeds the cost of the materials purchased.
D) A decrease in work in process means that cost of goods manufactured was less than the manufacturing costs incurred.

Question 9

The following information pertains to Bright Toy Company's operating activities for 2009. The company sells light box toys and sold 10,000 units in 2009.
$$\begin{array} { | l | r | } \hline \text { Purchases } & \$ 126,000 \\\hline \text { Selling and Administrative Expenses } & 90,000 \\\hline \text { Merchandise inventory, } 1 / 1 / 2009 & 14,000 \\\hline \text { Merchandise inventory, } 12 / 31 / 2009 & 10,000 \\\hline \text { Sales Revenue } & 250,000 \\\hline\end{array}$$ What is the cost of goods available for sale for 2009?

A) $140,000
B) $126,000
C) $104,000
D) $130,000

Question 10

The following information pertains to Bright Toy Company's operating activities for 2009. The company sells light box toys and sold 10,000 units in 2009.
$$\begin{array} { | l | r | } \hline \text { Purchases } & \$ 126,000 \\\hline \text { Selling and Administrative Expenses } & 90,000 \\\hline \text { Merchandise inventory, } 1 / 1 / 2009 & 14,000 \\\hline \text { Merchandise inventory, } 12 / 31 / 2009 & 10,000 \\\hline \text { Sales Revenue } & 250,000 \\\hline\end{array}$$ What is the cost of goods sold for 2009?

A) $104,000
B) $124,000
C) $130,000
D) $140,000

Question 11

The following information pertains to Bright Toy Company's operating activities for 2009. The company sells light box toys and sold 10,000 units in 2009.
$$\begin{array} { | l | r | } \hline \text { Purchases } & \$ 126,000 \\\hline \text { Selling and Administrative Expenses } & 90,000 \\\hline \text { Merchandise inventory, } 1 / 1 / 2009 & 14,000 \\\hline \text { Merchandise inventory, } 12 / 31 / 2009 & 10,000 \\\hline \text { Sales Revenue } & 250,000 \\\hline\end{array}$$ What is the gross profit for 2009?

A) $120,000
B) $130,000
C) $140,000
D) $136,000

Question 12

The following information pertains to Bright Toy Company's operating activities for 2009. The company sells light box toys and sold 10,000 units in 2009.
$$\begin{array} { | l | r | } \hline \text { Purchases } & \$ 126,000 \\\hline \text { Selling and Administrative Expenses } & 90,000 \\\hline \text { Merchandise inventory, } 1 / 1 / 2009 & 14,000 \\\hline \text { Merchandise inventory, } 12 / 31 / 2009 & 10,000 \\\hline \text { Sales Revenue } & 250,000 \\\hline\end{array}$$ What is the operating income for 2009?

A) $250,000
B) $140,000
C) $30,000
D) $90,000

Question 13

The following information pertains to Bright Toy Company's operating activities for 2009. The company sells light box toys and sold 10,000 units in 2009.
$$\begin{array} { | l | r | } \hline \text { Purchases } & \$ 126,000 \\\hline \text { Selling and Administrative Expenses } & 90,000 \\\hline \text { Merchandise inventory, } 1 / 1 / 2009 & 14,000 \\\hline \text { Merchandise inventory, } 12 / 31 / 2009 & 10,000 \\\hline \text { Sales Revenue } & 250,000 \\\hline\end{array}$$ What is the cost per light box sold in 2009?

A) $13.00
B) $12.40
C) $14.00
D) $10.40

Question 14

An increase in finished goods inventory implies that cost of goods sold was greater than cost of goods manufactured.

Question 15

Selling and administrative expenses are subtracted from cost of goods sold to obtain operating income.

Question 16

An increase in the work in process account during the year means that cost of goods manufactured was greater than the manufacturing costs incurred during the year.

Question 17

Which of the following statements does NOT describe today's business environment?

A) The business environment is shifting toward a service economy.
B) Global competition requires businesses to adjust their business strategies.
C) E-commerce has allowed business managers the opportunity to slow down the their manufacturing and
Delivery times.
D) Enterprise resource planning systems have emerged to assist business manager with respect to
Integrating their worldwide functions.

Question 18

A service company's:

A) expenses are all period costs.
B) expenses are all product costs.
C) income statement includes gross margin.
D) balance sheet includes finished goods inventory.

Question 19

A merchandising company's:

A) expenses include both period costs and product costs.
B) expenses include only product costs.
C) expenses include only period costs.
D) income statement doesn't include gross margin.

Question 20

Which of the following best defines direct materials?

A) Used to determine total inventoriable product costs
B) Cannot be separately and conveniently traced through the manufacturing process to finished goods
C) Are not part of the finished product
D) Used to determine total manufacturing overhead

Question 21

Wright Company reports production costs for 2009 as follows:
$$\begin{array} { | l | l | } \hline \text { Direct materials used } & \$ 375,000 \\\hline \text { Direct labor incurred } & \$ 250,000 \\\hline \text { Manufacturing overhead incurred } & \$ 400,000 \\\hline \text { Operating expenses } & \$ 145,000 \\\hline\end{array}$$ How much are Wright Company's period costs for 2009?

A) $250,000
B) $575,000
C) $145,000
D) $375,000

Question 22

Wright Company reports production costs for 2009 as follows:
$$\begin{array} { | l | l | } \hline \text { Direct materials used } & \$ 375,000 \\\hline \text { Direct labor incurred } & \$ 250,000 \\\hline \text { Manufacturing overhead incurred } & \$ 400,000 \\\hline \text { Operating expenses } & \$ 145,000 \\\hline\end{array}$$ How much are Wright Company's inventoriable product costs for 2009?

A) $925,000
B) $605,000
C) $975,000
D) $1,025,000

Question 23

Fitness Company reports the following data for 2009, its first year of operations:
$$\begin{array} { | l | r | } \hline \text { Cost of goods manufactured } & \$ 440,000 \\\hline \text { Work in process inventory, Dec. } 31,2009 & 130,000 \\\hline \text { Direct materials used } & 115,000 \\\hline \text { Manufacturing overhead incurred } & 160,000 \\\hline \text { Finished goods inventory, Dec. } 31,2009 & 75,000 \\\hline\end{array}$$ What are the total manufacturing costs to be accounted for?

A) $300,000
B) $190,000
C) $160,000
D) $570,000

Question 24

Fitness Company reports the following data for 2009, its first year of operations:
$$\begin{array} { | l | r | } \hline \text { Cost of goods manufactured } & \$ 440,000 \\\hline \text { Work in process inventory, Dec. } 31,2009 & 130,000 \\\hline \text { Direct materials used } & 115,000 \\\hline \text { Manufacturing overhead incurred } & 160,000 \\\hline \text { Finished goods inventory, Dec. } 31,2009 & 75,000 \\\hline\end{array}$$ What is cost of goods sold for 2009?

A) $365,000
B) $480,000
C) $340,000
D) $240,000

Question 25

Redbird Company reports the following data for 2009:
$$\begin{array} { | l | r | } \hline \text { Cost of goods manufactured } & \$ 69,500 \\\hline \text { Direct materials used } & 27,000 \\\hline \text { Direct labor incurred } & 25,000 \\\hline \text { Work in process inventory, Jan. 1, 2009 } & 11,000 \\\hline\end{array}$$ Manufacturing overhead is 75% of the cost of direct labor. What is work in process inventory on Dec. 31, 2009?

A) $13,500
B) $10,200
C) $12,250
D) $22,500

Question 26

At the beginning of 2008, the Taylor Company's work in process inventory account had a balance of $30,000. During 2008, $68,000 of direct materials were used in production, and $66,000 of direct labor costs were incurred. Manufacturing overhead in 2008 amounted to $90,000. The cost of goods manufactured was $220,000 in 2008. What is the balance in work in process inventory on December 31, 2008?

A) $24,000
B) $66,000
C) $6,000
D) $34,000

Question 27

Selected data for Young Company for 2009 is presented below:
$$\begin{array} { | l | r | } \hline \text { Direct labor incurred } & \$ 30,000 \\\hline \text { Indirect labor incurred } & 21,000 \\\hline \text { Factory depreciation } & 5,000 \\\hline \text { Factory utilities } & 7,000 \\\hline \text { Indirect materials used } & 2,000 \\\hline \text { Direct materials used } & 12,000 \\\hline \text { Property taxes on factory building } & 3,000 \\\hline \text { Sales commissions } & 8,000 \\\hline\end{array}$$ What is the manufacturing overhead for 2009?

A) $47,000
B) $50,000
C) $38,000
D) $46,000

Question 28

Village Company's selected cost data for 2009 are shown below:
$$\begin{array} { | l | r | } \hline \text { Cost of goods manufactured } & \$ 145,200 \\\hline \text { Work in process inventory, Jan. 1, 2009 } & 18,500 \\\hline \text { Work in process inventory, Dec. } 31,2009 & 22,500 \\\hline \text { Direct materials used } & 15,800 \\\hline\end{array}$$ What are total manufacturing costs incurred by Village Company in 2009?

A) $149,200
B) $158,300
C) $139,800
D) $117,100

Question 29

Village Company's selected cost data for 2009 are shown below:
$$\begin{array} { | l | r | } \hline \text { Cost of goods manufactured } & \$ 145,200 \\\hline \text { Work in process inventory, Jan. 1, 2009 } & 18,500 \\\hline \text { Work in process inventory, Dec. } 31,2009 & 22,500 \\\hline \text { Direct materials used } & 15,800 \\\hline\end{array}$$ Assuming direct labor is 60% of manufacturing overhead, what is the amount of direct labor incurred by Village Company in 2009?

A) $50,025
B) $62,550
C) $41,700
D) $83,400

Question 30

Harrison Company reports the following cost information for August:
$$\begin{array} { | l | r | } \hline \text { Cost of goods manufactured } & \$ 135,800 \\\hline \text { Finished goods inventory, Aug. 1 } & 30,200 \\\hline \text { Finished goods inventory, Aug. 31 } & 35,300 \\\hline \text { Work in process inventory, Aug. 1 } & 22,500 \\\hline \text { Work in process inventory, Aug. 31 } & 18,500 \\\hline \text { Direct materials used } & 25,300 \\\hline\end{array}$$ Direct labor incurred in August amounted to 150% of manufacturing overhead in August.
What is cost of goods sold for August?

A) $154,500
B) $125,100
C) $130,700
D) $139,800

Question 31

Harrison Company reports the following cost information for August:
$$\begin{array} { | l | r | } \hline \text { Cost of goods manufactured } & \$ 135,800 \\\hline \text { Finished goods inventory, Aug. 1 } & 30,200 \\\hline \text { Finished goods inventory, Aug. 31 } & 35,300 \\\hline \text { Work in process inventory, Aug. 1 } & 22,500 \\\hline \text { Work in process inventory, Aug. 31 } & 18,500 \\\hline \text { Direct materials used } & 25,300 \\\hline\end{array}$$ Direct labor incurred in August amounted to 150% of manufacturing overhead in August.
What is the amount of direct labor incurred by Harrison Company in August?

A) $131,800
B) $61,944
C) $49,556
D) $63,900

Question 32

Given the following information, determine the cost of goods manufactured and the cost of goods sold for 2009.
$$\begin{array} { | l | r | } \hline \text { Direct labor incurred } & \$ 126,000 \\\hline \text { Manufacturing overhead incurred } & 359,000 \\\hline \text { Direct materials used } & 1,000 \\\hline \text { Finished goods inventory, } 1 / 1 / 2009 & 395,000 \\\hline \text { Finished goods inventory, } 12 / 31 / 2009 & 442,000 \\\hline \text { Work in process inventory, } 1 / 1 / 2009 & 193,000 \\\hline \text { Work in process inventory, } 12 / 31 / 2009 & 218,000 \\\hline\end{array}$$

A) $781,000 and $837,000
B) $461,000 and $414,000
C) $731,000 and $684,000
D) $765,000 and $709,000

Question 33

Given the following information, calculate the direct materials purchased in 2009.
$$\begin{array} { | l | r | } \hline \text { Materials inventory, 1/1/2009 } & \$ 43,000 \\\hline \text { Materials inventory, 12/31/2009 } & 24,000 \\\hline \text { Work in process inventory, 1/1/09 } & 53,000 \\\hline \text { Work in process inventory, 12/31/09 } & 61,000 \\\hline \text { Finished goods inventory, } 1 / 1 / 2009 & 84,000 \\\hline \text { Finished goods inventory, } 12 / 31 / 2009 & 97,000 \\\hline \text { Cost of goods sold } & 395,000 \\\hline \text { Cost of goods manufactured } & 408,000 \\\hline \text { Direct labor } & 156,000 \\\hline \text { Manufacturing overhead costs } & 180,000 \\\hline\end{array}$$

A) $67,000
B) $85,000
C) $61,000
D) $80,000

Question 34

Which of the following would probably be considered an indirect material rather than a direct material?

A) Glue
B) Lumber
C) Fabric
D) Steel

Question 35

Manufacturing overhead should be classified as which of the following?

A) Product cost
B) Period cost
C) Indirect cost
D) Both A and C

Question 36

Robinson Company has provided the following information:
Raw materials inventory increased $15,000.
Work in process inventory decreased $29,000.
Finished goods inventory decreased $47,000.
Sales were $500,000.
The gross profit ratio was 52.2%.
How much was Robinson's cost of goods manufactured?

A) $268,000
B) $192,000
C) $286,000
D) $239,000

Question 37

Robinson Company has provided the following information:
Raw materials inventory increased $15,000.
Work in process inventory decreased $29,000.
Finished goods inventory decreased $47,000.
Sales were $500,000.
The gross profit ratio was 52.2%.
The manufacturing costs incurred by Robinson during the period were how much?

A) $221,000
B) $192,000
C) $163,000
D) $239,000

Question 38

Savard Corporation reported the following:
Raw material purchases totaling $100,000.
Raw material inventory increased $5,000.
Direct labor costs incurred totaled $150,000.
Total factory overhead was $225,000.
Work in process increased $20,000.
Indirect labor was $7,000.
Finished goods increased $40,000.
Sales salaries were $75,000.
How much was Savard's cost of goods manufactured?

A) $450,000
B) $490,000
C) $457,000
D) $497,000

Question 39

Savard Corporation reported the following:
Raw material purchases totaling $100,000.
Raw material inventory increased $5,000.
Direct labor costs incurred totaled $150,000.
Total factory overhead was $225,000.
Work in process increased $20,000.
Indirect labor was $7,000.
Finished goods increased $40,000.
Sales salaries were $75,000.
How much was Savard's cost of goods sold?

A) $410,000
B) $450,000
C) $407,000
D) $457,000

Question 40

Raw materials are expensed when:

A) they are purchased.
B) they are put into the production process.
C) the finished product comes out of cost of goods manufactured.
D) the finished product is sold.

Question 41

The following information has been provided by LeMaire Company:
Direct labor: $50,000
Direct materials used: $20,000
Direct materials purchased: $27,000
Cost of goods manufactured: $100,000
Ending work in process: $16,000
Corporate headquarters' property taxes: $6,000
Manufacturing overhead: $39,000
The beginning work in process was:

A) $23,000.
B) $7,000.
C) $9,000.
D) $1,000.

Question 42

The following information was obtained from Sizzler Company:
Advertising costs: $7,900
Indirect labor: $9,000
Direct Labor: $31,000
Indirect materials: $7,200
Direct materials: $47,000
Factory utilities: $3,000
Factory supplies: $700
Factory janitorial costs: $1,900
Manufacturing equipment depreciation: $1,600
Delivery vehicle depreciation: $790
Administrative wages and salaries: $19,000
How much were Sizzler's period costs?

A) $27,690
B) $7,900
C) $19,790
D) $19,000

Question 43

The following information was obtained from Sizzler Company:
Advertising costs: $7,900
Indirect labor: $9,000
Direct Labor: $31,000
Indirect materials: $7,200
Direct materials: $47,000
Factory utilities: $3,000
Factory supplies: $700
Factory janitorial costs: $1,900
Manufacturing equipment depreciation: $1,600
Delivery vehicle depreciation: $790
Administrative wages and salaries: $19,000
How much were Sizzler's product costs?

A) $102,190
B) $99,500
C) $129,090
D) $101,400

Question 44

The following information was obtained from Sizzler Company:
Advertising costs: $7,900
Indirect labor: $9,000
Direct Labor: $31,000
Indirect materials: $7,200
Direct materials: $47,000
Factory utilities: $3,000
Factory supplies: $700
Factory janitorial costs: $1,900
Manufacturing equipment depreciation: $1,600
Delivery vehicle depreciation: $790
Administrative wages and salaries: $19,000
How much was Sizzler's factory overhead?

A) $24,190
B) $1,600
C) $23,400
D) $3,600

Question 45

Management accountants should never disclose confidential information acquired in the course of their work.

Question 46

Performing professional duties in accordance with relevant laws, regulations, and technical standards are components of which IMA professional standard?

A) Competence
B) Objectivity
C) Integrity
D) Confidentiality

Question 47

Your company sends you to a conference on a new accounting rule, and you skip the afternoon session to go sightseeing. Which IMA guideline has been violated?

A) Confidentiality
B) Competence
C) Objectivity
D) Integrity