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Exam 10: An Introduction to Management Accounting

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Question 1

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During its first year of operations, a company that incurred $1,000 in production costs reported cost of goods sold of $800 and selling costs of $100. The company's ending finished goods inventory was $300.

A) True
B) False

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Question 2

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Just-in-time systems can be used by both manufacturing and merchandising companies.

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B) False

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Question 3

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The benefits of a just-in-time system would include all of the following except:

Which of the following statements is true with regard to product costs versus general, selling, and administrative costs?

During its first year of operations, Connor Company paid $50,000 for direct materials and $36,000 in wages for production workers. Lease payments and utilities on the production facilities amounted to $14,000. General, selling, and administrative expenses were $16,000. The company produced 5,000 units and sold 4,000 units for $30.00 a unit. The average cost to produce one unit is which of the following amounts?

How does the level of aggregation differ between financial accounting information and managerial accounting information?

As a Certified Management Accountant, Derek is bound by the standards of ethical conduct issued by the Institute of Management Accountants. According to the standards, Derek has a responsibility to:

What benefits may result from use of a just-in-time system?

Newton Corporation entered into the following transactions during its first year of operations. (Assume all transactions involve cash.) Acquired $2,000 of capital from the owners.Purchased $600 of direct raw materials.Used $400 of these direct raw materials in the production process.Paid production workers $800 cash.Paid $400 for manufacturing overhead.Started and completed 200 units of inventory.Sold 50 units at a price of $12 each.Paid $80 for selling and administrative expenses.The amount of net income for the year was:

Indicate whether each of the following statements is true or false.The schedule of cost of goods manufactured and sold is included as part of a company's income statement.The schedule of cost of goods manufactured and sold indicates the amount of direct raw materials used during the period.Direct raw materials used + direct labor + manufacturing overhead = total manufacturing costs.Cost of goods manufactured + ending finished goods -beginning finished goods = cost of goods sold.Cost of goods manufactured is calculated on the schedule of cost of goods manufactured and sold and is reported on the income statement.

How do information needs of employees change moving up the organization chart?

A just-in-time system can lower inventory holding costs and increase customer satisfaction.

Costs associated with holding inventory often include:

For a manufacturing company, product costs include all of the following except:

Which of the following is not classified as manufacturing overhead?

Kirsten believes her company's overhead costs are driven (affected) by the number of direct labor hours because the production process is very labor intensive. During the period, the company produced 5,300 units of Product A requiring a total of 830 labor hours and 2,800 units of Product B requiring a total of 230 labor hours. What allocation rate should be used if the company incurs overhead costs of $24,380?

Discuss the regulation of financial accounting, and compare to the level of regulation of managerial accounting information.

Ringgold Company had beginning finished goods of $36,000. During the period, the company produced goods that cost $150,000. If the ending balance in the Finished Goods Inventory account was $24,000, the amount of cost of goods sold was:

Financial accounting information is reported periodically, primarily at the end of each fiscal year. When is managerial accounting information reported to managers of an organization?

During its first year of operations, Silverman Company paid $14,000 for direct materials and $19,000 for production workers' wages. Lease payments and utilities on the production facilities amounted to $17,000 while general, selling, and administrative expenses totaled $8,000. The company produced 5,000 units and sold 3,000 units at a price of $15.00 a unit.What is the amount of gross margin for the first year?