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Exam 10: An Introduction to Management Accounting

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Question 31

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Warren Company applies overhead based on direct labor cost. Warren Company estimated that it would incur $180,000 in manufacturing overhead costs and $120,000 of direct labor costs during the current year. Actual manufacturing overhead cost totaled $150,000 and actual direct labor costs totaled $110,000 during the current year. If total manufacturing costs were $320,000, what amount of direct materials was used during the year?

A) $60,000
B) $30,000
C) $45,000
D) None of these.

E) None of the above
F) B) and C)

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Question 32

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Which of the following is a product cost for a construction company?

A) Cost of transporting raw materials to the job site
B) Wages paid to the company's payroll clerk
C) Rent of the company's main office
D) All of these.

E) None of the above
F) A) and C)

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Question 33

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Randall Company manufactures chocolate bars. The following were among Randall's manufacturing costs during the current year: $\begin{array}{llr} \text { Wages}\\\\ \text { Machine operators } &\$370,000\\ \text { Selling and administrative personnel } &\$82,000\\ \text { Materials used } &\\\\ \text { Lubricant for oiling machiner} &\$32,000\\ \text { Cocoa, sugar, and other raw materials } &\$320,000\\ \text {Packacinc materials } &\$260,000\\\end{array}$ Randall's direct materials amounted to:

A company uses sandpaper to prepare its product for finishing. Most manufacturers would classify the sandpaper as direct material because it is physically consumed in the production process.

Which of the following costs would be classified as a direct cost for a company that produces motorcycles?

What are indirect costs, and how are the indirect costs incurred to make products accounted for?

Steuben Company produces dog houses. During the current year, Steuben Company incurred the following costs: $\begin{array}{llr} \text { Rent on manufacturing facility} &\$123,000\\ \text {office manager's salary } &72,000\\ \text { Wages of factory machine operators} &52,000\\ \text {Depreciation on manufacturing equipment } &22,000\\ \text {Insurance and taxes on selling and administrative } &12,000\\ \text { offices } &\\ \text { Direct materials murchased and used } &82,000\end{array}$ Based on the above information, the amount of period costs shown on Steuben's income statement is:

Is depreciation on manufacturing equipment expensed in the period incurred? Explain why or why not.

During its first year of operations, Silverman Company paid $15,085 for direct materials and $10,200 for production workers' wages. Lease payments and utilities on the production facilities amounted to $9,200 while general, selling, and administrative expenses totaled $4,700. The company produced 6,050 units and sold 3,700 units at a price of $8.20 a unit.What was Silverman's net income for the first year in operation?

The Szakos Company engaged in the following transactions during the current year: Acquired $50,000 of cash by issuing common stock to ownersPaid $10,000 to acquire manufacturing equipmentPaid $5,000 cash for materials used in productionPaid $2,000 for wages of production workersPaid $8,000 in general, selling, and administrative costsRecognized $1,000 of depreciation on the manufacturing equipmentSold inventory for $18,000 cashThe cost of the inventory sold was $6,500Required:Show the balance sheet and income statement effects of the transactions by completing the financial statement model provided.

During its first year of operations, Silverman Company paid $11,625 for direct materials and $11,000 for production workers' wages. Lease payments and utilities on the production facilities amounted to $10,000 while general, selling, and administrative expenses totaled $3,500. The company produced 7,250 units and sold 4,500 units at a price of $7.00 a unit. What is the amount of finished goods inventory on the balance sheet at year-end?

Which of the following best represents a characteristic of managerial accounting?

The four Standards of Ethical Conduct for Management Accountants relate to competence, confidentiality, integrity, and credibility.

Why do accountants normally calculate cost per unit as an average?

Most internal users of accounting information need primarily global information that reflects the performance of the company as a whole.

Select the term from the list provided that best matches each of the following descriptions. The first is done for you.

Depreciation on manufacturing equipment is an indirect product cost, while depreciation on office equipment is a period cost.

Which of the following most exemplifies the value-added principle?

The primary difference between manufacturing companies and service companies is that the products provided by service companies are consumed immediately.

Which of the following practices is not considered an effective means of reengineering business systems?