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Exam 10: An Introduction to Management Accounting

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Question 61

True/False

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All costs incurred prior to delivery of the product to the customer are referred to as upstream costs.

A) True
B) False

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Question 62

Multiple Choice

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Which of the following is not one of the four Standards of Ethical Conduct for Management Accountants?

A) Credibility
B) Confidentiality
C) Integrity
D) Independence

E) A) and B)
F) A) and C)

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Question 63

Multiple Choice

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Which of the following statements concerning manufacturing costs is incorrect?

Steuben Company produces dog houses. During the current year, Steuben Company incurred the following costs: $\begin{array}{llr} \text { Rent on manufacturing facility} &\$250,000\\ \text {office manager's salary } &150,000\\ \text { Wages of factory machine operators} &110,000\\ \text {Depreciation on manufacturing equipment } &50,000\\ \text {Insurance and taxes on selling and administrative } &30,000\\ \text { offices } &\\ \text { Direct materials murchased and used } &170,000\end{array}$ Based on the above information, the amount of period costs shown on Steuben's income statement is:

Which of the following statements concerning product costs versus general, selling, and administrative costs is false?

Identify the false statement regarding how product costs in a manufacturing company differ from product costs in a service or merchandising company.

Certified Management Accountants (CMA) must complete a specified number of continuing professional education credits each reporting period. Which of the four standards of ethical conduct issued by the Institute of Management Accountants likely motivated this requirement?

Which of the following costs should not be recorded as an expense in the period incurred?

All of the following are downstream costs except:

Product costs are immediately recorded in expense accounts when the products are manufactured.

Manufacturing costs that cannot be traced to specific units of product in a cost-effective manner include:

At the end of the period, the balance remaining in work in process is reported on the balance sheet.

For what activities do an organization's managers need accounting information?

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

Which of the following costs should be recorded as an expense in the period incurred?

Transportation costs incurred to transfer products to customers are downstream costs.

Arizona Company provided the following information regarding its most recent year of operations: $\begin{array}{ll}\text { Acministrative salaries } & 24,000 \\\text { Direct labor } & 48,000 \\\text { Direct raw material } & 80,000 \\\text { Marketing and distribution costs } & 60,000 \\\text { Overheads costs } & 36,000 \\\text { Product design and testing } & 30,000 \\\text { Research and development } & 40,000\\\text { Sales revenues}&410,000\\\text { Sales salaries and commissions}&54,000\\\text { Warranty costs}&4,000\\\text { Number of units produced}&20,000\\\text { Kumber of units sold }&20,000\end{array}$ Required:Determine the following amounts:Total product costsTotal upstream costsTotal downstream costsProduct cost per unitTotal cost per unit, including product costs and upstream and downstream costsThe selling price per unit that would be required if the company wishes to earn a profit margin equal to 25% of total costComment on the company's profitability at its current selling price

A merchandising business paid $2,500 to purchase inventory and $50 to have the inventory delivered to its customers. Its product costs were $2,550.

The following information relates to Marshall Manufacturing's current accounting period: $\begin{array}{llr} \text { Raw materials used } &\$16,300\\ \text { Direct labor wages } &32,300\\ \text { Sales salaries and commissions } &24,300\\ \text { Depreciation on production equipment } &2,930\\ \text { Rent on manufacturing facilities } &3,930\\ \text {Administrative supplies and utilities } &4,300\\ \text { Sales revenue } &98,000\\ \text {Units produced } &3,300\\ \text { Unit sold } &3,300\\\end{array}$ Based on this information, what is the company's net income? (Do not round intermediate calculations.)

A merchandising business paid $2,100 to purchase inventory and $150 to have the inventory delivered to its customers. Its product costs were $2,250.