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Exam 1: Management Accounting and Corporate Governance

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Question 21

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The philosophy of encouraging workers to achieve zero defects and high customer satisfaction is known as total quality management.

A) True
B) False

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Question 22

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Costs associated with holding inventory include hidden costs,such as low employee motivation.

A) True
B) False

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Question 23

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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 Silverman's cost of goods sold for the year?

Steuben Company produces dog houses.During the current year,Steuben Company incurred the following costs: $\begin{array}{c}\begin{array}{|l|}\hline \text { Rent on manufacturing facility}\\\hline \text { Office manager's salary}\\\hline \text { Wages of factory machine operators } \\\hline\text { Depreciation on manufacturing equipment } \\\hline \text { Insurance and taxes on selling and administrative offices } \\ \hline\text { Direct materials purchased and used }\\ \hline\end{array}\begin{array}{r|}\hline\$ 250,000 \\\hline150,000 \\\hline110,000 \\\hline50,000 \\\hline30,000 \\\hline170,000\\\hline\end{array}\end{array}$ Based on the above information,the amount of period costs shown on Steuben's income statement is:

Managerial accounting is designed to satisfy needs of external users including creditors,investors,and governmental agencies.

Managerial accounting information is limited or restricted by which of the following authorities or principles?

Select the correct statement regarding managerial and financial accounting.

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

Reno Company provided the following information regarding its operations for the month ending September 30: $\begin{array} { | l | r | } \hline \text { Administrative costs } & \$ 30,000 \\\hline \text { Depreciation on factory equipment } & 12,000 \\\hline \text { Indirect materials } & 2,000 \\\hline \text { Marketing and distribution costs } & 24,000 \\\hline \text { Salaries for factory supervisors } & 20,000 \\\hline \text { Wages for production workers } & 26,000 \\\hline \text { Raw materials used } & 38,000 \\\hline \text { Sales revenue } & 196,000 \\\hline \text { Selling costs } & 18,000 \\\hline \text { Utilities for production facilities } & 8,000 \\\hline & \\\hline \text { Number of units produced } & 20,000 \\\hline \text { Number of units sold } & 15,000 \\\hline\end{array}$ Required: 1)Compute the firm's total manufacturing overhead cost. 2)Prepare a schedule of inventory costs that shows total product costs,ending inventory,and cost of goods sold;and 3)Prepare an income statement for the month ending September 30.

Randall Company manufactures chocolate bars.The following were among Randall's manufacturing costs during the current year: $\begin{array}{c}\begin{array}{lll}\underline{\text { Wages}} \\\text { Machine operators}\\\text { Selling and administrative personnel}\\ \end{array}\begin{array}{lll}\\\$300,000\\\$75,000\end{array}\end{array}$ $\begin{array}{c}\begin{array}{lll}\underline{\text { Materials used}}\\ \text { Lubricant for oiling machinery}\\\text { Cocoa, sugar, and other raw materials}\\\text { Packaging materials}\\ \end{array}\begin{array}{lll}\\\$25,000\\\$225,000\\\$190,000\end{array}\end{array}$ Randall's direct labor costs amounted to:

Arizona Company provided the following information regarding its most recent year of operations: $\begin{array} { | l | r | } \hline \text { Administrative salaries } & \$ 24,000 \\\hline \text { Direct labor } & 48,000 \\\hline \text { Direct raw material } & 80,000 \\\hline \text { Marketing and distribution costs } & 60,000 \\\hline \text { Overhead costs } & 36,000 \\\hline \text { Product design and testing } & 30,000 \\\hline \text { Research and development } & 40,000 \\\hline \text { Sales revenues } & 410,000 \\\hline \text { Sales salaries and commissions } & 54,000 \\\hline \text { Warranty costs } & 4,000 \\\hline & \\\hline \text { Number of units produced } & 20,000 \\\hline \text { Number of units sold } & 20,000\\\hline \end{array}$ Required: Determine the following amounts: (a)Total product costs (b)Total upstream costs (c)Total downstream costs (d)Product cost per unit (e)Total cost per unit,including product costs and upstream and downstream costs (f)The selling price per unit that would be required if the company wishes to earn a profit margin equal to 25% of total cost (g)Comment on the company's profitability at its current selling price

Which of the following is a product cost for a cons

Complete the following table to compare and contrast financial and managerial accounting. $\begin{array} { | l | l | l | } \hline \text { Characteristic } & \text { Financial Accounting } & \text { Managerial Accornting } \\\hline \text { Users } & & \\\hline \text { Level of aggregation } & & \\\hline \text { Regulation } & & \\\hline \text { Characteristics of information } & & \\\hline \text { Time horizon } & & \\\hline \text { Reporting frequency } & & \\\hline\end{array}$

All of the following are features of managerial accounting except:

Senior executives focus on financial data when comparing the performance of their companies to that of competitors.

A manufacturing business paid $3,000 to purchase inventory.As a result,assets would increase by $3,000.

Karen is a Certified Management Accountant and is bound by the IMA's Standards of Ethical Conduct.Her superior has asked her to try to influence the firm's outside auditors with expensive gifts and favors.If Karen complies,she will violate the competence standard.

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

What costs are treated as product costs for a manufacturing company?

What is the fraud triangle? Which element of the fraud triangle is most closely connected with internal controls?