Question 1

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 was Silverman's net income for the first year in operation?

Accepted Answer

A)   $7,000
B)   $12,000
C)   $28,000
D)   $37,000E) B) and D)
F) None of the above

Question 2

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

Accepted Answer

A)   Information is historically based and reported annually.
B)   Information is based on estimates and is bounded by relevance and timeliness.
C)   Information is regulated by the Securities and Exchange Commission.
D)   Information is characterized by reliability and objectivity.E) C) and D)
F) B) and C) B

Question 3

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 finished goods inventory on the balance sheet at year-end?

Accepted Answer

A)   $10,000
B)   $20,000
C)   $4,000
D)   $15,000E) A) and D)
F) C) and D)

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

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

Accepted Answer

A)   Product costs associated with unsold units appear on the income statement as general expenses.
B)   General, selling, and administrative costs appear on the balance sheet.
C)   Product costs associated with units sold appear on the income statement as cost of goods sold.
D)   None of these is true.E) C) and D)
F) A) and D)

Question 6

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

Accepted Answer

A)   Rent of manufacturing facility that produces motorcycles
B)   Seats used in the motorcycles
C)   Wages of motorcycle assembly workers
D)   Both seats used in the motorcycles and wages of motorcycle assembly workers are correct.E) A) and B)
F) All of the above

Question 7

Select the correct statement regarding managerial and financial accounting.

Accepted Answer

A)   Users of managerial accounting information desire greater aggregation than do users of financial accounting information.
B)   Both managerial and financial accounting use economic and physical data in addition to financial data.
C)   Financial accounting is more highly regulated than managerial accounting.
D)   Timeliness is more important in financial accounting than in managerial accounting.E) A) and B)
F) A) and C)

Question 8

What is the effect on the balance sheet of recording a $200 cash purchase of raw materials?

Accepted Answer

A)   Assets decrease by $200 and equity decreases by $200.
B)   Assets and equity do not change.
C)   Assets increase by $200 and equity increases by $200.
D)   Assets increase by $200 and equity does not change.E) None of the above
F) B) and C)

Question 9

Which of the following costs is not considered to be a period cost?

Accepted Answer

A)   Warehousing costs
B)   Depreciation of delivery vehicles
C)   Salaries paid to company executives
D)   Freight paid on a purchase of raw materialsE) B) and D)
F) All of the above

Question 10

Anton believes his company's overhead costs are driven (affected)  by the number of machine hours because the production process is heavily automated. During the period, the company produced 3,000 units of Product A requiring a total of 100 machine hours and 2,000 units of Product B requiring a total of 25 machine hours. What allocation rate should be used if the company incurs overhead costs of $10,000?

Accepted Answer

A)   $2 per unit
B)   $2 per machine hour
C)   $80 per unit
D)   $80 per machine hourE) A) and B)
F) A) and C) D

Question 11

A potential negative effect of using a just in time inventory system is the immediate impact of labor strikes on the transportation system such as railroad.

Accepted Answer

A) True 
 B)False

Question 12

Tucker Company's work in process account decreased by $1,000, while its Finished Goods Inventory account increased by $500. Assuming total manufacturing costs were $5,000, what was the company's cost of goods sold amount?

Accepted Answer

A)   $3,500
B)   $4,500
C)   $4,000
D)   $5,500E) A) and D)
F) B) and C)

Question 13

Period costs are initially recorded in asset accounts and are later expensed in the period when the related units are sold.

Accepted Answer

A) True 
 B)False

Question 14

The following information relates to Marshall Manufacturing's current accounting period:  Based on this information, what is the company's net income?

Accepted Answer

A)   $40,000
B)   $70,000
C)   $30,000
D)   $42,000E) A) and D)
F) A) and C)

Question 15

Cost of goods sold is equal to the cost of goods:

Accepted Answer

A)   manufactured minus ending finished goods.
B)   available for sale minus beginning finished goods.
C)   available for sale minus ending finished goods.
D)   manufactured minus beginning finished goods.E) A) and C)
F) B) and C)

Question 16

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

Accepted Answer

A) True 
 B)False  True

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

Managerial accounting systems consider economic and non-financial data as well as financial statement data.

Accepted Answer

A) True 
 B)False

Question 19

The sequence of activities through which an organization provides products to its customers is called a supply chain.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following statements concerning manufacturing costs is incorrect?

Accepted Answer

A)   All salaries incurred by the sales department are expensed as incurred.
B)   Direct labor costs are recorded initially in an inventory account.
C)   Depreciation on manufacturing equipment is a period cost.
D)   The cost of direct materials can be readily traced to products.E) None of the above
F) C) and D)

Exam 10: An Introduction to Management Accounting

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

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B

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

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

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

Correct Answer
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Select the correct statement regarding managerial and financial accounting.

Correct Answer
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What is the effect on the balance sheet of recording a $200 cash purchase of raw materials?

Correct Answer
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Which of the following costs is not considered to be a period cost?

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D

A potential negative effect of using a just in time inventory system is the immediate impact of labor strikes on the transportation system such as railroad.

Correct Answer
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Tucker Company's work in process account decreased by $1,000, while its Finished Goods Inventory account increased by $500. Assuming total manufacturing costs were $5,000, what was the company's cost of goods sold amount?

Correct Answer
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Period costs are initially recorded in asset accounts and are later expensed in the period when the related units are sold.

Correct Answer
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The following information relates to Marshall Manufacturing's current accounting period: Based on this information, what is the company's net income?

Correct Answer
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Cost of goods sold is equal to the cost of goods:

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

Correct Answer
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True

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

Correct Answer
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Managerial accounting systems consider economic and non-financial data as well as financial statement data.

Correct Answer
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The sequence of activities through which an organization provides products to its customers is called a supply chain.

Correct Answer
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Which of the following statements concerning manufacturing costs is incorrect?

Correct Answer
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Exam 10: An Introduction to Management Accounting

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedB

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Select the correct statement regarding managerial and financial accounting.

Correct AnswerverifiedShow Answer

What is the effect on the balance sheet of recording a $200 cash purchase of raw materials?

Correct AnswerverifiedShow Answer

Which of the following costs is not considered to be a period cost?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedD

A potential negative effect of using a just in time inventory system is the immediate impact of labor strikes on the transportation system such as railroad.

Correct AnswerverifiedShow Answer

Tucker Company's work in process account decreased by $1,000, while its Finished Goods Inventory account increased by $500. Assuming total manufacturing costs were $5,000, what was the company's cost of goods sold amount?

Correct AnswerverifiedShow Answer

Period costs are initially recorded in asset accounts and are later expensed in the period when the related units are sold.

Correct AnswerverifiedShow Answer

The following information relates to Marshall Manufacturing's current accounting period: Based on this information, what is the company's net income?

Correct AnswerverifiedShow Answer

Cost of goods sold is equal to the cost of goods:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedTrue

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

Correct AnswerverifiedShow Answer

Managerial accounting systems consider economic and non-financial data as well as financial statement data.

Correct AnswerverifiedShow Answer

The sequence of activities through which an organization provides products to its customers is called a supply chain.

Correct AnswerverifiedShow Answer

Which of the following statements concerning manufacturing costs is incorrect?

Correct AnswerverifiedShow Answer

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B

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D

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True

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