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Exam 18: Managerial Accounting Concepts and Principles

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Question 111

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Managerial accounting is different from financial accounting in that:

A) Managerial accounting is used extensively by investors, whereas financial accounting is used only by creditors.
B) Managerial accounting includes many projections and estimates whereas financial accounting has a minimum of predictions.
C) Managerial accounting is mainly used to set stock prices.
D) Managerial accounting is more focused on the organization as a whole and financial accounting is more focused on subdivisions of the organization.
E) Managerial accounting never includes nonmonetary information.

F) A) and C)
G) A) and B)

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Question 112

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Product costs can refer to expenditures necessary to finish products and to the administrative support during the time period.

A) True
B) False

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Question 113

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The cost of partially completed products is included in the balance of the Work in Process Inventory account.

The ________ aids continuous improvement by augmenting financial measures with information on the drivers or indicators of future financial performance along four dimensions: (1) financial, (2) customer, (3) internal business processes, and (4) learning and growth.

For a manufacturer, the cost of goods sold can be computed by adding the beginning finished goods inventory to ________ and then subtracting the ending finished goods inventory.

Labor costs that are clearly associated with specific units of product because the labor is used to convert raw materials into finished products are called:

What are the three types of inventories that are carried by manufacturers? Describe each type of inventory.

Information for Stanton, Inc., as of December 31 follows. Prepare a schedule of cost of goods manufactured for the year ended December 31. $\begin{array} { l | l } \text { Administrative salaries } & \$ 35,000 \\\hline \text { Depreciation of factory equipment } & 25,000 \\\hline \text { Depreciation of delivery vehicles } & 6,000 \\\hline \text { Direct labor } & 68,000 \\\hline \text { Factory supplies used } & 9,000 \\\hline \text { Finished goods inventory, January 1 } & 57,000 \\\hline \text { Finished goods inventory, December 31 } & ? \\\hline \text { Factory insurance } & 15,500 \\\hline \text { Interest expense } & 12,000 \\\hline \text { Factory utilities } & 14,000 \\\hline \text { Factory maintenance } & 7,500 \\\hline \text { Raw materials inventory, January 1 } & 5,000 \\\hline \text { Raw materials inventory, December 31 } & 4,000 \\\hline\end{array}$ $\begin{array} { l | l } \hline \text { Raw material purchases } & 125,000 \\\hline \text { Rent on factory building } & 25,000 \\\hline \text { Repairs of factory equipment } & 11,500 \\\hline \text { Sales comrnissions } & 37,500 \\\hline \text { Work in Process inventory. January 1 } & 3,500 \\\hline \text { Work in Process inventory. December 31 } & 2,700\end{array}$

A manufacturing company's finished goods inventory on January 1 was $68,000; cost of goods manufactured was $147,000; and the December 31 finished goods inventory was $77,000. What is the cost of goods sold for that year?

Manufacturers usually have three inventories: raw materials, work in process, and finished goods.

An employee overstates his reimbursable expenses in one period in order to receive needed additional cash. Since he intends to reduce his expenses the next period by the current overstatement, this act is not considered fraudulent.

Raw materials purchased plus beginning raw materials inventory equals the ending balance of raw materials inventory.

Factory overhead includes selling and administrative expenses because they are indirect costs of a product.

Total quality management (TQM) focuses on quality improvement and applies this standard to all aspects of business activities.

Using the information below, calculate the cost of goods manufactured for the period: $\begin{array}{lc}\text { Beginning Raw Materials Inventory } & \$ 25,000 \\\text { Ending Raw Materials Inventory } & 30,000 \\\text { Beginning Work in Process Inventory } & 55,000 \\\text { Ending Work in Process Inventory } & 64,000 \\\text { Beginning Finished Goods Inventory } & 80,000 \\\text { Ending Finished Goods Inventory } & 67,000 \\\text { Cost of Goods Sold for the period } & 540,000 \\\text { Sales revenues for the period } & 1,254,000\\\\\text { Operating expenses for the period}&232,000\end{array}$

Marv's Furniture and Fixtures produces seats for movie theaters. Listed below are selected cost items for the seat production. Classify each cost as either fixed or variable, and either a product or a period cost by placing an x in the appropriate boxes.

Use the following information to prepare the schedule of cost of goods manufactured for Graffstone Company for the month ended June 30. $\begin{array} { l | l } \text { Work in Process inventory. May 31 } & \$ 12,600 \\\hline \text { Work in Procest inventory. June 30 } & 16,500 \\\hline \text { Direct materials used during June } & 21,000 \\\hline \text { Direct labor used during June } & 31,000 \\\hline \text { Factory overhead: } & \\\hline \text { Indirect material } & 6,400 \\\hline \text { Indirect labor } & 9,200 \\\hline \text { Factory rent } & 12,000 \\\hline \text { Factory depreciation } & 15,000 \\\hline \text { Factory utilities } & 18,400\end{array}$

A manufacturer's cost of goods manufactured is the sum of direct materials, direct labor, and factory overhead costs incurred in producing products.

Which of the following represents the correct formula for calculating days' sales in raw materials inventory for a manufacturer?

If the cost of the beginning work in process inventory is $60,000, costs of goods manufactured is $890,000, direct materials cost is $330,000, direct labor cost is $210,000, and overhead cost is $315,000, calculate the ending work in process inventory: