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Exam 10: An Introduction to Management Accounting

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Question 51

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

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verified

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Question 52

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The objective of a just-in-time inventory system is to totally eliminate all inventories.

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Question 53

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What are period costs? How does the accounting for period costs differ from the accounting for product costs?

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

The biggest challenge in computing the total cost per unit of a product is determining the amount of overhead cost that should be assigned to each unit.

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

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

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

With respect to income taxes, managers would prefer to classify costs as assets rather than expenses.

Select the correct statement regarding managerial and financial accounting.

Ashley Bradshaw is the manager of one department in a large store. In this capacity, which of the following kinds of information would she be interested in?

Misclassifying a period cost as a product cost will usually correct itself in the following period.

All of the following are downstream costs except:

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

Because management accountants prepare and analyze financial information used by company decision-makers, they are considered to be at the forefront of corporate governance.

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 gross margin for the first year?

Select the incorrect statement regarding upstream and downstream costs.

During its first year of operations, Connor Company paid $50,000 for direct materials and $36,000 in wages for production workers. Lease payments and utilities on the production facilities amounted to $14,000. General, selling, and administrative expenses were $16,000. The company produced 5,000 units and sold 4,000 units for $30.00 a unit. The average cost to produce one unit is which of the following amounts?

Kirsten believes her company's overhead costs are driven (affected) by the number of direct labor hours because the production process is very labor intensive. During the period, the company produced 5,000 units of Product A requiring a total of 1,600 labor hours and 2,500 units of Product B requiring a total of 400 labor hours. What allocation rate should be used if the company incurs overhead costs of $20,000?

Unlike manufacturers, service companies do not have an inventory of products.