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Exam 1: Managerial Accounting Concepts and Principles

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Question 1

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Which of the following is the correct formula for calculating cost of goods manufactured?

A) Direct materials used + direct labor + factory overhead + beginning work in process + ending work in process.
B) Direct materials used + direct labor + factory overhead + beginning work in process − ending work in process.
C) Direct materials used + direct labor + factory overhead − beginning work in process + ending work in process.
D) Direct materials used + direct labor + factory overhead − beginning work in process − ending work in process.
E) Direct materials used + direct labor − factory overhead + beginning work in process − ending work in process.

F) A) and E)
G) A) and D)

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B

Question 2

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The purpose of managerial accounting information is to help ________ users make decisions while the purpose of financial accounting is to help ________ users make decisions.

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internal; external
a...

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Question 3

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Langston Company manufactures coats. Costs for February were as follows: $\begin{array} { | l | r | } \hline \text { Direct materials } & \$ 19,650 \\\hline \text { Direct labor } & 15,210 \\\hline \text { Factory insurance } & 950 \\\hline \text { Sales commissions } & 4,700 \\\hline \text { Corporate executive salaries } & 5,500 \\\hline \text { Factory supervisor salary } & 3,500 \\\hline \text { Indirect materials } & 1,920 \\\hline\end{array}$ Required: Calculate the total manufacturing cost for February.

The following information relates to the manufacturing operations of the Abbra Publishing Company for the year: $\begin{array}{llll} & \text { Beginning } & \text { Ending } \\\text { Raw materials inventory } & \$ 547,000 & \$ 610,000\end{array}$ The raw materials used in manufacturing during the year totaled $1,018,000. Raw materials purchased during the year amount to:

Shemekia Co. 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. $\begin{array} { | l | l | l | l | l | } \hline & { \text { Cost by behavior } } & &{ \text { Cost by function } } \\\hline & \text { Variable } & \text { Fixed } & \text { Product } & \text { Period } \\\hline \text { Fabric for seats } & & & & \\\hline \text { Assembly labor } & & & & \\\hline \text { Factory property taxes } & & & & \\\hline \text { Accounting staff salaries } & & & & \\\hline \text { Sales office rent } & & & & \\\hline \text { Sales manager's salary } & & & & \\\hline \begin{array} { l } \text { Depreciation on factory } \\\text { equipment }\end{array} & & & & \\\hline \text { Sales commissions } & & & & \\\hline\end{array}$

One of the usual differences between financial and managerial accounting is the timeliness of the information reported.

A manufacturing firm's cost of goods manufactured is equivalent to a merchandising firm's:

Using the information below, compute the days' sales in raw materials inventory: $\begin{array}{lr}\text { Raw materials used}&\$121,600\\\text {Beginning raw materials inventory }&18,000\\\text { Ending raw materials inventory}&20,200\\\end{array}$

Marshall Corporation incurred costs for materials and labor needed to manufacture its products. These costs are examples of:

Which one of the following items is not a manufacturing cost?

The schedule of cost of goods manufactured is also known as a manufacturing statement.

Beginning finished goods inventory plus cost of goods manufactured minus ending finished goods inventory equals cost of goods sold.

Factory overhead is charged to expense as it is incurred because it is a period cost.

What does the days' sales in raw materials inventory ratio reveal?

If the cost of the beginning work in process inventory is $60,000, direct materials cost is $350,000, direct labor cost is $216,000, and overhead cost is $319,000, and the ending work in process inventory is $55,000, calculate the cost of goods manufactured.

Product costs are capitalized as inventory on the balance sheet and period costs are expensed on the income statement.

Using the information below, compute the raw materials inventory turnover: $\begin{array}{lr}\text { Raw materials used}&\$121,600\\\text {Beginning raw materials inventory }&18,000\\\text { Ending raw materials inventory}&20,200\\\end{array}$

Both financial and managerial accounting rely on accepted principles that are enforced through an extensive set of rules and guidelines.

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

Use the cost information below for Laurels Company to determine the cost of goods manufactured during the current year: $\begin{array}{lr}\text { Direct materials used } & 5,000 \\\text { Direct labor } & 7,000 \\\text { Total factory overhead } & 5,100 \\\text { Beginning work in process } & 3,000 \\\text { Ending work in process } & 4,000\end{array}$