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Exam 1: Managerial Accounting Concepts and Principles

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Question 41

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Use the cost information below for Ruiz, Inc. to determine cost of goods manufactured for the year:

A) $13,000.
B) $44,500.
C) $57,500.
D) $94,500.
E) $52,000.

F) D) and E)
G) B) and C)

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Question 42

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An internal control system consists of the policies and procedures managers use to do all of the following except:

A) Urge adherence to company policies.
B) Promote efficient operations.
C) Ensure reliable accounting.
D) Determine pricing for products.
E) Protect assets.

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

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Question 43

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Current information for the Stellar Corporation follows: $\begin{array}{lr}\text { Beginning work in process inventory } & \$ 17,900 \\\text { Ending work in process inventory } & 19,300 \\\text { Direct materials used } & 147,000 \\\text { Direct labor used } & 85,000 \\\text { Total factory overhead } & 63,100\end{array}$ Stellar Corporation's cost of goods manufactured for the year is:

There are many differences between financial and managerial accounting. Identify and explain at least three of these differences.

Control is the process of setting goals and determining ways to achieve them.

A schedule of cost of goods manufactured is also known as a:

The main difference between the cost of goods sold of a manufacturer and a merchandiser is that the merchandiser includes cost of goods manufactured rather than cost of goods purchased.

Which of the following items is not a management concept that was created to improve company performance?

Cost concepts such as variable, fixed, mixed, direct, and indirect apply only to manufacturers and not to service companies.

A ________ system means that a company acquires or produces inventory only when needed.

Costs that are capitalized as inventory when they are incurred are called:

Under a just-in-time manufacturing system, large quantities of inventory are accumulated throughout the factory to be certain that components are available each time that they are needed.

Walter Co. and Sandburg Industries report the following information at December 31: $\begin{array} { | l | r | r | } \hline & \text { WALTER } & \text { SANDBURG } \\\hline \text { Accounts Receivable } & \$ 41,000 & \$ 68,000 \\\hline \text { Cash } & 6,000 & 7,000 \\\hline \text { Finished Goods Inventory } & & 25,000 \\\hline \text { Work in Process Inventory } & & 40,000 \\\hline \text { Merchandise Inventory } & 48,000 & \\\hline \text { Prepaid Expenses } & 1,000 & 2,000 \\\hline \text { Raw Materials Inventory } & & 21,000 \\\hline\end{array}$ Required: (a) Which company is a manufacturer? Explain. (b) Prepare the current assets section of the balance sheet for the manufacturer.

Managerial accounting provides financial and nonfinancial information to an organization's managers and other internal decision makers.

A lean business model aims to eliminate waste while satisfying the customer and providing a positive return to the company.

Total variable costs change in proportion to changes in the volume of activity.

Product costs can be classified as one of three types: direct materials, direct labor, or factory overhead.

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:

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

Which of the following costs is not included in factory overhead?