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Exam 1: Managerial Accounting Concepts and Principles

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Question 81

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Duncan Crafts manufactures specialty key chains for tourist attractions. On January 1, the firm had 300 souvenir attraction disks, costing $3 each, used in the production of key chains. During the year Duncan Crafts purchased 1,500 souvenir disks costing $3 each and produced 1,100 key chains. Compute the total cost of souvenir disk raw materials inventory at December 31.

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Question 82

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Classifying costs by behavior with changes in volume of activity involves:

A) Identifying fixed costs and variable cost.
B) Identifying cost of goods sold and operating costs.
C) Identifying costs as financial or managerial.
D) Identifying costs in a physical manner.
E) Identifying both quantitative and qualitative cost factors.

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

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Question 83

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Asteroid Industries accumulated the following cost information for the year: $\begin{array}{lr}\text { Direct materials } & \$ 16,000 \\\text { Indirect materials } & 4,000 \\\text { Indirect labor } & 8,500 \\\text { Factory depreciation } & 12,800 \\\text { Direct labor } & 37,000\end{array}$ Using the above information, total factory overhead costs equal:

Which of the following is an indirect cost of manufacturing scooters?

An employee devises a payroll scheme that costs the employer $150. The employer discovers the fraud but decides not to confront the employee since the amount of the fraud is small. Discuss why this course of action is not advisable.

Wesson Company sold 10,000 units of its only product in the first half of the year. If sales increase by 12% in the second half of the year, which cost will increase?

Managerial accounting information can be forwarded to the managers of a company quickly since external auditors do not have to review it, and estimates and projections are acceptable.

Control is the process of monitoring planning decisions and evaluating an organization's activities and employees.

For each of the characteristics below, identify whether it is a focus of financial accounting or managerial accounting. Use the letter F to identify financial accounting and M to identify managerial accounting. _____ 1. Users are generally investors, creditors, analysts, and regulators. _____ 2. Used to assist managers in making planning and control decisions. _____ 3. Information is structured and controlled by GAAP. _____ 4. Information is available quickly without the need to wait for an audit. _____ 5. Information is mainly historical with some predictions. _____ 6. Emphasis of the information is a company's projects, processes, and divisions. _____ 7. Information is mostly monetary, but includes nonmonetary information.

Using the information below, compute the raw materials inventory turnover: $\begin{array}{lr}\text {Raw materials used }&\$85,500\\\text {Beginning raw materials inventory }&8,000\\\text { Ending raw materials inventory}&9,000\\\end{array}$

Which of the following is not part of the sales activity in the flow of manufacturing activities?

________ reveals how many times a company uses its raw materials inventory in production during a period.

Managerial accounting is an activity that helps managers determine costs of products and services, plan future activities, and compare actual to planned results.

The series of activities that add value to a company's products or services is called a value chain.

Information for Underwood Industries is presented below. Compute the cost of goods manufactured. $\begin{array}{|l|r|r|} \hline& \text { Beginning } & \text { Ending } \\\hline \text { Raw materials inventory } & \$ 26,800 & \$ 30,100 \\\hline \text { Work in process inventory } & 41,200 & 39,000 \\\hline \text { Finished goods inventory } & 54,00 0& 53,500 \\\hline \text { Raw materials purchased } & 93,50 0 \\\hline \text { Direct labor } & 61,000 \\\hline \text { Total factory overhead } & 117,300 \\\hline\end{array}$

Raw materials inventory should not include indirect materials.

Period costs are incurred by manufacturing finished goods.

A fixed cost:

Indirect labor refers to the cost of workers who assist or supervise manufacturing, but they are not clearly identified with specific product units.

A management concept based on an understanding of the changing wants and needs of customers, and which leads to flexible product designs and production processes, is called: