Test Bank for Managerial Accounting 10th Edition by
Crosson
Multiple Choice Questions - Page 1
Cost of goods manufactured is equal to
1.
Direct Materials + Direct Labor + Overhead.2. Beginning Work in Process Inventory + Total Manufacturing Costs – Ending Work in Process Inventory.
3. Beginning Work in Process Inventory + Period Costs – Ending Work in Process Inventory.
4. Beginning Work in Process Inventory + Product Costs.
Costs such as salary of supervisors and other support personnel,
which are accounted for as overhead costs, are called
1.
period labor costs. 2. sales assistance costs. 3. indirect labor costs.4. prime labor costs.
Consider the following information: direct materials used totaled
$124,700; direct labor amounted to $412,000; overhead was
computed to be $789,600; Work in Process Inventory on March 1,
2014, was $482,500; and Work in Process Inventory on March 31,
2014, was $597,100. What was the cost of goods manufactured?
1.
$1,211,7002. $729,200
3. $1,440,900 4. $422,100
The fundamental way in which a company will achieve its goal is
described in its
1.
balance sheet and income statement. 2. cash flow statement.3. budget.
4. mission statement.
Velocity Ltd. is a sports car manufacturer. Which of the following is a
value-adding cost for Velocity?
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(2)2. Cost of tires used in cars
3. Cost of office supplies
4. Salary of operations manager
The credibility standard of management accountants state that
management accountants must communicate information fairly and
objectively. This means essentially that accountants must perform
each task
1.
as professionals, possessing the degree of skill of those management accountants who held the position before them.2. to provide relevant information, both positive and negative, to the recipients of their reports.
3. in conformity with generally accepted accounting principles.
4. to the satisfaction of government regulators.
The income statement for a manufacturing company usually contains
a detailed computation of the
1.
total manufacturing cost. 2. cost of goods sold.3. total cost of materials used. 4. total overhead.
Total manufacturing costs incurred during a period are transferred to
the
1.
Cost of Goods Sold account. 2. Work in Process Inventory account.3. Finished Goods Inventory account. 4. Overhead account.
Managerial accounting information is primarily used by
1.
lenders.2. supply-chain partners.
3. governmental agencies. 4. customers
In a manufacturing environment, direct labor costs initially flow
2. into the Cost of Goods Sold account. 3. into the Work in Process Inventory account.
4. into the Finished Goods Inventory account.
Overhead costs are
1.
not allocated to the Work in Process Inventory account. 2. not charged directly to the Finished Goods Inventory account.3. expensed in the period in which they are incurred.
4. not considered product costs.
To calculate the total cost of goods manufactured from total
manufacturing costs
1.
subtract all period costs from total manufacturing costs.2. add beginning and subtract ending finished goods inventory to total manufacturing costs.
3. you must know how many goods were sold during the period.
4. add beginning and subtract ending work in process inventory to total manufacturing costs.
From Jolier's year-end income statement, you observe that the
finished goods inventory has doubled during the year. This would
indicate that during the year Jolier
1.
sold more goods than were produced. 2. produced more goods than last year.3. produced more goods than were sold.
4. sold more goods than last year.
Prime costs is the sum of
1.
the direct labor costs and indirect labor costs.2. the direct material costs, direct labor costs, and overhead costs. 3. the direct labor costs and overhead costs.
4. the direct materials costs and direct labor costs.
The factory personnel whose wages are traceable directly to a
product include
2. support personnel. 3. factory supervisors.
4. employees who help to shape the product.
Suppose a management accountant becomes aware that a poor
judgment he or she made has resulted in the loss of one of the
company's clients. Is the accountant bound to share this information
with the company? (The accountant doubts that the company will
ever find out about it directly.)
1.
The management accountant is bound to respond honestly to inquiries regarding the adequacy of professional judgments but is not bound to communicate them if not directlyasked.
2. The management accountant is bound to communicate this error in judgment only if another client cannot be found.
3. The management accountant is not bound to communicate this error.
4. The management accountant is bound to communicate unfavorable and favorable judgments made, even if not directly asked.
The following are costs for a selected period: direct materials used in
production, $75,000; direct labor cost of converting materials into
product, $150,000; total indirect costs of manufacturing, $45,000.
What is the unit cost of manufacturing 30,000 units in this period?
1.
$7.50 2. $9.003. $6.00 4. $4.00
If the report is urgently needed, it is sometimes necessary to sacrifice
accuracy in the interest of
1.
timeliness2. personal feelings. 3. profits.
4. expectations.
In a manufacturing environment, costs of materials initially flow
1.
into the Work in Process Inventory account. 2. into the Materials Inventory account.4. into the Finished Goods Inventory account.
The Finished Goods Inventory and the Cost of Goods Sold for a
manufacturing company for the year 2014 are as follows: May 1
Finished Goods Inventory, $470,500; May 31 Finished Goods
Inventory, $125,000; Cost of Goods Sold for the year, $1,110,000.
The cost of goods manufactured for the month was
1.
$1,455,500. 2. $595,500. 3. $985,000. 4. $764,500.The beginning finished goods inventory of Ronald Co. was $480,125.
Goods completed during the year cost $963,250. The ending finished
goods inventory was dangerously low, having been reduced to
$135,850. The cost of goods sold for the year for Ronald Co. was
1.
$618,975. 2. $1,307,525.3. $1,579,225. 4. $1,171,675.
Materials and supplies that cannot be traced conveniently to specific
products are called
1.
indirect materials.2. raw materials. 3. waste materials.
4. direct materials.
Conversion costs consist of
1.
direct materials costs and direct labor costs. 2. direct labor costs and overhead costs.3. direct materials costs and overhead costs. 4. direct labor costs and indirect labor costs.
The three elements of product costs are
4. direct materials, direct labor, and period costs.
Period costs are
1.
charged against the revenue of the current period.2. initially recognized on the balance sheet as inventory.
3. charged to the period in which the product generates revenue. 4. further classified as direct costs and indirect costs.
Period cost is also called
1.
variable cost. 2. direct cost.3. value-adding cost.
4. noninventoriable cost.
Management accounting activities
1.
are synonymous with financial accounting activities. 2. are substitute for the management process.3. complement the management process.
4. have nothing to do with the management process.
If a management accountant confides to a relative that his or her
company has a confidential plan to merge with another company in
the near future, the accountant has
1.
not violated ethical standards.2. violated ethical standards only if the relative owns stock in the company.
3. violated ethical standards because the relative could stand to gain personally from that information.
4. not violated ethical standards because the information was relayed to a family member only.
Management accounting reports
1.
are primarily used by parties inside the organization.2. must be prepared on a periodic basis.
3. are generally publicly available.
The presentation of merchandise inventory on the balance sheet of a
merchandising company most nearly resembles the presentation of
__________ inventory on the balance sheet of a manufacturing
company.
1.
materials 2. finished goods3. manufacturing supplies 4. work in process
All manufacturing costs incurred and assigned to products that are
being produced are classified as
1.
variable costs. 2. allocated costs. 3. product costs.4. overhead costs.
The unit of measurement used in management accounting reports is
1.
primarily the historical dollar. 2. usually current replacement cost.3. any measurement unit that is useful in a particular situation.
4. the measurement unit used by competing companies.
Steve, the management accountant of a company, is not familiar with
the concept of prudence in financial reporting. Which of the following
IMA standards is Steve violating?
1.
Confidentiality 2. Materiality3. Disclosure 4. Competence
All manufacturing costs that are assigned to completed (but unsold)
products should be classified as
1.
materials inventory costs. 2. cost of goods sold.Management accounting reports are
1.
prepared using the double-entry system of accounting. 2. prepared periodically.3. based on generally accepted accounting principles. 4. driven by user’s needs.
69 Free Test Bank for Managerial Accounting 10th
Edition by Crosson Multiple Choice Questions - Page 2
Which of the following equations is correct?
1.
Total Manufacturing Costs = Direct Materials + Direct Labor + Selling Costs 2. Total Manufacturing Costs = Direct Materials + Direct Labor + Overhead3. Total Manufacturing Costs = Direct Labor + Overhead + Selling Costs + Administrative Costs
4. Total Manufacturing Costs = Product Costs + Period Costs
Which of the following is a product cost?
1.
General expenses 2. Selling expenses3. Advertising expenses 4. Material handling expenses
Which of the following represents normal cost measurement?
1.
Actual Direct Materials + Actual Direct Labor + Actual Overhead 2. Actual Direct Materials + Actual Direct Labor + Estimated Overhead3. Estimated Direct Materials + Estimated Direct Labor + Actual Overhead 4. Actual Direct Materials + Estimated Direct Labor + Estimated Overhead
Which of the following is a difference between managerial and
financial accounting?
1.
Managerial accounting reports non-monetary information whereas financial accounting reports both monetary and non-monetary information.2. Managerial accounting is used by government authorities whereas financial accounting
3. Managerial accounting prepares reports monthly whereas financial accounting prepares reports annually.
4. Managerial information is confidential whereas financial accounting information is publicly available.
Which of the following terms apply to materials and supplies that can
be traced conveniently to specific products?
1.
Indirect materials2. Indirect manufacturing costs 3. Direct costs
4. Manufacturing overhead
Which of the following account balances is not reported on the
balance sheet?
1.
Materials Inventory 2. Manufacturing Patents 3. Cost of Goods Sold4. Work in Process Inventory
Which of the following questions do not dictate a managerial report's
format?
1.
Who should write the report?2. To whom should the report be distributed? 3. What is the purpose of the report?
4. What information is needed?
Which of the following is a period cost?
1.
Advertising costs2. Indirect materials
3. Manufacturing overhead 4. Direct materials
Which of the following is not a stage in the management process?
3. Planning 4. Recording
Which of the following is one of the integrity standards of
management accountants?
1.
Refraining from accepting hospitality gifts from coworkers2. Refraining from activities that the company does not actively endorse
3. Avoiding actual or apparent conflicts of interest
4. Avoiding only those conflicts of interest that occur between coworkers
Which of the following types of product costs appear in the financial
statements?
1.
Predetermined overhead costs 2. Estimated costs3. Standard costs 4. Actual costs
Which of the following documents initiates the purchasing of
materials?
1.
Job order cost sheet 2. Receiving report 3. Purchase request4. Purchase order
Which of the following is a variable cost?
1.
Raw materials2. Rent
3. Insurance expense
4. Salaries
Which of the following is included in prime costs?
1.
Overhead costs2. Indirect materials costs
Which of the following costs is considered overhead?
1.
Indirect labor costs only 2. Direct materials costs only3. Both indirect materials and indirect labor costs
4. Direct materials and direct labor costs
Which of the following accounts contain only one type of product
cost?
1.
Work in Process Inventory 2. Materials Inventory3. Finished Goods Inventory 4. Cost of Goods Sold
Which cost measurement method calculates product unit cost using
estimates for direct materials, direct labor, and overhead?
1.
Standard costing2. Actual costing 3. Full costing 4. Normal costing
Which of the following activities is nota part of the "perform" stage in
the management process?
1.
Producing products as per customer specifications 2. Manage supply chain relationships3. Identifying operating activities that minimize waste
4. Calculating variances by comparing estimated and actual costs
Which of the following is a source document for purchase of
materials?
Which of the following is exclusive to a production-oriented
company?
1.
Balance sheet2. Statement of cash flows 3. Income statement
4. Statement of cost of goods manufactured
Which of the following is the formula used to compute product unit
cost?
1.
(Direct Materials + Direct Labor) / Number of Units Produced2. (Direct Materials + Direct Labor + Overhead) / Number of Units Produced
3. (Direct Labor + Overhead) / Number of Units Produced
4. (Indirect Materials + Indirect Labor + Overhead) / Number of Units Produced
Which of the following accounts includes the cost of completed but
unsold units of a manufacturing firm?
1.
Cost of Goods Sold 2. Finished Goods Inventory3. Work in Process Inventory
4. Materials Inventory
Which of the following user groups will use managerial accounting
information for decision-making purposes?
1.
Customers 2. Lenders 3. Employees4. Stockholders
Which of the following is not one of the key questions to be
addressed when preparing an accounting report?
1.
What is audience's familiarity with accounting? 2. What information should be included?Which of the following is nota product cost?
1.
Depreciation on office furniture2. Manufacturing overhead
3. Direct labor 4. Direct materials
Which of the following statements is true of financial and managerial
accounting?
1.
Both use historical costs as their primary unit of measurement. 2. Both depend on the double-entry system of accounting.3. Both require adherence to generally accepted accounting principles. 4. Both assist managers in decision making.
Which of the following is nota product cost?
1.
Indirect materials costs 2. Packaging costs3. Direct labor costs 4. Overhead costs
Which of the following should not be included in the computation of
cost of goods manufactured?
1.
Factory power costs 2. Indirect materials costs 3. Selling costs4. Direct materials costs
Which of the following contains period costs?
1.
Work in Process Inventory 2. Finished Goods Inventory 3. Cost of Goods Sold4. Selling and administrative expenses
Which of the following accounts decreases when cost of goods
manufactured is recorded?
2. Finished Goods Inventory 3. Overhead
4. Cost of Goods Sold
Which of the following is nota reason to classify costs as either
product or period costs?
1.
To determine unit manufacturing costs 2. To determine if the costs are fixed or variable3. To analyze costs for control purposes
4. To report production costs on the income statement
Woodies Inc. produces wooden desks. Which of the following is not
an indirect material for Woodies?
1.
Wood in a desk2. Nails in a desk 3. Screws in a desk
4. Lubricants for production machinery
Which of the following costs is not an inventoriable cost?
1.
Cost to ship products to a customer2. Cost of factory machinery used in production
3. Cost to design the product 4. Plant supervisor's salary
Which of the following labor costs would be included in direct labor?
1.
Maintenance workers 2. Machine operatorsFree Text Questions
Identify and explain the important questions a manager must address
before preparing a managerial report. (Hint: Think "w's.")
Answer Given
Why: To establish the purpose of the report. Who: To determine whom the report is
targeting, who will receive it, and who will read it; dictates the level of detail necessary
for the report. What: To determine the content and style of the report. When: To
determine when the report should be completed and distributed at a time when it will
be most
The Chief Financial Officer (CFO) of your company has asked you to
help her develop a cost control report to be distributed within the
company. She wants your input concerning what she should think
about before developing such a report. Discuss the significant points,
in detail, the CFO should consider before the cost control report is
prepared.
Answer Given
In addition to identifying the Why, Who, What, and When of the report, students should
address the specific points that need to be considered under each topic. Why: What is
the purpose of the report? Is the intent to report on total costs or is the report going to
be concerned with specific costs? Are the costs being considered for the entire
company or for specific segments of the company? Who: Who is going to receive the
report? Is it going to specific line managers or to someone higher up in the company or
to both groups? In other words, is it going to individuals actually incurring the costs or
to individuals that are just familiar with the costs being reported? What: Can the
information needed to prepare the report be obtained from existing source documents
and other sources or not? How will the information be presented? As columnar data,
as charts and graphs, as dollar amounts, as percentages, as year-to-date costs, as
actual compared to budget, as actual this year compared to actual last year, or some
other way? When: How often will the report be prepared? Daily, weekly, monthly,
quarterly, annually? Is the report going to be used to influence current operations or
future operations?
Job #178 consists of 500 units and has total of direct materials,
$48,000; direct labor, $58,000; and overhead, $35,000. a. What is
the unit product cost?; b. What are the prime costs per unit?; c. What
are the conversion costs per unit?
Answer Given
a. ($48,000 + $58,000 + $35,000) / 500 units = $282 per unit; b. Prime Costs = Direct
Conversion Costs = Direct Labor + Overhead; so ($58,000 + $35,000) / 500 units =
$186 per unit.
Give two examples of each stage in the management process.
Answer Given
Plan: Determining the mission statement (strategic objectives and operating
objectives); developing a business plan. Perform: Hiring and training personnel;
properly matching human and technical resources to the work that must be done;
purchasing/leasing facilities; maintaining inventories for sale; identifying operating
activities that can minimize waste; improving the quality of products or services.
Evaluate: Comparing actual to expected performance; correcting problems; revising
original plans. Communicate: Preparing external and internal reports
Assume you are the president of the business club at your school.
You are thinking about creating a fundraising project to generate
money for next year's operations. Develop an outline of your ideas
using the various stages of the management process.
Answer Given
Note: Student answers will vary considerably; however, they should adequately cover
the four stages of
Accountants must have high professional ethics. List and briefly
describe five ethical standards that management accountants
subscribe to that, in your opinion, help maintain the impression that
accountants are highly ethical.
Answer Given
