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Exam 1: Introduction to Managerial Accounting

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Question 21

True/False

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Sales commissions are included in manufacturing overhead.

A) True
B) False

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Question 22

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Which of the following describes a system in which suppliers deliver materials at the time they are needed and finished units are completed when customer orders need to be filled?

A) Supply chain management
B) Just-in-time (JIT) management
C) Enterprise resource planning (ERP)
D) Total quality management (TQM)

E) A) and C)
F) B) and D)

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Question 23

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Which of the following statements is true of management accounting?

Which of the following will most likely be considered an indirect material cost for a bakery?

A company that uses labor, equipment, supplies, and facilities to convert raw materials into finished products is a:

Crystal Inc. is a merchandiser of stone ornaments. The company sold 15,000 units in 2015. The company has provided the following information: $\begin{array} { | l | r | } \hline \text { Sales Revenue } & \$ 557,000 \\\hline \text { Purchases (excluding freight in) } & 300,000 \\\hline \text { Selling and Administrative Expenses } & 69,000 \\\hline \text { Freight In } & 15,000 \\\hline \text { Beginning Merchandise Inventory } & 45,000 \\\hline \text { Ending Merchandise Inventory } & 55,700 \\\hline\end{array}$ What is the cost of goods sold for 2015?

Barricades Corporation provided the following information for the year 2015: $\begin{array} { | l | r | } \hline \text { Beginning Balance - Work-in-Process Inventory } & \$ 24,000 \\\hline \text { Ending Balance - Work-in-Process Inventory } & 56,000 \\\hline \text { Beginning Balance - Raw Materials Inventory } & 84,000 \\\hline \text { Ending Balance - Raw Materials Inventory } & 60,000 \\\hline \text { Purchases - Raw Materials } & 460,000 \\\hline \text { Direct Labor } & 470,000 \\\hline \text { Indirect Materials } & 47,000 \\\hline \text { Indirect Labor } & 19,000 \\\hline \text { Depreciation on Factory Plant \& Equipment } & 24,000 \\\hline \text { Plant Utilities \& Insurance } & 270,00 \\\hline\end{array}$ -What was the amount of the cost of goods manufactured for the year 2015?

Viva Inc. has provided the following information for the year 2015: $\begin{array} { | l | r | } \hline \text { Cost of Goods Manufactured } & \$ 1,234,000 \\\hline \text { Beginning Balance - Finished Goods Inventory } & 99,000 \\\hline \text { Ending Balance - Finished Goods Inventory } & 84,000 \\\hline\end{array}$ How much is the cost of goods sold?

Which of the following is both a prime cost and a conversion cost?

One of the primary activities of Rex Inc. is to purchase hats from Viva Inc. in Texas and sell them to its customers in Washington for a profit. It is likely that Rex is a:

Management's accountability to its suppliers and vendors is to:

Dreams Manufacturing Company provided the following information for the year 2015: $\begin{array} { |l | r |} \hline \text { Purchases - Raw Materials } & \$ 270,000 \\\hline \text { Plant Utilities \& Insurance } & 202,500 \\\hline \text { Indirect Materials } & 35,250 \\\hline \text { Indirect Labor } & 14,250 \\\hline \text { Ending Balance - Work-in-Process Inventory } & 42,000 \\\hline \text { Ending Balance - Raw Materials Inventory } & 45,000\\\hline \text { Direct Labor } &352,500 \\\hline \text { Depreciation on Factory Plant \& Equipment } &18,000 \\\hline \text { Beginning Balance - Work-in-Process Inventory } &18,000\\\hline \text { Beginning Balance - Raw Materials Inventory } & 63,000 \\\hline\end{array}$ Required: Prepare a statement of the cost of goods manufactured using the following format: $\begin{array}{|l|l|l|l|}\hline \text { COST OF GOODS MFGD } &\quad \quad &\quad \quad & \quad \quad \\\hline \text { Beginning Work-in-Process Inventory } & & & \\\hline \text { Direct Materials Used: } & & & \\\hline \text { Beginning Raw Materials Inventory } & & & \\\hline \text { Purchases of Raw Materials } & & & \\\hline \text { Raw Materials Available for Use } & & & \\\hline \text { Ending Raw Materials Inventory } & & &\\\hline \text { Direct Materials Used } & & & \\\hline \text { Direct Labor } & & & \\\hline \text { Manufacturing Overhead: } & & & \\\hline \text { Indirect Materials } & & &\\\hline \text { Indirect Labor } & & & \\\hline \text { Depreciation-Plant \& Equip. } & & & \\\hline \text { Plant utilities \& Insurance } & & & \\\hline \text { Total Manufacturing Overhead } & & &\\\hline \text { Total Manufacturing Costs Incurred During } & & & \\\text { the Year } & & & \\\hline \text { Total Manufacturing Costs to Account For } & & &\\\hline \text { Ending Work-in-Process Inventory } & & & \\\hline\text { Cost of Goods Manufactured } & & &\\\hline\end{array}$

Which of the following correctly describes the accounting for advertising costs?

Managerial accounting can be used to calculate costs for service and merchandising companies.

Service companies include companies that provide health care, communication, banking, and other important benefits to society.

The following information was obtained from Fizz Company: $\begin{array} { | l | r | } \hline \text { Advertising Costs } & \$ 9,900 \\\hline \text { Indirect Labor } & 11,000 \\\hline \text { CEO's Salary } & 49,000 \\\hline \text { Direct Labor } & 41,000 \\\hline \text { Indirect Materials } & 7,900 \\\hline \text { Direct Materials Used } & 61,000 \\\hline \text { Factory Utilities } & 700 \\\hline \text { Factory Janitorial Costs } & 2,300 \\\hline \text { Manufacturing Equipment Depreciation } & 2,100 \\\hline \text { Delivery Vehicle Depreciation } & 1,100 \\\hline \text { Administrative Wages and Salaries } & 21,000 \\\hline\end{array}$ -How much were Fizz's period costs?

The IMA Standards of Ethical Practice include confidentiality, competence, credibility, and integrity.

Given the following information, determine the cost of goods sold. $\begin{array} { | l | r | } \hline \text { Direct Labor Incurred } & \$ 63,000 \\\hline \text { Manufacturing Overhead Incurred } & 179,500 \\\hline \text { Direct Materials Used } & 150,000 \\\hline \text { Finished Goods Inventory, } 1 / 1 / 2015 & 197,500 \\\hline \text { Finished Goods Inventory, } 12 / 31 / 2015 & 221,000 \\\hline \text { Work-in-Process Inventory, } 1 / 1 / 2015 & 96,500 \\\hline \text { Work-in-Process Inventory, } 12 / 31 / 2015 & 109,000 \\\hline\end{array}$

At the beginning of 2015, Swift Company's Work-in-Process Inventory account had a balance of $120,000. During 2015, $250,000 of direct materials were used in production, and $75,000 of direct labor costs were incurred. Manufacturing overhead amounted to $850,000. The cost of goods manufactured was $675,000. What is the balance in the Work-in-Process Inventory account on December 31, 2015?

Which of the following is one of the key standards of ethical practice published by the IMA?