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Exam 1: Introduction to Managerial Accounting

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Question 41

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Transportation costs paid to ship raw materials to a company warehouse are considered product costs.

A) True
B) False

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Question 42

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Total manufacturing costs to account for during the year minus the ending work-in-process inventory equals the cost of goods manufactured.

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B) False

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Question 43

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Salary of a factory manager will be included in manufacturing overhead.

Damsel Inc. is a large manufacturer of auto tires. Damsel has provided the following information: $\begin{array} { | l | r | } \hline \text { Sales Revenue } & \$ 45,500 \\\hline \text { Beginning Finished Goods Inventory } & 1,500 \\\hline \text { Cost of Goods Sold } & 32,500 \\\hline \text { Cost of Goods Manufactured } & 35,000 \\\hline\end{array}$ Calculate the amount of ending finished goods inventory reported in Damsel's balance sheet.

Repair and maintenance costs of vehicles used to deliver products to the customers are included in manufacturing overhead.

Manufacturing overhead is also referred to as:

Merchandiser's inventory consists of raw materials inventory, work-in-process inventory, and finished goods inventory.

Fuchsia Inc. provides automobile services in the local community. The company provides the following information for the month of March: $\begin{array} { | l | r | } \hline \text { Building Rent Expense } & \$ 5,000 \\\hline \text { Depreciation Expense-Equipment } & 1,700 \\\hline \text { Supplies Expense } & 8,500 \\\hline \text { Utilities Expense } & 2,450 \\\hline\end{array}$ Fuchsia provided services to 1,500 clients in the month of March and generated $20,500 as revenue. How much is the cost per service?

For external reporting purposes, GAAP requires companies to treat period costs as assets.

In a manufacturing firm, which of the following is an example of a period cost?

For a manufacturing business, which of the following would be considered a product cost?

Arturo Manufacturing Company provided the following information for the year 2015: $\begin{array} { | l | r | } \hline \text { Beginning Balance - Work-in-Process Inventory } & \$ 12,000 \\\hline \text { Ending Balance - Work-in-Process Inventory } & 28,000 \\\hline \text { Beginning Balance - Raw Materials Inventory } & 42,000 \\\hline \text { Ending Balance - Raw Materials Inventory } & 30,000 \\\hline \text { Purchases - Raw Materials } & 180,000 \\\hline \text { Direct Labor } & 235,000 \\\hline \text { Indirect Materials } & 23,500 \\\hline \text { Indirect Labor } & 9,500 \\\hline \text { Depreciation on Factory Plant \& Equipment } & 12,000 \\\hline \text { Plant Utilities \& Insurance } & 135,000 \\\hline\end{array}$ How much is the cost of goods manufactured?

What is total quality management (TQM) ?

Excellent Company sells accounting textbooks. The following information summarizes Excellent's operating activities for 2015: $\begin{array}{|l|r|}\hline \text { Merchandise Inventory, January 1, 2015 } & \$ 10,000 \\\hline \text { Merchandise Inventory, December 31, 2015 } & 7,000 \\\hline \text { Purchases } & 95,000 \\\hline \text { Selling and Administrative Expenses } & 65,000 \\\hline \text { Sales Revenue } & 180,000 \\\hline\end{array}$ Required: Prepare Excellent Company's income statement for the year ended December 31, 2015.

The accountant for Myra Lido deliberately deferred cash payments for business expenses in order to record a higher operating cash flow for the company. As long as the amount was not material, this would not be considered unethical behavior.

In a manufacturing firm, accounting, legal, and administrative costs are typical examples of product costs.

Which of the following is an example of direct labor cost in a factory?

Wages of factory janitors is considered non-manufacturing overhead, as these are not directly related to the manufacturing process.

Amber Corporation has provided the following information of its operating activities for 2015: $\begin{array} { | l | r } \hline \text { Merchandise Inventory, January 1, 2015 } & \$ 150,000 \\\hline \text { Merchandise Inventory, December } 31,2015 & 75,000 \\\hline \text { Purchases } & 854,000 \\\hline \text { Selling and Administrative Expenses } & 65,000 \\\hline \text { Sales Revenue } & 1,000,000 \\\hline\end{array}$ Required: Prepare Amber's income statement for the year ended December 31, 2015. Use the format provided below: $\begin{array} { | l | l | l | } \hline \text { Sales Revenue } & \quad\quad&\quad\quad \\\hline \text { Cost of Goods Sold } & & \\\hline \text { Beginning Inventory } & & \\\hline \text { Purchases } & & \\\hline \text { Cost of Goods Available for Sale } & & \\\hline \text { Ending Inventory } & & \\\hline \text { Cost of Goods Sold } & & \\\hline \text { Gross Profit } & & \\\hline \text { Selling and Administrative Expenses } & & \\\hline \text { Operating Income } & & \\\hline\end{array}$

The cost of goods manufactured includes selling expenses, administrative expenses, and manufacturing overhead.