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Exam 1: Managerial Accounting Concepts and Principles

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Question 101

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Which of the following items appears only in a manufacturing company's financial statements?

A) Cost of goods sold.
B) Cost of goods manufactured.
C) Goods available for sale.
D) Gross profit.
E) Net income.

F) A) and E)
G) C) and D)

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Question 102

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

A) True
B) False

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Question 103

Multiple Choice

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All of the following statements regarding manufacturing costs are true except:

Information for Maxim Manufacturing is presented below. Compute both the cost of goods manufactured and the cost of goods sold for Maxim Manufacturing. $\begin{array} { | l | r | } \hline \text { Beginning raw materials inventory } & \$ 36,800 \\\hline \text { Beginning work in process inventory } & 21,200 \\\hline \text { Direct labor } & 81,00 \\\hline \text { Beginning finished goods inventory } & 64,000 \\\hline \text { Total factory overhead } & 126,000 \\\hline \text { Raw materials purchased } & 21,500 \\\hline \text { Ending raw materials inventory } & 40,000 \\\hline \text { Ending work in process inventory } & 20,000 \\\hline\text { Ending finished goods inventory } & 46,000\\\hline\end{array}$

Information for Eastman Industries is presented below. Compute the cost of goods manufactured. $\begin{array} { | l | r | } \hline \text { Beginning work in process inventory } & 21,200 \\\hline \text { Ending work in process inventory } & 20,000 \\\hline \text { Raw materials used in production } & \$ 46,800 \\\hline \text { Direct labor } & 81,000 \\\hline \text { Total factory overhead } & 106,000 \\\hline\end{array}$

________ inventory consists of completed products ready for sale by a manufacturer.

Prime costs consist of direct labor and factory overhead.

Waters, Inc. reported the following data regarding costs and inventories for the current year: beginning finished goods inventory, $5,000; cost of goods manufactured, $21,500; ending finished goods inventory, $4,000. Cost of goods sold for Waters, Inc. equals ________.

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

Just-in-time manufacturing (JIT) is a system that acquires inventory and produces only when needed.

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

Which of the following items is not a management concept that was created to improve companies' performances?

When the attitude of continuous improvement exists throughout an organization, every manager and employee is challenged to continuously experiment with new and improved business practices.

Jenny, an employee of Toucan Company, used company assets for her own personal gain. This is an example of:

Prime costs consist of direct materials and direct labor.

The following information pertains to the Frameworks Corporation for May. Calculate the cost of goods sold for the period:

Newly completed units are combined with beginning finished goods inventory to make up total ending work in process inventory.

Product costs can refer to expenditures necessary to finish products and to the administrative support during the time period.

What are prime costs? What are conversion costs?

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