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Exam 18: Managerial Accounting Concepts and Principles

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Question 21

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Planning is the process of setting goals and making plans to achieve them.

A) True
B) False

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Question 22

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A manufacturing company has a beginning finished goods inventory of $14,600, raw material purchases of $18,000, cost of goods manufactured of $32,500, and an ending finished goods inventory of $17,800. The cost of goods sold for this company is:

A) $47,100.
B) $27,600.
C) $21,200.
D) $29,300.
E) $32,500.

F) A) and B)
G) A) and C)

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Question 23

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Beginning finished goods inventory plus cost of goods manufactured equals cost of goods available for sale.

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

There are many differences between financial and managerial accounting. Identify and explain at least three of these differences.

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

Match the following terms to the appropriate definitions. ________ (1) Prime costs ________ (2) Continuous improvement ________ (3) Raw materials inventory (4) Balanced scorecard ________ (5) Just-in-time manufacturing ________ (6) Work in Process inventory ________ (7) Lean business model ________ (8) Customer orientation ________ (9) Managerial accounting ________ (10) Raw materials inventory turnover (a) An idea that rejects the notions of "good enough" or "acceptable" and challenges employees and managers to continually experiment with new and improved business practices. (b) Goods a company acquires to use in making products. (c) Reveals how many times a company uses its raw materials inventory in production during a period. (d) A system that acquires inventory and produces only when needed. (e) Aids in continuous improvement by augmenting financial measures with information on the drivers or indicators of future financial performance along the four dimensions of (1) financial, (2) customer, (3) internal business processes; (4) learning and growth. (f) Expenditures directly associated with the manufacture of finished goods; includes direct materials and direct labor. (g) The idea that employees understand the changing needs and wants of their customers and align their management and operating practices accordingly. (h) Products in the process of being manufactured but not yet complete. (i) A model whose goal is to eliminate waste while satisfying the customer and providing a positive return to the company. (j) An activity that provides financial and nonfinancial information to an organization's managers and other internal decision makers.

The following costs are incurred by Gonzalez Manufacturing Co. Classify each cost item as either a period cost or a product cost. If the cost is a product cost, identify it as a prime and/or conversion cost. $\begin{array}{|l|l|l|l}\hline&\text { Period Cost } & \text { Product Cost } \\\hline& & \text { Prime Cost } & \begin{array}{l}\text { Conversion } \\\text { Cost }\end{array} \\\hline \text { Factory property taxes......... } & & & \\\hline \text { Payroll taxes for assembly labor......... } & & & \\\hline \text { Depreciation of factory equipment......... } & & & \\\hline \text { Insurance on delivery vehicles........ } & & & \\\hline \text { Indirect materials used........ } & & & \\\hline \text { Wages of production workers........ } & & & \\\hline \text { Production supervisor's salary........ } & & & \\\hline \text { Advertising......... } & & & \\\hline \text { Direct materials used............... } & & & \\\hline \text { Sales salaries } & & & \\\hline\end{array}$

Which of the following costs would not be classified as factory overhead?

The schedule of cost of goods manufactured must be prepared monthly as it is a required general-purpose financial statement.

An attitude of constantly seeking ways to improve company operations, including customer service, product quality, product features, the production process, and employee interactions, is called:

The salary paid to the assembly line supervisor would normally be classified as:

Enterprise risk management (ERM) includes the systems and process companies use to maximize the effect of risk.

Using the information below, compute the Days' sales in raw materials inventory: $\begin{array}{lr}\text { Raw Materials Used } & \$ 121,600 \\\\\text { Beginning Raw Materials Inventory } & 18,000 \\\text { Ending Raw Materials Inventory } & 20,200\end{array}$

A classification of costs that determines whether a cost is expensed to the income statement or capitalized to inventory is:

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

Variable costs per unit change in proportion to changes in the volume of activity.

_____________is the deliberate misuse of the employer's assets for the employee's personal gain.

___________eveals how much raw materials inventory is available in terms of the number of days' sales.

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