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Exam 14: Managerial Accounting Concepts and Principles

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Question 1

True/False

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Cost concepts such as variable,fixed,mixed,direct,and indirect apply only to manufacturers and not to service companies.

A) True
B) False

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Question 2

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The cost of labor that is not clearly associated with specific units or batches of product is called:

A) Unspecified labor
B) Direct labor
C) Indirect labor
D) Basic labor
E) Joint labor

F) None of the above
G) A) and B)

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Question 3

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Much of managerial accounting is directed at gathering useful information about costs for planning and control decisions.

The potential benefit lost by taking a specific action from two or more choices is an _____________________________.

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

An _____________________ cost requires the future outlay of cash and is relevant for decision making.

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

Although direct labor and raw materials costs are treated as manufacturing costs and therefore make up part of the finished goods inventory cost,factory overhead is charged to expense as it is incurred because it is a period cost.

Products that are in the process of being manufactured but are not yet complete are called:

Costs that are incurred as part of the manufacturing process but are not clearly associated with specific units of product or batches of production,including all manufacturing costs other than direct material and direct labor costs,are called:

Braintree Ltd.manufactures coats in a large facility.One area in the production facility is an underused storage space.The company has twice turned down offers to lease out this facility.This situation is an example of what costing concept? How should Braintree handle the costing for this situation?

An opportunity cost requires a future cash outlay and is relevant for decision making.

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:

One of the usual differences between financial and managerial accounting is the time dimension of the information reported.

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

Whether a cost is controllable or not controllable by an employee depends on the employee's level of responsibility.

Which of the following costs is not included in factory overhead?

The orientation of just-in-time manufacturing is that products are "pulled" through the manufacturing process by the orders received from customers.

What is fraud as it relates to the business environment?

Calculate cost of goods sold for the following two companies: $\begin{array}{lrr}&\text { CARVER }&\text { PEMBROKE, }\\&\text { LTD }&\text { INC. }\\ \text { Beginning inventory: } & & \\\text { Merchandise } &\$ 250,000 & \\\text { Finished goods } & & \$550,000\\\text { Cost of goods purchased } &460,000 & \\\text { Cost of goods manufactured } & & 688,000\\\text { Ending inventory: } & \\\text { Merchandise }& 128,000 \\\quad \text { Finished goods } & &350,000\end{array}$