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Exam 1: Management Accounting and Corporate Governance

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Question 71

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What is a value chain? And what relationship is there between the value chain and activity-based management?

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The value chain is the sequence of activ...

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Question 72

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Identify the false statement regarding how product costs in a manufacturing company differ from product costs in a service or merchandising company.

A) Both manufacturing companies and service companies incur costs for supplies.
B) Manufacturing companies accumulate product costs in inventory accounts, while service companies do not.
C) Products of service companies such as restaurants are consumed immediately.
D) Most labor costs for merchandising companies are treated as product costs.

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

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Question 73

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The following information relates to Marshall Manufacturing's current accounting period: $\begin{array} { l r } \text { Raw materials used } &\$ 34,000 \\\text { Direct labor wages } & 66,000 \\\text { Sales salaries and commissions } & 50,000 \\\text { Depreciation on production equipment } & 6,000 \\\text { Rent on marufacturing facilities } & 4,000 \\\text { Adrninistrative supplies ard utilities } & 10,000 \\\text { Sales revenue } & 210,000 \\\text { Units produced } & 10,000 \\\text { Units sold } & 10,000\end{array}$ Based on this information,what is the company's net income?

Certified Management Accountants (CMA) must complete a specified number of continuing professional education credits each reporting period.Which of the four standards of ethical conduct issued by the Institute of Management Accountants likely motivated this requirement?

Select the term from the list provided that best matches each of the following descriptions.

Because management accountants prepare and analyze financial information used by company decision-makers,they are considered to be at the forefront of corporate governance.

Assuming that the inventory on hand at the end of the period is sold during the following period,misclassifying a period cost as a product cost during a period will usually correct itself in the following period.

What are period costs? How does the accounting for period costs differ from the accounting for product costs?

Which of the following statements concerning product costs versus general,selling,and administrative costs is false?

Managerial accounting focuses primarily on the performance of the company as a whole.

A company that uses a just-in-time inventory system:

Who are the primary users of financial accounting information? Who are the primary users of managerial accounting information?

Kirsten believes her company's overhead costs are driven (affected) by the number of direct labor hours because the production process is very labor intensive.During the period,the company produced 5,000 units of Product A requiring a total of 1,600 labor hours and 2,500 units of Product B requiring a total of 400 labor hours.What allocation rate should be used if the company incurs overhead costs of $20,000?

Manufacturing costs that cannot be traced to specific units of product in a cost-effective manner include:

Select the incorrect statement regarding upstream and downstream costs.

Howard Lumber Company mistakenly classified a product cost as an expense that totaled $20,000.The company produced 2,000 units of product and sold 1,000 of them during the year.Management is paid a bonus equal to 2% of net income.In the year in which the mistake was made:

Select the incorrect statement regarding costs and expenses.

Managerial accounting information is limited or restricted by which of the following authorities or principles?

Which of the following best represents a characteristic of managerial accounting?

Assuming that the number of units produced exceeds the number of units sold,misclassifying period costs as product costs will overstate net income relative to what net income would be without this error.