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Exam 1: Managerial Accounting Concepts and Principles

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Question 1

True/False

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The sales commission incurred based on units of product sold during the month is an example of a product cost.

A) True
B) False

Correct Answer

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False

Question 2

Multiple Choice

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Classifying costs by behavior with changes in volume of activity involves:

A) Identifying fixed cost and variable cost.
B) Identifying cost of goods sold and operating costs.
C) Identifying costs as financial or managerial.
D) Identifying costs in a physical manner.
E) Identifying both quantitative and qualitative cost factors.

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

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A

Question 3

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The Richards Company manufactures a single product. All raw materials used are traceable to specific units of product. Current information for the Richards Company follows: The company's cost of raw materials used, cost of goods manufactured and cost of goods sold is:

A manufacturer's cost of goods manufactured is the sum of direct materials, direct labor, and factory overhead costs incurred in producing products.

Control is the process of monitoring planning decisions and evaluating an organization's activities and employees.

Managerial accounting is different from financial accounting in that:

An internal control system consists of the policies and procedures managers use to do all of the following except:

Products that have been completed and are ready to be sold by the manufacturer are called:

Feedback provided by the control function allows managers to revise their plans.

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

What are the components of the schedule of cost of goods manufactured? Describe each component.

Indirect labor refers to the cost of the workers whose efforts are directly related to specific units of product.

Expenditures incurred in the process of converting raw materials to finished goods, that include direct labor and factory overhead are known as ________.

Calculate the cost of goods manufactured using the following information:

Current information for the Healey Company follows: $\begin{array} { | l | r | } \hline \text { Beginning raw materials inventory } & \$ 15,200 \\\hline\text { Raw material purchases } & 60,000 \\\hline \text { Ending raw materials inventory } & 16,600 \\\hline \text { Beginning work in process inventory } & 22,400 \\\hline \text { Ending work in process inventory } & 28,000 \\\hline \text { Direct labor } & 42,800 \\\hline \text { Total factory overhead } & 30,000 \\\hline\end{array}$ All raw materials used were traceable to specific units of product. Healey Company's direct materials used for the year is:

Under a just-in-time manufacturing system, large quantities of inventory are accumulated throughout the factory to be certain that components are available each time that they are needed.

Product costs are expenditures necessary and integral to finished products.

Expenditures necessary and integral to the manufacture of finished products are ________ costs.

Indirect materials are accounted for as factory overhead because they are not clearly identified with specific product units.

Use the following data to determine the cost of goods manufactured: $\begin{array} { | l | r | } \hline \text { Beginning finished goods inventory } & \$ 10,800 \\\hline \text { Direct labor } & 30,600 \\\hline \text { Beginning work in process inventory } & 7,200 \\\hline \text { General and administrative expenses } & 13,500 \\\hline \text { Direct materials used } & 40,500 \\\hline \text { Ending work in process inventory } & 9,000 \\\hline \text { Indirect labor } & 6,300 \\\text { Ending finished goods inventory } & 9,500 \\\hline \text { Indirect materials } & 13,500 \\\hline \text { Depreciation-factory equipment } & 7,500 \\\hline\end{array}$