Question 1

Conversion cost is the combination of direct labor cost and factory overhead cost.

Accepted Answer

A) True 
 B)False

Question 2

Manufacturers use labor, plant, and equipment to convert direct materials into finished products.

Accepted Answer

A) True 
 B)False

Question 3

Costs which are reported on the income statement as part of cost of goods sold are referred to as:

Accepted Answer

A)   administrative expenses
B)   period costs
C)   cost of goods manufactured
D)   operating expensesE) B) and D)
F) A) and D)

Question 4

A company sells goods for $150,000 that cost $60,000 to manufacture. Which statement(s)  are true?

Accepted Answer

A)   The company will recognize sales on the balance sheet of $150,000.
B)   The company will recognize $90,000 gross profit on the balance sheet.
C)   The company will decrease finished goods by $60,000.
D)   All of these are true.E) A) and B)
F) A) and C)

Question 5

The cost of materials entering directly into the manufacturing process is classified as factory overhead cost.

Accepted Answer

A) True 
 B)False

Question 6

Compute conversion costs given the following data: Direct Materials, $347,500; Direct Labor, $186,300; Factory Overhead, $187,900; and Selling Expenses, $45,290.

Accepted Answer

A)   $533,800
B)   $187,900
C)   $721,700
D)   $374,200E) None of the above
F) A) and C)

Question 7

Period costs include direct materials and direct labor.

Accepted Answer

A) True 
 B)False

Question 8

A staff department has no direct authority over a line department.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following is an example of a factory overhead cost?

Accepted Answer

A)   Repair and maintenance cost on the administrative building
B)   Factory heating and lighting cost
C)   Insurance premiums on salespersons' automobiles
D)   President's salaryE) B) and D)
F) None of the above

Question 10

The cost of a manufactured product generally consists of which of the following costs?

Accepted Answer

A)   Direct materials cost and factory overhead cost
B)   Direct labor cost and factory overhead cost
C)   Direct labor cost, direct materials cost, and factory overhead cost
D)   Direct materials cost and direct labor costE) All of the above
F) A) and C)

Question 11

What is the purpose of the Statement of Cost of Goods Manufactured?

Accepted Answer

A)   to determine the ending materials inventory
B)   to determine the ending work in process inventory
C)   to determine the amounts transferred to finished goods
D)   all of the answers are trueE) A) and B)
F) A) and C)

Question 12

Indirect labor would be included in factory overhead.

Accepted Answer

A) True 
 B)False

Question 13

Cost of goods sold for a manufacturer equals cost of goods manufactured plus:

Accepted Answer

A)   beginning work in process inventory less ending work in process inventory
B)   ending work in process inventory less beginning work in process inventory
C)   beginning finished goods inventory less ending finished goods inventory
D)   ending finished goods inventory less beginning finished goods inventoryE) B) and D)
F) A) and D)

Question 14

Another term often used to refer to factory overhead is:

Accepted Answer

A)   surplus
B)   period cost
C)   supervisory cost
D)   factory burdenE) A) and D)
F) None of the above

Question 15

A plant manager's salary may be referred to as:

Accepted Answer

A)   either a direct cost or an indirect cost since managerial accounting is not restricted by GAAP
B)   a direct cost
C)   an indirect cost
D)   a period costE) A) and B)
F) All of the above

Question 16

Conversion costs are the combination of direct labor, direct material and factory overhead costs.

Accepted Answer

A) True 
 B)False

Question 17

Since there are few rules to restrict how an organization chooses to arrange its own internal data for decision making, managerial accounting provides ample opportunity for creativity and change.

Accepted Answer

A) True 
 B)False

Question 18

A report analyzing the dollar savings of purchasing new equipment to speed up the production process is a managerial accounting report.

Accepted Answer

A) True 
 B)False

Question 19

An example of a period cost is:

Accepted Answer

A)   advertising expense
B)   indirect materials
C)   depreciation on factory equipment
D)   property taxes on plant facilitiesE) A) and D)
F) A) and C)

Question 20

Which of the following are basic phases of the management process?

Accepted Answer

A)   Supervising and directing
B)   Decision making and supervising
C)   Organizing and directing
D)   Planning and controllingE) B) and C)
F) A) and D)

Exam 16: Managerial Accounting Concepts and Principles

What is the purpose of the Statement of Cost of Goods Manufactured?

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Cost of goods sold for a manufacturer equals cost of goods manufactured plus:

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Compute conversion costs given the following data: Direct Materials, $347,500; Direct Labor, $186,300; Factory Overhead, $187,900; and Selling Expenses, $45,290.

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Costs which are reported on the income statement as part of cost of goods sold are referred to as:

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Indirect labor would be included in factory overhead.

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An example of a period cost is:

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The cost of a manufactured product generally consists of which of the following costs?

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Since there are few rules to restrict how an organization chooses to arrange its own internal data for decision making, managerial accounting provides ample opportunity for creativity and change.

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Conversion costs are the combination of direct labor, direct material and factory overhead costs.

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A plant manager's salary may be referred to as:

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A company sells goods for $150,000 that cost $60,000 to manufacture. Which statement(s) are true?

Correct AnswerverifiedShow Answer

Which of the following are basic phases of the management process?

Correct AnswerverifiedShow Answer

Period costs include direct materials and direct labor.

Correct AnswerverifiedShow Answer

Conversion cost is the combination of direct labor cost and factory overhead cost.

Correct AnswerverifiedShow Answer

Manufacturers use labor, plant, and equipment to convert direct materials into finished products.

Correct AnswerverifiedShow Answer

Which of the following is an example of a factory overhead cost?

Correct AnswerverifiedShow Answer

A report analyzing the dollar savings of purchasing new equipment to speed up the production process is a managerial accounting report.

Correct AnswerverifiedShow Answer

Another term often used to refer to factory overhead is:

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A staff department has no direct authority over a line department.

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The cost of materials entering directly into the manufacturing process is classified as factory overhead cost.

Correct AnswerverifiedShow Answer

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