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Exam 1: Management Accounting and Corporate Governance

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Question 31

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During its first year of operations, Silverman Company paid $14,000 for direct materials and $19,000 for production workers' wages. Lease payments and utilities on the production facilities amounted to $17,000 while general, selling, and administrative expenses totaled $8,000. The company produced 5,000 units and sold 3,000 units at a price of $15.00 a unit.What is Silverman's cost of goods sold for the year?

A) $50,000
B) $24,600
C) $30,000
D) $41,000

E) All of the above
F) A) and C)

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Question 32

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Distinguishing between product and period costs is sometimes guided by the value-added principle.

A) True
B) False

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Question 33

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During its first year of operations, Silverman Company paid $14,000 for direct materials and $19,000 for production workers' wages. Lease payments and utilities on the production facilities amounted to $17,000 while general, selling, and administrative expenses totaled $8,000. The company produced 5,000 units and sold 3,000 units at a price of $15.00 a unit.What was Silverman's net income for the first year in operation?

Ashley Bradshaw is the manager of one department in a large store. In this capacity, which of the following kinds of information would she be interested in?

Period costs are initially recorded in asset accounts and are later expensed in the period when the related units are sold.

A potential negative effect of using a just in time inventory system is the immediate impact of labor strikes on the transportation system such as railroad.

Which of the following types of labor costs will never flow through the balance sheet?

Senior executives focus on financial data when comparing the performance of their companies to that of competitors.

What are upstream costs? What upstream costs would be incurred by a company that produces and sells computer software programs?

A just-in-time system can lower inventory holding costs and increase customer satisfaction.

What part do management accountants play in corporate governance?

Randall Company manufactures chocolate bars. The following were among Randall's manufacturing costs during the current year: Randall's direct labor costs amounted to: $\begin{array}{ll}\text { Wages }\\\text { Machine operators } & \$ 300,000 \\\text { Selling and administrative personnel } & \$ 75,000\\\\\text { Materials used }\\\text { Lubricant for oiling machinery } & \$ 25,000 \\\text { Cocoa, sugar, and other raw materials } & \$ 225,000 \\\text { Packaging materials } & \$ 190,000\end{array}$

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?

All of the following are features of managerial accounting except:

Is McDonald's a manufacturing company or a service company? How do they record the cost of materials, labor, and overhead?

If a company misclassifies a general, selling and administrative cost as a product cost in a period when production exceeds sales:

The time spent moving a product from one processing department to the next processing department is an example of a value-added activity.

Select the incorrect statement regarding the relationship between type of user and type of information.

The Szakos Company engaged in the following transactions during the current year: a) Acquired $50,000 of cash by issuing common stock to owners b) Paid $10,000 to acquire manufacturing equipment c) Paid $5,000 cash for materials used in production d) Paid $2,000 for wages of production workers e) Paid $8,000 in general, selling, and administrative costs f) Recognized $1,000 of depreciation on the manufacturing equipment g) Sold inventory for $18,000 cash h) The cost of the inventory sold was $6,500 Required: Show the balance sheet and income statement effects of the transactions by completing the financial statement model provided. $\begin{array}{|l|l|l|l|l|l|l|c|c|c|c|c|c|c|c|}\hline&&&&&\text { Balance Sheet }&&&&&&\text { Income Statement }\\\hline& \text { Cash } & +& \text { Invent. } & + &\text { Equip. } & = & \begin{array}{c}\text { Comm. } \\\text { Stk. }\end{array} & +&\begin{array}{c}\text { Ret. } \\\text { Eam. }\end{array} & \text { Rev. } & -&\text { Exp. }&=&\text { NI } \\\hline a)\\\hline b)\\\hline c)\\\hline d)\\\hline e)\\\hline f)\\\hline g)\\\hline h)\\\hline \text { Total }\\\hline\end{array}$

If product costs are misclassified as selling costs, the average cost per unit will be understated.