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Exam 14: Managerial Accounting Concepts and Principles

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Question 101

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Product costs are expenditures necessary and integral to finished products.

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B) False

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Question 102

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Identify the three categories of manufacturing costs.

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The three basic cost elements ...

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Question 103

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The Institute of Management Accountants has developed a code of ethics that requires management accountants to behave in certain ways.Which of the following behaviors is not required?

Classify each of the following cost items as a variable cost,a fixed cost,or a mixed cost by placing an X in the appropriate column.Each cost should be evaluated in terms of the volume of units of finished products produced.Also indicate with an X for each item if it is a product cost or a period cost. $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\text { Variable, Fixed, or Mixed Cost\quad Product or Period Cost }$ $\begin{array}{llllll}\text { Cost Item } & \text { Variable } & \text { Fixed } & \text { Mixed } & \text { Product } & \text { Period } \\\text { Executive salary } & & & & &\\\text { Direct labor}\\\text { Direct materials}\\\text { Depreciation of}\\\text { manufacturing equipment}\\\text { Indirect labor}\\\text { Factory utilities}\\\text { Delivery expense}\\\text { Television advertising}\\ \text { Indirect materials }\end{array}$

The following costs are included in a recent summary of data for a company: advertising expense,$85,000; depreciation expense - factory building,$133,000; direct labor,$250,000; direct material used,$300,000; factory utilities,$105,000; and sales salaries expense,$150,000.Determine the dollar amount of overhead costs.

Figure 14_03 Use the following information for Acme, Inc., as of December 31 $\begin{array} { l r } \text { Administrative salaries } & \$ 32,000 \\\text { Depreciation of factory equipment } & 25,000 \\\text { Depreciation of delivery vehicles } & 9,000 \\\text { Direct labor } & 68,000 \\\text { Factory supplies used } & 12,000 \\\text { Finished goods inventory, January 1 } & 57,000 \\\text { Finished goods inventory, December } 31 & 68,000 \\\text { Factory insurance } & 15,500 \\\text { Interest expense } & 12,000 \\\text { Factory utilities } & 14,000 \\\text { Factory maintenance } & 7,500 \\\text { Raw materials inventory, January 1 } & 8,000 \\\text { Raw materials inventory, December 31 } & 4,000 \\\text { Raw material purchases } & 125,000 \\\text { Rent on factory building } & 25,000 \\\text { Repairs of factory equipment } & 11,500 \\\text { Sales commissions } & 37,500 \\\text { Goods in process inventory, January } 1 & 3,500 \\\text { Goods in process inventory, December } 31 & 2,000\end{array}$ -What is the total amount of manufacturing costs added to Goods In Process?

Costs that are first assigned to inventory are called:

A ______________________ system means that a company acquires or produces inventory only when needed.

Costs classified by controllability are useful for:

Raw materials purchased plus beginning raw materials inventory equals the ending balance of raw materials inventory.

The following information is available for the year ended December 31: $\begin{array}{lr}\text { Beginning raw materials inventory } & \$ 2,500 \\\text { Raw materials purchases } & 4,000 \\\text { Ending raw materials inventory } & 3,000 \\\text { Office supplies expense } & 1,000\end{array}$ The amount of raw materials used in production for the year is:

Product costs can be classified as one of three types: direct materials,direct labor,or overhead.

Use the following information to prepare the manufacturing statement for Forsythe Company for the month ended June 30: $\begin{array} { l r } \text { Goods in process inventory, May } 31 & \$ 12,600 \\\text { Goods in process inventory, Jurie } 30 & 16,500 \\\text { Direct materials used during Jure } & 21,000 \\\text { Direct labor used during Jurne } & 31,000 \\\text { Factory overhead: } & \\\text { Indirect material } & 6,400 \\\text { Indirect labor } & 9,200 \\\text { Factory rent } & 12,000 \\\text { Factory depreciation } & 15,000 \\\text { Factory utilities } & 18,400\end{array}$

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

The balanced scorecard aids in continuous improvement by augmenting financial measures with drivers or indicators of future financial performance.

Use the following information to compute the cost of goods manufactured: $\begin{array}{lr}\text { Beginning finished goods inventory } & \$ 65,000 \\\text { Beginning goods in process inventory } & 81,000 \\\text { Beginning raw materials } & 73,000 \\\text { Depreciation on factory equipment } & 7,000 \\\text { Direct labor } & 25,000 \\\text { Ending finished goods inventory } & 67,000 \\\text { Ending goods in process inventory } & 79,000 \\\text { Ending raw materials } & 60,000 \\\text { Factory repairs and maintenance } & 12,000 \\\text { Raw material purchases } & 50,000\end{array}$

One difference between financial and managerial accounting is that the external users that use financial information must plan a company's future,but the internal users of managerial accounting information generally must decide whether to invest in or lend to a company.

The focus of financial accounting is on an organization's projects,processes,and subdivisions,and the focus of managerial accounting is on the whole organization.