Test Bank for Managerial Accounting 10th Edition by Crosson
Test Bank for Managerial Accounting 10th Edition by
Crosson
Multiple Choice Questions - Page 1
Cost of goods manufactured is equal to
1.
Direct Materials + Direct Labor + Overhead.
2.
Beginning Work in Process Inventory + Total Manufacturing Costs – Ending Work in
Process Inventory.
3.
Beginning Work in Process Inventory + Period Costs – Ending Work in Process
Inventory.
4.
Beginning Work in Process Inventory + Product Costs.
Costs
as salary for
of supervisors
other
which such
are accounted
as overheadand
costs,
aresupport
called personnel,
1.
period labor costs.
2.
sales assistance costs.
3.
indirect labor costs.
4.
prime labor costs.
Consider
the
following
information:
direct
materials
used was
totaled
$124,700;
direct
labor
amounted
to
$412,000;
overhead
computed
to
be $789,600;
WorkininProcess
ProcessInventory
Inventoryon
onMarch
March31,
1,
2014,
was
$482,500;
and
Work
2014, was $597,100. What was the cost of goods manufactured?
1.
$1,211,700
2.
$729,200
3.
$1,440,900
4.
$422,100
The
fundamental
described
in its way in which a company will achieve its goal is
1.
balance sheet and income statement.
2.
cash flow statement.
3.
budget.
4.
mission statement.
Velocity
Ltd. iscost
a sports
car manufacturer. Which of the following is a
value-adding
for Velocity?
1.
Salary of the payroll department
2.
Cost of tires used in cars
3.
Cost of office supplies
4.
Salary of operations manager
The
credibilityaccountants
standard of management
accountants
statefairly
that and
management
must
communicate
information
objectively.
each task This means essentially that accountants must perform
1.
as professionals, possessing the degree of skill of those management accountants
who held the position before them.
2.
to provide relevant information, both positive and negative, to the recipients of their
reports.
3.
in conformity with generally accepted accounting principles.
4.
to the satisfaction of government regulators.
The
income
statement for
a manufacturing company usually contains
a detailed
computation
of the
1.
total manufacturing cost.
2.
cost of goods sold.
3.
total cost of materials used.
4.
total overhead.
Total
the manufacturing costs incurred during a period are transferred to
1.
Cost of Goods Sold account.
2.
Work in Process Inventory account.
3.
Finished Goods Inventory account.
4.
Overhead account.
Managerial accounting information is primarily used by
1.
lenders.
2.
supply-chain partners.
3.
governmental agencies.
4.
customers
In a manufacturing environment, direct labor costs initially flow
1.
into the Materials Inventory account.
2.
into the Cost of Goods Sold account.
3.
into the Work in Process Inventory account.
4.
into the Finished Goods Inventory account.
Overhead costs are
1.
not allocated to the Work in Process Inventory account.
2.
not charged directly to the Finished Goods Inventory account.
3.
expensed in the period in which they are incurred.
4.
not considered product costs.
To
calculate thecosts
total cost of goods manufactured from total
manufacturing
1.
subtract all period costs from total manufacturing costs.
2.
add beginning and subtract ending finished goods inventory to total manufacturing
costs.
3.
you must know how many goods were sold during the period.
4.
add beginning and subtract ending work in process inventory to total manufacturing
costs.
From
Jolier's
year-end
income
statement,
youthe
observe
that would
the
finished
goods
inventory
has
doubled
during
year.
This
indicate that during the year Jolier
1.
sold more goods than were produced.
2.
produced more goods than last year.
3.
produced more goods than were sold.
4.
sold more goods than last year.
Prime costs is the sum of
1.
the direct labor costs and indirect labor costs.
2.
the direct material costs, direct labor costs, and overhead costs.
3.
the direct labor costs and overhead costs.
4.
the direct materials costs and direct labor costs.
The
factory
personnel whose wages are traceable directly to a
product
include
1.
maintenance personnel.
2.
support personnel.
3.
factory supervisors.
4.
employees who help to shape the product.
Suppose
ahemanagement
accountant
becomes
aware
thatofa the
poor
judgment
or
she
made
has
resulted
in
the
loss
of
one
company's
clients. Is
the accountant
accountant doubts
bound to
share
this information
with
the
company?
(The
that
the
company
will
ever find out about it directly.)
1.
The management accountant is bound to respond honestly to inquiries regarding the
adequacy of professional judgments but is not bound to communicate them if not directly
asked.
2.
The management accountant is bound to communicate this error in judgment only if
another client cannot be found.
3.
The management accountant is not bound to communicate this error.
4.
The management accountant is bound to communicate unfavorable and favorable
judgments made, even if not directly asked.
The
following
are costs
for alabor
selected
period:
direct materials
materials into
used in
production,
$75,000;
direct
cost
of
converting
product,
$150,000;
indirect costs of
manufacturing,
What is the
unit costtotal
of manufacturing
30,000
units in this$45,000.
period?
1.
$7.50
2.
$9.00
3.
$6.00
4.
$4.00
If
the report
is urgently
it is sometimes necessary to sacrifice
accuracy
in the
interestneeded,
of
1.
timeliness
2.
personal feelings.
3.
profits.
4.
expectations.
In a manufacturing environment, costs of materials initially flow
1.
into the Work in Process Inventory account.
2.
into the Materials Inventory account.
3.
into the Cost of Goods Sold account.
4.
into the Finished Goods Inventory account.
The
Finished Goods
Inventory
and
the
Cost
of as
Goods
SoldMay
for 1a
manufacturing
company
for
the
year
2014
are
follows:
Finished
Goods
Inventory,
$470,500;
Mayfor
31the
Finished
Goods
Inventory,
$125,000;
Cost
of
Goods
Sold
year,
$1,110,000.
The cost of goods manufactured for the month was
1.
$1,455,500.
2.
$595,500.
3.
$985,000.
4.
$764,500.
The
beginning
finished
goods
inventory
of RonaldThe
Co. ending
was $480,125.
Goods
completed
during
the year
cost
$963,250.
finished
goods
inventory
was
dangerously
low,
having
been
reduced
to
$135,850. The cost of goods sold for the year for Ronald Co. was
1.
$618,975.
2.
$1,307,525.
3.
$1,579,225.
4.
$1,171,675.
Materials
andcalled
supplies that cannot be traced conveniently to specific
products are
1.
indirect materials.
2.
raw materials.
3.
waste materials.
4.
direct materials.
Conversion costs consist of
1.
direct materials costs and direct labor costs.
2.
direct labor costs and overhead costs.
3.
direct materials costs and overhead costs.
4.
direct labor costs and indirect labor costs.
The three elements of product costs are
1.
direct materials, work in process, and overhead.
2.
direct materials, work in process, and finished goods.
3.
direct materials, direct labor, and overhead.
4.
direct materials, direct labor, and period costs.
Period costs are
1.
charged against the revenue of the current period.
2.
initially recognized on the balance sheet as inventory.
3.
charged to the period in which the product generates revenue.
4.
further classified as direct costs and indirect costs.
Period cost is also called
1.
variable cost.
2.
direct cost.
3.
value-adding cost.
4.
noninventoriable cost.
Management accounting activities
1.
are synonymous with financial accounting activities.
2.
are substitute for the management process.
3.
complement the management process.
4.
have nothing to do with the management process.
If
a management
accountantplan
confides
to a with
relative
that his
or her in
company
has
a
confidential
to
merge
another
company
the near future, the accountant has
1.
not violated ethical standards.
2.
violated ethical standards only if the relative owns stock in the company.
3.
violated ethical standards because the relative could stand to gain personally from that
information.
4.
not violated ethical standards because the information was relayed to a family member
only.
Management accounting reports
1.
are primarily used by parties inside the organization.
2.
must be prepared on a periodic basis.
3.
are generally publicly available.
4.
are based on generally accepted accounting principles.
The
presentation
of merchandise
inventory
on the
balance
sheet of
a
merchandising
company
most
nearly
resembles
the
presentation
of
__________
company. inventory on the balance sheet of a manufacturing
1.
materials
2.
finished goods
3.
manufacturing supplies
4.
work in process
All
manufacturing
costs
incurred
being
produced are
classified
as and assigned to products that are
1.
variable costs.
2.
allocated costs.
3.
product costs.
4.
overhead costs.
The unit of measurement used in management accounting reports is
1.
primarily the historical dollar.
2.
usually current replacement cost.
3.
any measurement unit that is useful in a particular situation.
4.
the measurement unit used by competing companies.
Steve,
the management
accountant
of a company,
is of
notthe
familiar
with
the
concept
of
prudence
in
financial
reporting.
Which
following
IMA standards is Steve violating?
1.
Confidentiality
2.
Materiality
3.
Disclosure
4.
Competence
All
manufacturing
that are
products
should becosts
classified
as assigned to completed (but unsold)
1.
materials inventory costs.
2.
cost of goods sold.
3.
work in process inventory costs.
4.
finished goods inventory costs.
Management accounting reports are
1.
prepared using the double-entry system of accounting.
2.
prepared periodically.
3.
based on generally accepted accounting principles.
4.
driven by user’s needs.
69 Free Test Bank for Managerial Accounting 10th
Edition by Crosson Multiple Choice Questions - Page 2
Which of the following equations is correct?
1.
Total Manufacturing Costs = Direct Materials + Direct Labor + Selling Costs
2.
Total Manufacturing Costs = Direct Materials + Direct Labor + Overhead
3.
Total Manufacturing Costs = Direct Labor + Overhead + Selling Costs + Administrative
Costs
4.
Total Manufacturing Costs = Product Costs + Period Costs
Which of the following is a product cost?
1.
General expenses
2.
Selling expenses
3.
Advertising expenses
4.
Material handling expenses
Which of the following represents normal cost measurement?
1.
Actual Direct Materials + Actual Direct Labor + Actual Overhead
2.
Actual Direct Materials + Actual Direct Labor + Estimated Overhead
3.
Estimated Direct Materials + Estimated Direct Labor + Actual Overhead
4.
Actual Direct Materials + Estimated Direct Labor + Estimated Overhead
Which
of accounting?
the following is a difference between managerial and
financial
1.
Managerial accounting reports non-monetary information whereas financial accounting
reports both monetary and non-monetary information.
2.
Managerial accounting is used by government authorities whereas financial accounting
is used by stockholders.
3.
Managerial accounting prepares reports monthly whereas financial accounting
prepares reports annually.
4.
Managerial information is confidential whereas financial accounting information is
publicly available.
Which
of the
following terms
applyproducts?
to materials and supplies that can
be traced
conveniently
to specific
1.
Indirect materials
2.
Indirect manufacturing costs
3.
Direct costs
4.
Manufacturing overhead
Which
the following account balances is not reported on the
balanceofsheet?
1.
Materials Inventory
2.
Manufacturing Patents
3.
Cost of Goods Sold
4.
Work in Process Inventory
Which
format?of the following questions do not dictate a managerial report's
1.
Who should write the report?
2.
To whom should the report be distributed?
3.
What is the purpose of the report?
4.
What information is needed?
Which of the following is a period cost?
1.
Advertising costs
2.
Indirect materials
3.
Manufacturing overhead
4.
Direct materials
Which of the following is not a stage in the management process?
1.
Evaluating
2.
Communicating
3.
Planning
4.
Recording
Which
of the following
is one of the integrity standards of
management
accountants?
1.
Refraining from accepting hospitality gifts from coworkers
2.
Refraining from activities that the company does not actively endorse
3.
Avoiding actual or apparent conflicts of interest
4.
Avoiding only those conflicts of interest that occur between coworkers
Which
of the following types of product costs appear in the financial
statements?
1.
Predetermined overhead costs
2.
Estimated costs
3.
Standard costs
4.
Actual costs
Which
of the following documents initiates the purchasing of
materials?
1.
Job order cost sheet
2.
Receiving report
3.
Purchase request
4.
Purchase order
Which of the following is a variable cost?
1.
Raw materials
2.
Rent
3.
Insurance expense
4.
Salaries
Which of the following is included in prime costs?
1.
Overhead costs
2.
Indirect materials costs
3.
Selling and administrative costs
4.
Direct labor costs
Which of the following costs is considered overhead?
1.
Indirect labor costs only
2.
Direct materials costs only
3.
Both indirect materials and indirect labor costs
4.
Direct materials and direct labor costs
Which
cost? of the following accounts contain only one type of product
1.
Work in Process Inventory
2.
Materials Inventory
3.
Finished Goods Inventory
4.
Cost of Goods Sold
Which
costfor
measurement
method
calculates
product
unit cost using
estimates
direct materials,
direct
labor, and
overhead?
1.
Standard costing
2.
Actual costing
3.
Full costing
4.
Normal costing
Which
of the following
activities is nota part of the "perform" stage in
the management
process?
1.
Producing products as per customer specifications
2.
Manage supply chain relationships
3.
Identifying operating activities that minimize waste
4.
Calculating variances by comparing estimated and actual costs
Which
of the following is a source document for purchase of
materials?
1.
Vendor's invoice
2.
Purchase request
3.
Receiving report
4.
All of these
Which
of the following is exclusive to a production-oriented
company?
1.
Balance sheet
2.
Statement of cash flows
3.
Income statement
4.
Statement of cost of goods manufactured
Which
cost? of the following is the formula used to compute product unit
1.
(Direct Materials + Direct Labor) / Number of Units Produced
2.
(Direct Materials + Direct Labor + Overhead) / Number of Units Produced
3.
(Direct Labor + Overhead) / Number of Units Produced
4.
(Indirect Materials + Indirect Labor + Overhead) / Number of Units Produced
Which
the of
following
accounts firm?
includes the cost of completed but
unsold of
units
a manufacturing
1.
Cost of Goods Sold
2.
Finished Goods Inventory
3.
Work in Process Inventory
4.
Materials Inventory
Which
of thefor
following
user groups
will use managerial accounting
information
decision-making
purposes?
1.
Customers
2.
Lenders
3.
Employees
4.
Stockholders
Which
of the
following
is notan
one
of the keyreport?
questions to be
addressed
when
preparing
accounting
1.
What is audience's familiarity with accounting?
2.
What information should be included?
3.
When is it due and what method of presentation is best?
4.
How long should the information be valid?
Which of the following is nota product cost?
1.
Depreciation on office furniture
2.
Manufacturing overhead
3.
Direct labor
4.
Direct materials
Which
of the following statements is true of financial and managerial
accounting?
1.
Both use historical costs as their primary unit of measurement.
2.
Both depend on the double-entry system of accounting.
3.
Both require adherence to generally accepted accounting principles.
4.
Both assist managers in decision making.
Which of the following is nota product cost?
1.
Indirect materials costs
2.
Packaging costs
3.
Direct labor costs
4.
Overhead costs
Which
the following
should not be included in the computation of
cost of of
goods
manufactured?
1.
Factory power costs
2.
Indirect materials costs
3.
Selling costs
4.
Direct materials costs
Which of the following contains period costs?
1.
Work in Process Inventory
2.
Finished Goods Inventory
3.
Cost of Goods Sold
4.
Selling and administrative expenses
Which
of the following
accounts decreases when cost of goods
manufactured
is recorded?
1.
Work in Process Inventory
2.
Finished Goods Inventory
3.
Overhead
4.
Cost of Goods Sold
Which
following
is nota reason to classify costs as either
productoforthe
period
costs?
1.
To determine unit manufacturing costs
2.
To determine if the costs are fixed or variable
3.
To analyze costs for control purposes
4.
To report production costs on the income statement
Woodies
produces
wooden desks. Which of the following is not
an indirectInc.
material
for Woodies?
1.
Wood in a desk
2.
Nails in a desk
3.
Screws in a desk
4.
Lubricants for production machinery
Which of the following costs is not an inventoriable cost?
1.
Cost to ship products to a customer
2.
Cost of factory machinery used in production
3.
Cost to design the product
4.
Plant supervisor's salary
Which of the following labor costs would be included in direct labor?
1.
Maintenance workers
2.
Machine operators
3.
Managers and supervisors
4.
Materials storeroom custodian
Free Text Questions
Identify
and explain
the important
questions
a manager
before preparing
a managerial
report.
(Hint: Think
"w's.")must address
Answer Given
Why: To establish the purpose of the report. Who: To determine whom the report is
targeting, who will receive it, and who will read it; dictates the level of detail necessary
for the report. What: To determine the content and style of the report. When: To
determine when the report should be completed and distributed at a time when it will
be most
The
Chief
Financial
Officer
(CFO)
of your
haswithin
askedthe
you to
help
her develop
a cost
control
report
to becompany
distributed
company.
She
wants
your
input
concerning
what
she
should
think
about
before
developing
such
a report.
Discuss
thecontrol
significant
points,
in
detail,
the
CFO
should
consider
before
the
cost
report
is
prepared.
Answer Given
In addition to identifying the Why, Who, What, and When of the report, students should
address the specific points that need to be considered under each topic. Why: What is
the purpose of the report? Is the intent to report on total costs or is the report going to
be concerned with specific costs? Are the costs being considered for the entire
company or for specific segments of the company? Who: Who is going to receive the
report? Is it going to specific line managers or to someone higher up in the company or
to both groups? In other words, is it going to individuals actually incurring the costs or
to individuals that are just familiar with the costs being reported? What: Can the
information needed to prepare the report be obtained from existing source documents
and other sources or not? How will the information be presented? As columnar data,
as charts and graphs, as dollar amounts, as percentages, as year-to-date costs, as
actual compared to budget, as actual this year compared to actual last year, or some
other way? When: How often will the report be prepared? Daily, weekly, monthly,
quarterly, annually? Is the report going to be used to influence current operations or
future operations?
Job
#178 direct
consists
of 500
units and
has
total of$35,000.
direct materials,
$48,000;
labor,
$58,000;
and
overhead,
a. What
is
the
unit
product
cost?;
b.
What
are
the
prime
costs
per
unit?;
c.
What
are the conversion costs per unit?
Answer Given
a. ($48,000 + $58,000 + $35,000) / 500 units = $282 per unit; b. Prime Costs = Direct
Materials + Direct Labor; so ($48,000 + $58,000) / 500 units = $212 per unit; c.
Conversion Costs = Direct Labor + Overhead; so ($58,000 + $35,000) / 500 units =
$186 per unit.
Give two examples of each stage in the management process.
Answer Given
Plan: Determining the mission statement (strategic objectives and operating
objectives); developing a business plan. Perform: Hiring and training personnel;
properly matching human and technical resources to the work that must be done;
purchasing/leasing facilities; maintaining inventories for sale; identifying operating
activities that can minimize waste; improving the quality of products or services.
Evaluate: Comparing actual to expected performance; correcting problems; revising
original plans. Communicate: Preparing external and internal reports
Assume
you are about
the president
ofathe
businessproject
club attoyour
school.
You
are
thinking
creating
fundraising
generate
money
forvarious
next year's
operations.
Develop anprocess.
outline of your ideas
using the
stages
of the management
Answer Given
Note: Student answers will vary considerably; however, they should adequately cover
the four stages of
Accountants
must
have
high professional
ethics. List
and briefly
describe
five
ethical
standards
that
management
accountants
subscribe
to that,
in your
opinion, help maintain the impression that
accountants
are highly
ethical.
Answer Given
The student should list any five of the following ethical standards: Competence) Each
member has a responsibility to: 1. Maintain an appropriate level of professional
expertise by continually developing knowledge and skills.; 2. Perform professional
duties in accordance with relevant laws, regulations, and technical standards.; 3.
Provide decision support information and recommendations that are accurate, clear,
concise, and timely.; 4. Recognize and communicate professional limitations or other
constraints that would preclude responsible judgment or successful performance of an
activity. Confidentiality) Each member has a responsibility to: 1. Keep information
confidential except when disclosure is authorized or legally required.; 2. Inform all
relevant parties regarding appropriate use of confidential information. Monitor
subordinates’ activities to ensure compliance.; 3. Refrain from using confidential
information for unethical or illegal advantage. Integrity) Each member has a
responsibility to: 1. Mitigate actual conflicts of interest. Regularly communicate with
business associates to avoid apparent conflicts of interest. Advise all parties of any
potential conflicts.; 2. Refrain from engaging in any conduct that would prejudice
carrying out duties ethically.; 3. Abstain from engaging in or supporting any activity that
might discredit the profession. Credibility) Each member has a responsibility to: 1.
Communicate information fairly and objectively.; 2. Disclose all relevant information
that could reasonably be expected to influence an intended user’s understanding of
the reports, analyses, or recommendations.; 3. Disclose delays or deficiencies in
information, timeliness, processing, or internal controls in conformance with
organization policy and/or applicable law
Crosson
Multiple Choice Questions - Page 1
Cost of goods manufactured is equal to
1.
Direct Materials + Direct Labor + Overhead.
2.
Beginning Work in Process Inventory + Total Manufacturing Costs – Ending Work in
Process Inventory.
3.
Beginning Work in Process Inventory + Period Costs – Ending Work in Process
Inventory.
4.
Beginning Work in Process Inventory + Product Costs.
Costs
as salary for
of supervisors
other
which such
are accounted
as overheadand
costs,
aresupport
called personnel,
1.
period labor costs.
2.
sales assistance costs.
3.
indirect labor costs.
4.
prime labor costs.
Consider
the
following
information:
direct
materials
used was
totaled
$124,700;
direct
labor
amounted
to
$412,000;
overhead
computed
to
be $789,600;
WorkininProcess
ProcessInventory
Inventoryon
onMarch
March31,
1,
2014,
was
$482,500;
and
Work
2014, was $597,100. What was the cost of goods manufactured?
1.
$1,211,700
2.
$729,200
3.
$1,440,900
4.
$422,100
The
fundamental
described
in its way in which a company will achieve its goal is
1.
balance sheet and income statement.
2.
cash flow statement.
3.
budget.
4.
mission statement.
Velocity
Ltd. iscost
a sports
car manufacturer. Which of the following is a
value-adding
for Velocity?
1.
Salary of the payroll department
2.
Cost of tires used in cars
3.
Cost of office supplies
4.
Salary of operations manager
The
credibilityaccountants
standard of management
accountants
statefairly
that and
management
must
communicate
information
objectively.
each task This means essentially that accountants must perform
1.
as professionals, possessing the degree of skill of those management accountants
who held the position before them.
2.
to provide relevant information, both positive and negative, to the recipients of their
reports.
3.
in conformity with generally accepted accounting principles.
4.
to the satisfaction of government regulators.
The
income
statement for
a manufacturing company usually contains
a detailed
computation
of the
1.
total manufacturing cost.
2.
cost of goods sold.
3.
total cost of materials used.
4.
total overhead.
Total
the manufacturing costs incurred during a period are transferred to
1.
Cost of Goods Sold account.
2.
Work in Process Inventory account.
3.
Finished Goods Inventory account.
4.
Overhead account.
Managerial accounting information is primarily used by
1.
lenders.
2.
supply-chain partners.
3.
governmental agencies.
4.
customers
In a manufacturing environment, direct labor costs initially flow
1.
into the Materials Inventory account.
2.
into the Cost of Goods Sold account.
3.
into the Work in Process Inventory account.
4.
into the Finished Goods Inventory account.
Overhead costs are
1.
not allocated to the Work in Process Inventory account.
2.
not charged directly to the Finished Goods Inventory account.
3.
expensed in the period in which they are incurred.
4.
not considered product costs.
To
calculate thecosts
total cost of goods manufactured from total
manufacturing
1.
subtract all period costs from total manufacturing costs.
2.
add beginning and subtract ending finished goods inventory to total manufacturing
costs.
3.
you must know how many goods were sold during the period.
4.
add beginning and subtract ending work in process inventory to total manufacturing
costs.
From
Jolier's
year-end
income
statement,
youthe
observe
that would
the
finished
goods
inventory
has
doubled
during
year.
This
indicate that during the year Jolier
1.
sold more goods than were produced.
2.
produced more goods than last year.
3.
produced more goods than were sold.
4.
sold more goods than last year.
Prime costs is the sum of
1.
the direct labor costs and indirect labor costs.
2.
the direct material costs, direct labor costs, and overhead costs.
3.
the direct labor costs and overhead costs.
4.
the direct materials costs and direct labor costs.
The
factory
personnel whose wages are traceable directly to a
product
include
1.
maintenance personnel.
2.
support personnel.
3.
factory supervisors.
4.
employees who help to shape the product.
Suppose
ahemanagement
accountant
becomes
aware
thatofa the
poor
judgment
or
she
made
has
resulted
in
the
loss
of
one
company's
clients. Is
the accountant
accountant doubts
bound to
share
this information
with
the
company?
(The
that
the
company
will
ever find out about it directly.)
1.
The management accountant is bound to respond honestly to inquiries regarding the
adequacy of professional judgments but is not bound to communicate them if not directly
asked.
2.
The management accountant is bound to communicate this error in judgment only if
another client cannot be found.
3.
The management accountant is not bound to communicate this error.
4.
The management accountant is bound to communicate unfavorable and favorable
judgments made, even if not directly asked.
The
following
are costs
for alabor
selected
period:
direct materials
materials into
used in
production,
$75,000;
direct
cost
of
converting
product,
$150,000;
indirect costs of
manufacturing,
What is the
unit costtotal
of manufacturing
30,000
units in this$45,000.
period?
1.
$7.50
2.
$9.00
3.
$6.00
4.
$4.00
If
the report
is urgently
it is sometimes necessary to sacrifice
accuracy
in the
interestneeded,
of
1.
timeliness
2.
personal feelings.
3.
profits.
4.
expectations.
In a manufacturing environment, costs of materials initially flow
1.
into the Work in Process Inventory account.
2.
into the Materials Inventory account.
3.
into the Cost of Goods Sold account.
4.
into the Finished Goods Inventory account.
The
Finished Goods
Inventory
and
the
Cost
of as
Goods
SoldMay
for 1a
manufacturing
company
for
the
year
2014
are
follows:
Finished
Goods
Inventory,
$470,500;
Mayfor
31the
Finished
Goods
Inventory,
$125,000;
Cost
of
Goods
Sold
year,
$1,110,000.
The cost of goods manufactured for the month was
1.
$1,455,500.
2.
$595,500.
3.
$985,000.
4.
$764,500.
The
beginning
finished
goods
inventory
of RonaldThe
Co. ending
was $480,125.
Goods
completed
during
the year
cost
$963,250.
finished
goods
inventory
was
dangerously
low,
having
been
reduced
to
$135,850. The cost of goods sold for the year for Ronald Co. was
1.
$618,975.
2.
$1,307,525.
3.
$1,579,225.
4.
$1,171,675.
Materials
andcalled
supplies that cannot be traced conveniently to specific
products are
1.
indirect materials.
2.
raw materials.
3.
waste materials.
4.
direct materials.
Conversion costs consist of
1.
direct materials costs and direct labor costs.
2.
direct labor costs and overhead costs.
3.
direct materials costs and overhead costs.
4.
direct labor costs and indirect labor costs.
The three elements of product costs are
1.
direct materials, work in process, and overhead.
2.
direct materials, work in process, and finished goods.
3.
direct materials, direct labor, and overhead.
4.
direct materials, direct labor, and period costs.
Period costs are
1.
charged against the revenue of the current period.
2.
initially recognized on the balance sheet as inventory.
3.
charged to the period in which the product generates revenue.
4.
further classified as direct costs and indirect costs.
Period cost is also called
1.
variable cost.
2.
direct cost.
3.
value-adding cost.
4.
noninventoriable cost.
Management accounting activities
1.
are synonymous with financial accounting activities.
2.
are substitute for the management process.
3.
complement the management process.
4.
have nothing to do with the management process.
If
a management
accountantplan
confides
to a with
relative
that his
or her in
company
has
a
confidential
to
merge
another
company
the near future, the accountant has
1.
not violated ethical standards.
2.
violated ethical standards only if the relative owns stock in the company.
3.
violated ethical standards because the relative could stand to gain personally from that
information.
4.
not violated ethical standards because the information was relayed to a family member
only.
Management accounting reports
1.
are primarily used by parties inside the organization.
2.
must be prepared on a periodic basis.
3.
are generally publicly available.
4.
are based on generally accepted accounting principles.
The
presentation
of merchandise
inventory
on the
balance
sheet of
a
merchandising
company
most
nearly
resembles
the
presentation
of
__________
company. inventory on the balance sheet of a manufacturing
1.
materials
2.
finished goods
3.
manufacturing supplies
4.
work in process
All
manufacturing
costs
incurred
being
produced are
classified
as and assigned to products that are
1.
variable costs.
2.
allocated costs.
3.
product costs.
4.
overhead costs.
The unit of measurement used in management accounting reports is
1.
primarily the historical dollar.
2.
usually current replacement cost.
3.
any measurement unit that is useful in a particular situation.
4.
the measurement unit used by competing companies.
Steve,
the management
accountant
of a company,
is of
notthe
familiar
with
the
concept
of
prudence
in
financial
reporting.
Which
following
IMA standards is Steve violating?
1.
Confidentiality
2.
Materiality
3.
Disclosure
4.
Competence
All
manufacturing
that are
products
should becosts
classified
as assigned to completed (but unsold)
1.
materials inventory costs.
2.
cost of goods sold.
3.
work in process inventory costs.
4.
finished goods inventory costs.
Management accounting reports are
1.
prepared using the double-entry system of accounting.
2.
prepared periodically.
3.
based on generally accepted accounting principles.
4.
driven by user’s needs.
69 Free Test Bank for Managerial Accounting 10th
Edition by Crosson Multiple Choice Questions - Page 2
Which of the following equations is correct?
1.
Total Manufacturing Costs = Direct Materials + Direct Labor + Selling Costs
2.
Total Manufacturing Costs = Direct Materials + Direct Labor + Overhead
3.
Total Manufacturing Costs = Direct Labor + Overhead + Selling Costs + Administrative
Costs
4.
Total Manufacturing Costs = Product Costs + Period Costs
Which of the following is a product cost?
1.
General expenses
2.
Selling expenses
3.
Advertising expenses
4.
Material handling expenses
Which of the following represents normal cost measurement?
1.
Actual Direct Materials + Actual Direct Labor + Actual Overhead
2.
Actual Direct Materials + Actual Direct Labor + Estimated Overhead
3.
Estimated Direct Materials + Estimated Direct Labor + Actual Overhead
4.
Actual Direct Materials + Estimated Direct Labor + Estimated Overhead
Which
of accounting?
the following is a difference between managerial and
financial
1.
Managerial accounting reports non-monetary information whereas financial accounting
reports both monetary and non-monetary information.
2.
Managerial accounting is used by government authorities whereas financial accounting
is used by stockholders.
3.
Managerial accounting prepares reports monthly whereas financial accounting
prepares reports annually.
4.
Managerial information is confidential whereas financial accounting information is
publicly available.
Which
of the
following terms
applyproducts?
to materials and supplies that can
be traced
conveniently
to specific
1.
Indirect materials
2.
Indirect manufacturing costs
3.
Direct costs
4.
Manufacturing overhead
Which
the following account balances is not reported on the
balanceofsheet?
1.
Materials Inventory
2.
Manufacturing Patents
3.
Cost of Goods Sold
4.
Work in Process Inventory
Which
format?of the following questions do not dictate a managerial report's
1.
Who should write the report?
2.
To whom should the report be distributed?
3.
What is the purpose of the report?
4.
What information is needed?
Which of the following is a period cost?
1.
Advertising costs
2.
Indirect materials
3.
Manufacturing overhead
4.
Direct materials
Which of the following is not a stage in the management process?
1.
Evaluating
2.
Communicating
3.
Planning
4.
Recording
Which
of the following
is one of the integrity standards of
management
accountants?
1.
Refraining from accepting hospitality gifts from coworkers
2.
Refraining from activities that the company does not actively endorse
3.
Avoiding actual or apparent conflicts of interest
4.
Avoiding only those conflicts of interest that occur between coworkers
Which
of the following types of product costs appear in the financial
statements?
1.
Predetermined overhead costs
2.
Estimated costs
3.
Standard costs
4.
Actual costs
Which
of the following documents initiates the purchasing of
materials?
1.
Job order cost sheet
2.
Receiving report
3.
Purchase request
4.
Purchase order
Which of the following is a variable cost?
1.
Raw materials
2.
Rent
3.
Insurance expense
4.
Salaries
Which of the following is included in prime costs?
1.
Overhead costs
2.
Indirect materials costs
3.
Selling and administrative costs
4.
Direct labor costs
Which of the following costs is considered overhead?
1.
Indirect labor costs only
2.
Direct materials costs only
3.
Both indirect materials and indirect labor costs
4.
Direct materials and direct labor costs
Which
cost? of the following accounts contain only one type of product
1.
Work in Process Inventory
2.
Materials Inventory
3.
Finished Goods Inventory
4.
Cost of Goods Sold
Which
costfor
measurement
method
calculates
product
unit cost using
estimates
direct materials,
direct
labor, and
overhead?
1.
Standard costing
2.
Actual costing
3.
Full costing
4.
Normal costing
Which
of the following
activities is nota part of the "perform" stage in
the management
process?
1.
Producing products as per customer specifications
2.
Manage supply chain relationships
3.
Identifying operating activities that minimize waste
4.
Calculating variances by comparing estimated and actual costs
Which
of the following is a source document for purchase of
materials?
1.
Vendor's invoice
2.
Purchase request
3.
Receiving report
4.
All of these
Which
of the following is exclusive to a production-oriented
company?
1.
Balance sheet
2.
Statement of cash flows
3.
Income statement
4.
Statement of cost of goods manufactured
Which
cost? of the following is the formula used to compute product unit
1.
(Direct Materials + Direct Labor) / Number of Units Produced
2.
(Direct Materials + Direct Labor + Overhead) / Number of Units Produced
3.
(Direct Labor + Overhead) / Number of Units Produced
4.
(Indirect Materials + Indirect Labor + Overhead) / Number of Units Produced
Which
the of
following
accounts firm?
includes the cost of completed but
unsold of
units
a manufacturing
1.
Cost of Goods Sold
2.
Finished Goods Inventory
3.
Work in Process Inventory
4.
Materials Inventory
Which
of thefor
following
user groups
will use managerial accounting
information
decision-making
purposes?
1.
Customers
2.
Lenders
3.
Employees
4.
Stockholders
Which
of the
following
is notan
one
of the keyreport?
questions to be
addressed
when
preparing
accounting
1.
What is audience's familiarity with accounting?
2.
What information should be included?
3.
When is it due and what method of presentation is best?
4.
How long should the information be valid?
Which of the following is nota product cost?
1.
Depreciation on office furniture
2.
Manufacturing overhead
3.
Direct labor
4.
Direct materials
Which
of the following statements is true of financial and managerial
accounting?
1.
Both use historical costs as their primary unit of measurement.
2.
Both depend on the double-entry system of accounting.
3.
Both require adherence to generally accepted accounting principles.
4.
Both assist managers in decision making.
Which of the following is nota product cost?
1.
Indirect materials costs
2.
Packaging costs
3.
Direct labor costs
4.
Overhead costs
Which
the following
should not be included in the computation of
cost of of
goods
manufactured?
1.
Factory power costs
2.
Indirect materials costs
3.
Selling costs
4.
Direct materials costs
Which of the following contains period costs?
1.
Work in Process Inventory
2.
Finished Goods Inventory
3.
Cost of Goods Sold
4.
Selling and administrative expenses
Which
of the following
accounts decreases when cost of goods
manufactured
is recorded?
1.
Work in Process Inventory
2.
Finished Goods Inventory
3.
Overhead
4.
Cost of Goods Sold
Which
following
is nota reason to classify costs as either
productoforthe
period
costs?
1.
To determine unit manufacturing costs
2.
To determine if the costs are fixed or variable
3.
To analyze costs for control purposes
4.
To report production costs on the income statement
Woodies
produces
wooden desks. Which of the following is not
an indirectInc.
material
for Woodies?
1.
Wood in a desk
2.
Nails in a desk
3.
Screws in a desk
4.
Lubricants for production machinery
Which of the following costs is not an inventoriable cost?
1.
Cost to ship products to a customer
2.
Cost of factory machinery used in production
3.
Cost to design the product
4.
Plant supervisor's salary
Which of the following labor costs would be included in direct labor?
1.
Maintenance workers
2.
Machine operators
3.
Managers and supervisors
4.
Materials storeroom custodian
Free Text Questions
Identify
and explain
the important
questions
a manager
before preparing
a managerial
report.
(Hint: Think
"w's.")must address
Answer Given
Why: To establish the purpose of the report. Who: To determine whom the report is
targeting, who will receive it, and who will read it; dictates the level of detail necessary
for the report. What: To determine the content and style of the report. When: To
determine when the report should be completed and distributed at a time when it will
be most
The
Chief
Financial
Officer
(CFO)
of your
haswithin
askedthe
you to
help
her develop
a cost
control
report
to becompany
distributed
company.
She
wants
your
input
concerning
what
she
should
think
about
before
developing
such
a report.
Discuss
thecontrol
significant
points,
in
detail,
the
CFO
should
consider
before
the
cost
report
is
prepared.
Answer Given
In addition to identifying the Why, Who, What, and When of the report, students should
address the specific points that need to be considered under each topic. Why: What is
the purpose of the report? Is the intent to report on total costs or is the report going to
be concerned with specific costs? Are the costs being considered for the entire
company or for specific segments of the company? Who: Who is going to receive the
report? Is it going to specific line managers or to someone higher up in the company or
to both groups? In other words, is it going to individuals actually incurring the costs or
to individuals that are just familiar with the costs being reported? What: Can the
information needed to prepare the report be obtained from existing source documents
and other sources or not? How will the information be presented? As columnar data,
as charts and graphs, as dollar amounts, as percentages, as year-to-date costs, as
actual compared to budget, as actual this year compared to actual last year, or some
other way? When: How often will the report be prepared? Daily, weekly, monthly,
quarterly, annually? Is the report going to be used to influence current operations or
future operations?
Job
#178 direct
consists
of 500
units and
has
total of$35,000.
direct materials,
$48,000;
labor,
$58,000;
and
overhead,
a. What
is
the
unit
product
cost?;
b.
What
are
the
prime
costs
per
unit?;
c.
What
are the conversion costs per unit?
Answer Given
a. ($48,000 + $58,000 + $35,000) / 500 units = $282 per unit; b. Prime Costs = Direct
Materials + Direct Labor; so ($48,000 + $58,000) / 500 units = $212 per unit; c.
Conversion Costs = Direct Labor + Overhead; so ($58,000 + $35,000) / 500 units =
$186 per unit.
Give two examples of each stage in the management process.
Answer Given
Plan: Determining the mission statement (strategic objectives and operating
objectives); developing a business plan. Perform: Hiring and training personnel;
properly matching human and technical resources to the work that must be done;
purchasing/leasing facilities; maintaining inventories for sale; identifying operating
activities that can minimize waste; improving the quality of products or services.
Evaluate: Comparing actual to expected performance; correcting problems; revising
original plans. Communicate: Preparing external and internal reports
Assume
you are about
the president
ofathe
businessproject
club attoyour
school.
You
are
thinking
creating
fundraising
generate
money
forvarious
next year's
operations.
Develop anprocess.
outline of your ideas
using the
stages
of the management
Answer Given
Note: Student answers will vary considerably; however, they should adequately cover
the four stages of
Accountants
must
have
high professional
ethics. List
and briefly
describe
five
ethical
standards
that
management
accountants
subscribe
to that,
in your
opinion, help maintain the impression that
accountants
are highly
ethical.
Answer Given
The student should list any five of the following ethical standards: Competence) Each
member has a responsibility to: 1. Maintain an appropriate level of professional
expertise by continually developing knowledge and skills.; 2. Perform professional
duties in accordance with relevant laws, regulations, and technical standards.; 3.
Provide decision support information and recommendations that are accurate, clear,
concise, and timely.; 4. Recognize and communicate professional limitations or other
constraints that would preclude responsible judgment or successful performance of an
activity. Confidentiality) Each member has a responsibility to: 1. Keep information
confidential except when disclosure is authorized or legally required.; 2. Inform all
relevant parties regarding appropriate use of confidential information. Monitor
subordinates’ activities to ensure compliance.; 3. Refrain from using confidential
information for unethical or illegal advantage. Integrity) Each member has a
responsibility to: 1. Mitigate actual conflicts of interest. Regularly communicate with
business associates to avoid apparent conflicts of interest. Advise all parties of any
potential conflicts.; 2. Refrain from engaging in any conduct that would prejudice
carrying out duties ethically.; 3. Abstain from engaging in or supporting any activity that
might discredit the profession. Credibility) Each member has a responsibility to: 1.
Communicate information fairly and objectively.; 2. Disclose all relevant information
that could reasonably be expected to influence an intended user’s understanding of
the reports, analyses, or recommendations.; 3. Disclose delays or deficiencies in
information, timeliness, processing, or internal controls in conformance with
organization policy and/or applicable law