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Exam 10: An Introduction to Management Accounting

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Question 21

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Select the correct statement regarding managerial and financial accounting.

A) Users of managerial accounting information desire greater aggregation than do users of financial accounting information.
B) Both managerial and financial accounting use economic and physical data in addition to financial data.
C) Financial accounting is more highly regulated than managerial accounting.
D) Timeliness is more important in financial accounting than in managerial accounting.

E) A) and D)
F) A) and C)

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Question 22

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Complete the following table to compare and contrast financial and managerial accounting.

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Question 23

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During its first year of operations, Connor Company paid $49,990 for direct materials and $19,700 in wages for production workers. Lease payments and utilities on the production facilities amounted to $8,700. General, selling, and administrative expenses were $9,700. The company produced 6,700 units and sold 5,700 units for $16.70 a unit. The average cost to produce one unit is which of the following amounts?

Classify each of the following costs for Harrison Company as a selling or general and administrative period cost or as a direct or indirect product cost by entering the dollar amount(s) in the appropriate column(s):Paid $75,000 in wages for employees who assemble the company's products.Paid sales commissions of $58,000.Paid $38,000 in salaries for factory supervisors.Paid $88,000 in salaries for executives (president and vice presidents).Recorded depreciation cost of $25,000. $13,000 was depreciation on factory equipment and $12,000 was depreciation on the company headquarters building.Paid $4,000 for various supplies that it used in the factory (oil and materials used in machine maintenance).Used $10,000 in prepaid corporate liability insurance.

Cost of goods sold is equal to the cost of goods:

Does the term "cost" mean the same thing as the term "expense?" Explain your answer.

What inventory holding costs would be incurred by a business that holds a large amount of inventory?

The Giga Company produces tablet computers. The following information is provided: $\begin{array}{lc}\text { a) Materials used } & \$ 216,000 \\ \text { b)Advertising } & \$ 40,000 \\\text { c) Insurance, factory } & \$ 20,000 \\\text { d) Administrative salaries } & \$ 50,000 \\\text { e) Property taxes, factory } & \$ 12,000 \\\text { f) Utilities, administrative building } & \$ 22,000\\\text {g) Factory labor}&\$80,000\\\text {h) Sales commissions}&\$56,000\\\text {i) Factory supervisor's salary}&\$60,000\\\text {j) Research and development}&\$18,000\\\text {k) Depreciation, factory}&\$12,000\\\text {l) Depreciation, office}&\$8,000\\\text { m) Indirect materials }&\$14,000\end{array}$ Required:Classify each of the company's costs as a period cost (general, selling, and administrative cost) or as a direct or indirect product cost. Enter the dollar amount of the cost in the appropriate column. After entering all amounts, calculate the total general, selling, and administrative cost, the total direct product cost, and the total indirect product cost.

The philosophy of encouraging workers to achieve zero defects and high customer satisfaction is known as total quality management.

Upstream costs are classified as product costs and downstream costs are classified as period costs for financial reporting purposes.

During its first year of operations, a company that incurred $1,500 in production costs reported cost of goods sold of $890 and selling costs of $190. The company's ending finished goods inventory was $610.

Anton believes his company's overhead costs are driven (affected) by the number of machine hours because the production process is heavily automated. During the period, the company produced 3,500 units of Product A requiring a total of 300 machine hours and 2,500 units of Product B requiring a total of 75 machine hours. What allocation rate should be used if the company incurs overhead costs of $16,875?

What are period costs? How does the accounting for period costs differ from the accounting for product costs?

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

The following information relates to Marshall Manufacturing's current accounting period:. $\begin{array}{llr} \text { Raw materials used } &\$34,000\\ \text { Direct labor wages } &66,000\\ \text { Sales salaries and commissions } &50,000\\ \text { Depreciation on production equipment } &6,000\\ \text { Rent on manufacturing facilities } &4,000\\ \text {Administrative supplies and utilities } &10,000\\ \text { Sales revenue } &210,000\\ \text {Units produced } &10,000\\ \text { Unit sold } &10,000\\\end{array}$ Based on this information, what is the company's net income?

Which of the following correctly computes cost of goods manufactured?

Tucker Company's work in process account decreased by $1,000, while its Finished Goods Inventory account increased by $500. Assuming total manufacturing costs were $5,000, what was the company's cost of goods sold amount?

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?

As a Certified Management Accountant, Suzanne is bound by the standards of ethical conduct issued by the Institute of Management Accountants. During the course of business, Suzanne learned that her company has decided to discontinue a major product line. If she mentions this fact to her brother, who is a stockbroker, Suzanne could be in violation of the:

Management accountants have a responsibility to demonstrate integrity. What does this ethical standard require of management accountants?