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Exam 1: Management Accounting and Corporate Governance

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Question 71

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

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The term "cost" can be...

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Question 72

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What is the effect on the balance sheet of recording a $200 cash purchase of raw materials?

A) Assets decrease by $200 and equity decreases by $200.
B) Assets and equity do not change.
C) Assets increase by $200 and equity increases by $200.
D) Assets increase by $200 and equity does not change.

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

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Question 73

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Managerial accounting systems consider economic and non-financial data as well as financial statement data.

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 the amount of finished goods inventory on the balance sheet at year-end?

Most internal users of accounting information need primarily global information that reflects the performance of the company as a whole.

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?

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

Which of the following is not an element that is typically present when fraud occurs?

Jarvis Company provided the following information regarding its first year of operations: $\begin{array}{l}\begin{array} { | l | r | } \hline \text { Administrative salaries } & \$ 60,000 \\\hline \text { Depreciation on factory equipment } & 16,000 \\\hline \text { Indirect materials } & 4,000 \\\hline \text { Marketing costs } & 40,000 \\\hline \text { Salaries for factory supervisors } & 28,000 \\\hline \text { Wages for production workers } & 80,000 \\\hline \text { Raw materials used } & 100,000 \\\hline \text { Research and development } & 32,000 \\\hline \text { Rent on factory building } & 18,000 \\\hline \text { Sales revenues } & 432,000 \\\hline \text { Sales salaries and other selling costs } & 56,000 \\\hline\end{array}\\\begin{array} { | l | c | } \hline \text { Beginning inventory }\quad \quad \quad \quad \quad \quad \quad & 0 \text { units } \\\hline \text { Number of units produced } & 20,000 \\\hline \text { Number of units sold } & 18,000 \\\hline\end{array}\end{array}$ Required: Determine the following amounts: (a)Total overhead costs. (b)Total product costs. (c)Product cost per unit. (d)Total cost of ending finished goods inventory. (e)Total cost of goods sold.

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

Product costs are immediately recorded in expense accounts when the products are manufactured.

The four Standards of Ethical Conduct for Management Accountants relate to competence,confidentiality,integrity,and objectivity.

A merchandising business paid $2,500 to purchase inventory and $50 to have the inventory delivered to its customers.Its product costs were $2,550.

What are indirect costs,and how are the indirect costs incurred to make products accounted for?

Kirsten believes her company's overhead costs are driven (affected) by the number of direct labor hours because the production process is very labor intensive.During the period,the company produced 5,000 units of Product A requiring a total of 1,600 labor hours and 2,500 units of Product B requiring a total of 400 labor hours.What allocation rate should be used if the company incurs overhead costs of $20,000?

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

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

Select the term from the list provided that best matches each of the following descriptions.The first is done for you.

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

Which of the following is not a reason management might be tempted to classify costs as product costs rather than expensing them during periods in which production exceeds sales?