Test bank for managerial accounting 10th edition by crosson

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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 such as salary of supervisors and other support

personnel, which are accounted for as overhead costs, are called

1 period labor costs

2 sales assistance costs

3 indirect labor costs

4 prime labor costs

Consider the following information: direct materials used

totaled $124,700; direct labor amounted to $412,000;

overhead was computed to be $789,600; Work in Process Inventory on March 1, 2014, was $482,500; and Work in Process Inventory on March 31, 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 way in which a company will achieve its goal

is described in its

1 balance sheet and income statement

2 cash flow statement.

3 budget

4 mission statement

Velocity Ltd is a sports car manufacturer Which of the

following is a value-adding cost 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 credibility standard of management accountants state that

management accountants must communicate information fairly and objectively This means essentially that

accountants must perform each task

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 manufacturing costs incurred during a period are

transferred to the

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 the total cost of goods manufactured from total

manufacturing costs

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, you observe that the

finished goods inventory has doubled during the year This would 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 a management accountant becomes aware that a poor

judgment he or she made has resulted in the loss of one

of the company's clients Is the accountant bound to

share this information with the company? (The

accountant doubts 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 a selected period: direct materials

used in production, $75,000; direct labor cost of

converting materials into product, $150,000; total indirect costs of manufacturing, $45,000 What is the unit cost of manufacturing 30,000 units in this period?

1 $7.50

2 $9.00

3 $6.00

4 $4.00

If the report is urgently needed, it is sometimes necessary to

sacrifice accuracy in the interest 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 Goods Sold for a

manufacturing company for the year 2014 are as follows: May 1 Finished Goods Inventory, $470,500; May 31

Finished Goods Inventory, $125,000; Cost of Goods Sold for the 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 Ronald Co was

$480,125 Goods completed during the year cost

$963,250 The ending 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 and supplies that cannot be traced conveniently to

specific products are called

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 accountant confides to a relative that his or

her company has a confidential plan to merge with

another company in 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 inventory on the balance sheet of a manufacturing company

1 materials

2 finished goods

3 manufacturing supplies

4 work in process

All manufacturing costs incurred and assigned to products that

are being produced are classified as

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 not familiar

with the concept of prudence in financial reporting Which

of the following IMA standards is Steve violating?

1 Confidentiality

2 Materiality

3 Disclosure

4 Competence

All manufacturing costs that are assigned to completed (but

unsold) products should be classified as

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 the following is a difference between managerial and

financial accounting?

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 apply to materials and supplies

that can be traced conveniently to specific products?

1 Indirect materials

2 Indirect manufacturing costs

3 Direct costs

4 Manufacturing overhead

Which of the following account balances is not reported on the

balance sheet?

1 Materials Inventory

2 Manufacturing Patents

3 Cost of Goods Sold

4 Work in Process Inventory

Which of the following questions do not dictate a managerial

report's format?

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 of the following accounts contain only one type of

product cost?

1 Work in Process Inventory

2 Materials Inventory

3 Finished Goods Inventory

4 Cost of Goods Sold

Which cost measurement method calculates product unit cost

using estimates for 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 of the following is the formula used to compute product

unit cost?

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 of the following accounts includes the cost of completed

but unsold units of a manufacturing firm?

1 Cost of Goods Sold

2 Finished Goods Inventory

3 Work in Process Inventory

4 Materials Inventory

Which of the following user groups will use managerial

accounting information for decision-making purposes?

1 Customers

2 Lenders

3 Employees

4 Stockholders

Which of the following is not one of the key questions to be

addressed when preparing an accounting report?

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 of the following should not be included in the

computation of cost of goods manufactured?

1 Factory power costs

2 Indirect materials costs

3 Selling costs

4 Direct materials costs