159 test bank for managerial accounting 11th

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159 Test Bank for Managerial Accounting 11th

True False Questions Free Text Questions

-Multiple Choice Questions-Page 1

The cost of wages paid to employees directly involved in the manufacturing process in converting materials into finished product is classified as:

1 factory overhead cost

2 direct labor cost

3 wages expense

4 direct materials cost

If the cost of direct materials is a small portion of total production cost, it may

be classified as part of:

1 direct labor cost

2 selling and administrative costs

3 miscellaneous costs

4 factory overhead cost

What term is used to refer to the cost of changing direct materials into a

finished manufactured product?

1 Factory overhead cost

2 Period cost

3 Conversion cost

4 Direct labor cost

Which of the following is the principle reason for preparing managerial

All of the following employees hold line positions in Anthea Electric EXCEPT:

1 vice president of production

2 vice president of finance

3 manager of the Valhalla Plant

4 vice president of sales

Which of the following accounts will be found on the income statement?

Which of the following is an example of direct materials cost for an

automobile manufacturer?

1 Cost of oil lubricants for factory machinery

2 Cost of wages of assembly worker

3 Salary of production supervisor

4 Cost of interior upholstery

Which of the following is not a characteristic of useful managerial accounting reports?

1 Accuracy

3 historical and estimated data

4 reports prepared as needed

Which of the following items would not be classified as part of factory

overhead?

1 Direct labor used

2 Amortization of manufacturing patents

3 Production supervisors' salaries

4 Factory supplies used

The controller's staff often consists of several management accountants All

of the following would most likely be on the controller's staff EXCEPT:

1 general accountants

2 budgets and budget analysts

3 investments and shareholder relations managers

4 cost accountants

Which of the following is not a prime cost?

1 Supervisor’s wages

2 Direct labor wages

3 Machine operator wages

4 Assembly line wages

Who are the individuals charged with the responsibility for directing the to-day operations of a business?

day-1 Investors

2 Managers

3 Employees

4 Customers

Compute conversion costs given the following data: Direct Materials,

$452,700; Direct Labor, $186,300; Factory Overhead, $175,600; and Selling Expenses, $45,290

1 $639,000

2 $175,600

3 $816,600

4 $361,900

Which of the following manufacturing costs is an indirect cost of producing a product?

1 Oil lubricants used for factory machinery

2 Commissions for sales personnel

3 Hourly wages of an assembly worker

4 Memory chips for a microcomputer manufacturer

Work in Process, Beginning $10,000; Work in Process, Ending $15,000; Direct Labor Costs Incurred $4,000; Cost of Goods Manufactured $8,000; Factory Overhead $8,000; What is the amount of direct materials used?

1 $1,000

2 $4,000

3 $7,000

4 $3,000

Cost of Materials Used $40,000; Direct Labor costs $55,000; Factory Overhead

$32,000; Work in Process, beg $28,000; Work in Process, end $18,000 What

is Cost of Goods Manufactured?

1 $173,000

2 $97,000

3 $117,000

4 $137,000

Another term often used to refer to factory overhead is:

1 surplus

2 other manufacturing cost

3 supervisory cost

4 factory burden

Which of the following statements is false?

1 There is no overlap between financial and managerial accounting.

2 Managerial accounting sometimes relies on past information.

3 Managerial accounting does not need to conform to GAAP

4 Financial accounting must conform to GAAP.

All of the following are ways that managers use managerial information except

1 to evaluate the company’s stock performance

2 to evaluate the performance of a company’s operations

3 to support long-term planning decisions

4 to determine the cost of manufacturing a product

What is the primary criterion for the preparation of managerial accounting reports?

1 Relevance of the reports

2 Meet the manager needs

3 Timing of the reports

4 Cost of the reports

Which of the following is considered a part of factory overhead cost?

1 Sales commissions

2 Depreciation of factory buildings

3 Depreciation of office equipment

4 Direct materials used

What term is used to describe the process of monitoring operating results and comparing actual results with the expected results?

1 Improving

2 Controlling

3 Directing

4 Planning

Prime costs are

1 direct materials and factory overhead

2 direct materials and direct labor

3 direct labor and factory overhead

4 period costs and factory overhead

Which of the following are basic phases of the management process?

1 Supervising and directing

2 Decision making and supervising

3 Organizing and directing

4 Planning and controlling

The following are all product costs except:

Which of the following costs are referred to as conversion costs?

1 Direct labor cost and factory overhead cost

2 Direct materials cost and direct labor cost

3 Factory overhead cost

4 Direct materials cost and factory overhead cost

In most business organizations, the chief management accountant is called the:

1 chief accounting officer

2 controller

3 chairman of the board

4 chief executive officer

What term is used to describe the process of developing the organization’s objectives and translating those into courses of action?

1 is prepared according to GAAP.

2 is prepared according to management needs.

3 is prepared periodically only.

4 is related to the entire business entity only.

Cost of Materials Used $40,000; Direct Labor costs $55,000; Factory Overhead

$32,000; Work in Process, beg.$28,000; Work in Process, end.$18,000;

Finished Goods,beg $28,000; Finished Goods, end.$18,000 What is Cost of Goods Sold?

2 be prepared in accordance with generally accepted accounting principles

3 be provided at any time management needs information

4 be prepared to report information for any unit of the business to support decision making

A company sells goods for $300,000 that cost $140,000 to manufacture Which statement(s) are true?

1 The company will recognize sales on the balance sheet of $300,000.

2 The company will recognize $160,000 gross profit on the balance sheet.

3 The company will decrease finished goods by $140,000.

4 All of the above are true.

What is the purpose of the Statement of Cost of Goods Manufactured?

1 to determine the ending materials inventory

2 to determine the ending work in process inventory

3 to determine the amounts transferred to finished goods

4 all of the answers are true

Which of the following is an example of a factory overhead cost?

1 Repair and maintenance cost on the administrative building

2 Factory heating and lighting cost

3 Insurance premiums on salespersons' automobiles

4 President's salary

Which of the following is most associated with financial accounting?

1 Can have both objective and subjective information

2 Can be prepared periodically, or as needed

3 Prepared in accordance with GAAP

4 Can be prepared for the entity or segment

Costs other than direct materials cost and direct labor cost incurred in the manufacturing process are classified as:

1 factory overhead cost

2 miscellaneous expense

3 product costs

4 other manufacturing costs

Which of the following is most associated with managerial accounting?

1 Must follow GAAP

2 May rely on estimates and forecasts

3 Is prepared for users outside the organization.

4 Always reports on the entire entity

Materials must have which two qualities in order to be classified as direct materials?

1 They must be classified as both prime costs and conversion costs.

2 They must be introduced into the process in both work-in-process inventories and finished goods inventories.

3 They must be an integral part of the finished product, but can be an insignificant portion

of the total product cost.

4 They must be an integral part of the finished product and be a significant portion of the total product cost.

In the income statement of a manufacturing company, what replaces

purchases in the cost of goods section of a retail company?

1 Finished goods

2 Cost of merchandise available

3 Cost of goods manufactured

4 Work in process completed

Conversion costs are

1 direct materials and direct labor

2 direct materials and factory overhead

3 factory overhead and direct labor

4 direct materials and indirect labor

Beginning Raw Materials Inventory: $75,000; Materials Purchased: $20,000; Ending Raw Materials Inventory: $30,000; What is the amount of raw materials used?

2 Direct labor cost and factory overhead cost

3 Direct labor cost, direct materials cost, and factory overhead cost

4 Direct materials cost and direct labor cost

Which of the following is false in regards to direct materials for an auto manufacturer?

1 Steel would probably be a direct material.

2 Upholstery fabric would probably be a direct material

3 Oil to lubricate factory machines would not be a direct material.

4 Small plastic clips to hold on door panels, that become part of the auto, must be accounted for as direct materials.

Which of the following is an example of direct labor cost for an airplane manufacturer?

1 Cost of oil lubricants for factory machinery

2 Cost of wages of assembly worker

3 Salary of plant supervisor

4 Cost of jet engines

82 Free Test Bank for Managerial Accounting 11th Edition by Warren Multiple Choice Questions-Page 2

Factory overhead includes:

1 factory rent and direct labor

2 direct materials and direct labor

3 indirect materials and direct materials

4 indirect labor and indirect materials

Beginning work in process is equal to:

1 cost of goods manufactured plus ending work in process minus manufacturing costs incurred during the current period

2 cost of goods manufactured minus ending work in process plus manufacturing costs incurred during the current period

3 ending work in process plus manufacturing costs incurred during the current period

4 manufacturing costs incurred during the current period minus ending work in process

All of the following would probably be considered a direct material except:

1 steel

2 fabric

3 glue

4 lumber

Indirect labor and indirect materials are classified as:

1 factory overhead and product costs

2 factory overhead and period costs

3 operating costs and period costs

4 operating costs and product costs

Finished goods inventory is reported on the:

1 income statement as a period cost

2 balance sheet as a long-term asset

3 balance sheet as a current asset

4 income statement as revenue

Williams Company reports production costs for 2012 as follows: Direct

materials used $375,000; Direct labor incurred 250,000; Factory overhead incurred 400,000; Operating expenses 145,000; Williams Company’s period costs for 2012 amount to:

1 $291,500

2 $302,000

3 $275,750

4 $233,750

Work in process inventory increased $20,000 during 2011 Cost of goods manufactured was $280,000 Total manufacturing costs incurred in 2011 are:

2 a schedule of total manufacturing costs incurred

3 a statement of cost of goods manufactured

4 a statement of stockholders’ equity

Indirect costs incurred in a manufacturing environment that cannot be traced directly to a product are treated as:

1 period costs and expensed when incurred

2 product costs and expensed when the goods are sold

3 product costs and expenses when incurred

4 period costs and expensed when the goods are sold

Goods that are partially completed by a manufacturer are referred to as:

1 merchandise inventory

2 work in process inventory

3 finished goods inventory

4 both A and C are correct

A product cost is:

1 expensed in the period in which it is incurred

2 shown with current liabilities on the balance sheet

3 shown on the income statement with the operating expenses

4 expensed in the period the product is sold

An example of a period cost is:

1 advertising expense

2 indirect materials

3 depreciation on factory equipment

4 property taxes on plant facilities

Costs on the income statement for both a merchandiser and a manufacturer would include:

1 operating expenses

2 direct materials

3 direct labor incurred

4 cost of goods manufactured

Costs which are reported on the income statement as part of cost of goods sold are referred to as:

1 administrative expenses

2 period costs

3 cost of goods manufactured

4 operating expenses

Cost of goods manufactured is equal to:

1 total manufacturing costs plus ending materials inventory less beginning materials inventory

2 cost of goods sold beginning work in process inventory less ending work in process inventory

3 total manufacturing costs plus ending work in process inventory less beginning work in process inventory

4 total manufacturing costs plus beginning work in process inventory less ending work in process inventory

Period costs include:

1 current assets on the balance sheet

2 current liabilities on the balance sheet

3 operating costs that are shown on the income statement when products are sold

4 operating costs that are shown on the income statement in the period in which they are incurred

Williams Company reports production costs for 2012 as follows: Direct

materials used $375,000; Direct labor incurred 250,000; Factory overhead incurred 400,000; Operating expenses 145,000; Williams Company’s product costs for 2012 amount to:

1 $1,025,000

2 $975,000

3 $605,000

4 $925,000

A plant manager’s salary may be referred to as:

1 either a direct cost or an indirect cost since managerial accounting is not restricted by GAAP

2 a direct cost

3 an indirect cost

4 a period cost

Which of the following is not a factory overhead cost?

1 materials used directly in the manufacturing process of the product

2 insurance on factory equipment

3 salaries of production supervisors

4 property tax on factory building

Direct labor and direct materials are classified as:

1 product costs and expensed when the goods are sold

2 product costs and expensed when incurred

3 period costs and expensed when incurred

4 period costs and expensed when the goods are sold

Managerial accountants would most likely prepare all of the following reports except:

1 A performance report identifying amounts of scrap.

2 A control report comparing direct material usage over time.

3 A sales report targeting monthly sales and potential bonuses.

4 An annual report for external regulators such as the SEC.

Rent expense incurred on a factory building would be treated as a(n):

1 indirect cost

2 period cost

3 product cost

4 both A and C are correct

Work in process inventory on December 31, 2011, is $42,000 Work in process inventory decreased 40% during 2011 Total manufacturing costs incurred in

2011 amount to $260,000 What is cost of goods manufactured?

1 beginning work in process inventory less ending work in process inventory

2 ending work in process inventory less beginning work in process inventory

3 beginning finished goods inventory less ending finished goods inventory

4 ending finished goods inventory less beginning finished goods inventory

The cost of goods sold for Heedy manufacturing in 2011 was $233,000 The January 1, 2011, finished goods inventory balance was $31,600, and the

December 31, 2011, finished goods inventory balance was $24,200 Cost of goods manufactured during the period was:

1 $233,000

2 $225,600

3 $288,800

4 $240,400