lesson 1 intromas

8/13/2019 Lesson 1 IntroMAS

1/12

NAME: _________________________________________________ DATE: _______________________ TRUE-FALSE STATEMENTS

1. Reports prepared in financial accounting are general-purpose reports, whereas reports prepared inmanagerial accounting are usually special-purpose reports.

2. Managerial accounting information generally pertains to an entity as a whole and is highly aggregated.3. Managerial accounting applies to all forms of business organizations.4. etermining the unit cost of manufacturing a product is an output of financial accounting.!. Managerial accounting internal reports are prepared more fre"uently than are classified financial

statements.#. $he management function of organizing and directing is mainly concerned with setting goals and

ob%ecti&es for the entity.'. $he (arbanes-)*ley +ct replaces generally accepted accounting principles in a manufacturing company.

. ontrolling is the process of determining whether planned goals are being met.

. ecision-ma/ing is an integral part of the planning, directing, and controlling functions.10. oth direct labor cost and indirect labor cost are product costs.11. Manufacturing costs that cannot be classified as direct materials or direct labor are classified as

manufacturing o&erhead.12. Raw materials are e"ual to direct materials minus indirect materials.13. Raw materials that can be con&eniently and directly associated with a finished product are called

materials o&erhead.14. $he total cost of a finished product does not generally contain e"ual amounts of materials, labor, and

o&erhead costs.1!. irect materials costs and indirect materials costs are manufacturing o&erhead.1#. eriod costs include selling and administrati&e e*penses.1'. ndirect materials and indirect labor are both in&entoriable costs.1 . irect materials and direct labor are the only product costs.1 . $otal period costs are deducted from total cost of wor/ in process to calculate cost of goods

manufactured.20. eriod costs are not in&entoriable costs.21. nding finished goods in&entory appears on both the balance sheet and the income statement of a

manufacturing company.22. $he beginning wor/ in process in&entory appears on both the balance sheet and the cost of goods

manufactured schedule of a manufacturing company.23. n calculating gross profit for a manufacturing company, the cost of goods manufactured is deducted from

net sales.24. 5inished goods in&entory does not appear on a cost of goods manufactured schedule.2!. f the ending wor/ in process in&entory is greater than the beginning wor/ in process in&entory, then the

cost of goods manufactured will be less than total manufacturing costs for the period.2#. 5inished goods in&entory for a manufacturing company is e"ui&alent to merchandise in&entory for a

merchandising company.2'. Raw materials in&entory is not an asset until it is used to ma/e a product.2 . Raw materials in&entory shows the cost of completed goods a&ailable for sale to customers.2 . $he supply chain is all the acti&ities associated with pro&iding a product or ser&ice.30. Many companies ha&e significantly lowered in&entory le&els and costs using %ust-in-time in&entory

methods.31. $he theory of constraints is used to measure performance.32. $he focus of a $6M system is to reduce defects in finished products.33. $he balanced scorecard approach attempts to maintain as little in&entory on hand as possible.34. n preparing closing entries for a manufacturing company, all re&enue and e*pense account balances are

closed to a Manufacturing (ummary account.3!. $o balance the ost of 7oods Manufactured columns of a wor/sheet for a manufacturing company, an

entry must be made in the income statement debit column.3#. Managerial accounting is primarily concerned with managers and e*ternal users.3'. lanning in&ol&es coordinating the di&erse acti&ities and human resources of a company to produce a

smooth running operation.3 . 8hen the physical association of raw materials with the finished product is too small to trace in terms of

cost, they are usually classified as indirect materials.3 . roduct costs are also called in&entoriable costs.40. irect materials become a cost of the finished goods manufactured when they are ac"uired, not when they

are used.


2/12

41. $he sum of the direct materials costs, direct labor costs, and beginning wor/ in process is the totalmanufacturing costs for the year.

42. n a manufacturing company balance sheet, manufacturing in&entories are reported in the current assetssection in the order of their e*pected use in production.

MULTIPLE CHOICE QUESTIONS : Encircle the correct letter

43. Managerial accounting applies to each of the following types of businesses except a. ser&ice firms. b. merchandising firms.c. manufacturing firms. d. Managerial accounting applies to all types of firms.

44. Managerial accounting information is generally prepared for a. stoc/holders. b. creditors. c. managers. d. regulatory agencies.

4!. Managerial accounting informationa. pertains to the entity as a whole and is highly aggregated.

b. pertains to subunits of the entity and may be &ery detailed.

c. is prepared only once a year.d. is constrained by the re"uirements of generally accepted accounting principles.

4#. $he ma%or reporting standard for presenting managerial accounting information isa. rele&ance. b. generally accepted accounting principles.c. the cost principle. d. the current ta* law.

4'. Managerial accounting is also calleda. management accounting. b. controlling.c. analytical accounting. d. inside reporting.

4 . 8hich of the following is not an internal user9

a. reditor b. epartment manager c. ontroller d. $reasurer

4 . Managerial accounting does not encompassa. calculating product cost. b. calculating earnings per share.c. determining cost beha&ior. d. profit planning.

!0. Managerial accounting is applicable toa. ser&ice entities. b. manufacturing entities.c. not-for-profit entities. d. all of these.

!1. Management accountants would not a. assist in budget planning.

b. prepare reports primarily for e*ternal users.c. determine cost beha&ior.d. be concerned with the impact of cost and &olume on profits.

!2. nternal reports must be communicateda. daily. b. monthly. c.annually. d. as needed.

!3. 5inancial statements for e*ternal users can be described asa. user-specific. b. general-purpose.c. special-purpose. d. managerial reports.

!4. Managerial accounting reports can be described as

a. general-purpose. b. macro-reports.c. special-purpose. d. classified financial statements.

!!. $he reporting standard for e*ternal financial reports isa. industry-specific. b. company-specific.c. generally accepted accounting principles. d. department-specific.

2


3/12

!#. 8hich of the following statements about internal reports is not true9a. $he content of internal reports may e*tend beyond the double-entry accounting system.

b. nternal reports may show all amounts at mar/et &alues.c. nternal reports may discuss prospecti&e e&ents.d. Most internal reports are summarized rather than detailed.

!'. n an analogous sense, e*ternal user is to internal user as generally accepted accounting principles are toa. timely. b. special-purpose. c. rele&ance to decision. d. ( .

! . nternal reports are generallya. aggregated. b. detailed. c. regulated. d. unreliable.

! . + distinguishing feature of managerial accounting isa. e*ternal users. b. general-purpose reports.c. &ery detailed reports. d. "uarterly and annual reports.

#0. 8hat acti&ities and responsibilities are not associated with management:s functions9a. lanning b. +ccountability c. ontrolling d. irecting

#1. lanning is a function that in&ol&esa. hiring the right people for a particular %ob. b. coordinating the accounting information system.c. setting goals and ob%ecti&es for an entity. d. analyzing financial statements.

#2. $he managerial function of controllinga. is performed only by the controller of a company.

b. is only applicable when the company sustains a loss.c. is concerned mainly with operating a manufacturing segment.d. includes performance e&aluation by management.

#3. 8hich of the following is not a management function9a. onstraining b. lanning c. ontrolling d. irecting

#4. + manager that is establishing ob%ecti&es is performing which management function9a. ontrolling b. irecting c. lanning d. onstraining

#!. $he management function that re"uires managers to loo/ ahead and establish ob%ecti&es isa. controlling. b. directing. c. planning. d. constraining.

##. n determining whether planned goals are being met, a manager is performing the function of a. planning. b. follow-up. c. directing. d. controlling.

#'. 8hich of the following is not a separate management function9a. lanning b. irecting c. ecision-ma/ing d. ontrolling

# . irecting includesa. pro&iding a framewor/ for management to ha&e criteria to terminate employees when needed.

b. running a department under "uality control standards uni&ersally accepted.c. coordinating a company:s di&erse acti&ities and human resources to produce a smooth-running

operation.d. de&eloping a comple* performance ran/ing system to gi&e certain high performers good raises.

# . oth direct materials and indirect materials area. raw materials.

b. manufacturing o&erhead.c. merchandise in&entory.d. sold directly to customers by a manufacturing company.

'0. $he wor/ of factory employees that can be physically and directly associated with con&erting rawmaterials into finished goods isa. manufacturing o&erhead. b. indirect materials.c. indirect labor. d. direct labor.


4/12

'1. 8hich one of the following would not be classified as manufacturing o&erhead9a. ndirect labor b. irect materialsc. nsurance on factory building d. ndirect materials

'2. Manufacturing costs includea. direct materials and direct labor only.

b. direct materials and manufacturing o&erhead only.c. direct labor and manufacturing o&erhead only.d. direct materials, direct labor, and manufacturing o&erhead.

'3. 8hich one of the following is not a direct material9a. + tire used for a lawn mower

b. lastic used in the co&ered case for a home c. (teel used in the manufacturing of steel-radial tiresd. ;ubricant for a ball-bearing %oint for a large crane

'4. 8hich one of the following is not a cost element in manufacturing a product9a. Manufacturing o&erhead b. irect materialsc. )ffice salaries d. irect labor

'!. + manufacturing process re"uires small amounts of glue. $he glue used in the production process isclassified as a


5/12

!. $he product cost that is most difficult to associate with a product isa. direct materials. b. direct labor.c. manufacturing o&erhead. d. ad&ertising.

#. Manufacturing costs that cannot be classified as either direct materials or direct labor are /nown asa. period costs. b. nonmanufacturing costs.c. selling and administrati&e e*penses. d. manufacturing o&erhead.

'. 8hich one of the following is an e*ample of a period cost9a. + change in benefits for the union wor/ers who wor/ in the >ew ?or/ plant of a 5ortune 1000

manufacturer b. 8or/ers: compensation insurance on factory wor/ers: wages allocated to the factoryc. + bo* cost associated with computersd. + manager:s salary for wor/ that is done in the corporate head office

. 8hich one of the following costs would not be in&entoriable9a. eriod costs b. 5actory insurance costsc. ndirect materials d. ndirect labor costs

. irect materials and direct labor of a company total #,000,000. f manufacturing o&erhead is3,000,000, what is direct labor cost9

a. 3,000,000 b. #,000,000 c. 0 d. annot be determined

0. 8hich of the following are period costs9a. Raw materials b. irect materials and direct labor c. irect labor and manufacturing o&erhead d. (elling e*penses

1. (ales commissions are classified asa. o&erhead costs b. period costs. c. product costs. d. indirect labor.

2. roduct costs consist of a. direct materials and direct labor only.

b. direct materials, direct labor, and manufacturing o&erhead.c. selling and administrati&e e*penses.d. period costs.

3. 8hich one of the following represents a period cost9a. $he @ of (ales: salary and benefits

b. )&erhead allocated to the manufacturing operationsc. ;abor costs associated with "uality controld. 5ringe benefits associated with factory wor/ers

4. roduct costs are also calleda. direct costs. b. o&erhead costs. c. in&entoriable costs. d. capitalizable costs.

!. 5or in&entoriable costs to become e*penses under the matching principle,a. the product must be finished and in stoc/.

b. the product must be e*pensed based on its percentage-of-completion.c. the product to which they attach must be sold.d. all accounts payable must be settled.

#. +s in&entoriable costs e*pire, they becomea. selling e*penses. b. gross profit.

c. cost of goods sold. d. sales re&enue.

'. + manufacturing company calculates cost of goods sold as followsAa. eginning 57 in&entory B cost of goods purchased C ending 57 in&entory.

b. nding 57 in&entory C cost of goods manufactured B beginning 57 in&entory.c. eginning 57 in&entory C cost of goods manufactured C ending 57 in&entory.d. eginning 57 in&entory B cost of goods manufactured C ending 57 in&entory.


6/12

. + manufacturing company reports cost of goods manufactured as a


7/12

5inished goods in&entory 1 0,000 1!0,000

uring 200 , !00,000 of raw materials were purchased, direct labor costs amounted to #00,000, andmanufacturing o&erhead incurred was 4 0,000.

10'. $he total raw materials a&ailable for use during 200 for arly Manufacturing ompany isa. 10,000. b. 2#0,000. c. 4!0,000. d. '#0,000.

10 . arly Manufacturing ompany:s total manufacturing costs incurred in 200 amounted toa. 1,!30,000. b. 1,4 0,000. c. 1,3 0,000. d. 1,! 0,000.

10 . f arly Manufacturing ompany:s cost of goods manufactured for 200 amounted to 1,3 0,000, its costof goods sold for the year isa. 1,!00,000. b. 1,2!0,000. c. 1,3!0,000. d. 1,430,000.

110. 8hat is wor/ in process in&entory generally described as9a. osts applicable to units that ha&e been started in production but are only partially completed

b. osts associated with the end stage of manufacturing that are almost always complete and ready forcustomers

c. osts strictly associated with direct labor d. eginning stage production costs associated with labor costs dealing with bringing in raw materials

from the shipping doc/s

111. Ftley Manufacturing ompany reported the following year-end informationA beginning wor/ in processin&entory, 1 0,000G cost of goods manufactured, !1#,000G beginning finished goods in&entory,

2!2,000G ending wor/ in process in&entory, 220,000G and ending finished goods in&entory, 2#4,000.Ftley Manufacturing ompany:s cost of goods sold for the year isa. !04,000. b. !2 ,000. c. 4'#,000. d. 2!2,000.

112. >eeley Manufacturing ompany reported the following year-end informationAeginning wor/ in process in&entory 1,0 0,000eginning raw materials in&entory 300,000nding wor/ in process in&entory 00,000nding raw materials in&entory 4 0,000

Raw materials purchased #0,000irect labor 00,000

Manufacturing o&erhead #00,000

>eeley Manufacturing ompany:s cost of goods manufactured for the year isa. 2,2 0,000. b. 2,4#0,000. c. 2,100,000. d. 2,#40,000.

Use the following information for questions 113115.

Eop/ins Manufacturing nc.:s accounting records reflect the following in&entoriesA

ec. 31, 200' ec. 31, 200Raw materials in&entory 0,000 #4,0008or/ in process in&entory 104,000 11#,0005inished goods in&entory 100,000 2,000

uring 200 , Eop/ins purchased '#0,000 of raw materials, incurred direct labor costs of 100,000, and incurredmanufacturing o&erhead totaling 12 ,000.

113. Eow much is raw materials transferred to production during 200 for Eop/ins Manu-facturing9a. 2,000 b. ''#,000 c. '#0,000 d. '44,000

114. Eow much is total manufacturing costs incurred during 200 for Eop/ins9a. 2,000 b. 1,004,000 c. ,000 d. 1,000,000

11!. +ssume Eop/ins ManufacturingHs cost of goods manufactured for 200 amounted to #0,000. Eowmuch would it report as cost of goods sold for the year9a. # ,000 b. 1,000,000 c. 1,0#0,000 d. !2,000


8/12

11#. Mc>ally Manufacturing ompany reported the following year-end informationAeginning wor/ in process in&entory 4#,000eginning raw materials in&entory 24,000nding wor/ in process in&entory !0,000nding raw materials in&entory 20,000

Raw materials purchased # 0,000irect labor 240,000

Manufacturing o&erhead 100,000

Eow much is Mc>ally ManufacturingHs cost of goods manufactured for the year9a. # 4,000 b. 1,024,000 c. 1,020,000 d. 1,02 ,000

Use the following information for questions 117118.Modine Manufacturing nc.:s accounting records reflect the following in&entoriesA

ec. 31, 200' ec. 31, 200Raw materials in&entory 120,000 #,0008or/ in process in&entory 1!#,000 1'4,0005inished goods in&entory 1!0,000 13 ,000

uring 200 , Modine purchased 1,140,000 of raw materials, incurred direct labor costs of 1!0,000, andincurred manufacturing o&erhead totaling 1 2,000.

11'. Eow much is total manufacturing costs incurred during 200 for Modine9a. 1,4 ,000 b. 1,!0#,000 c. 1,4 2,000 d. 1,!00,000

11 . Eow much would Modine Manufacturing report as cost of goods manufactured for 200 9a. 1,4#4,000 b. 1,!24,000 c. 1,!1 ,000 d. 1,4 ,000

11 . (auder Manufacturing ompany reported the following year-end informationA

eginning wor/ in process in&entory 3!,000eginning raw materials in&entory 1 ,000nding wor/ in process in&entory 3 ,000nding raw materials in&entory 1!,000

Raw materials purchased !10,000irect labor 1 0,000

Manufacturing o&erhead '!,000

Eow much is (auder ManufacturingHs total cost of wor/ in process for the year9a. !13,000 b. '# ,000 c. '#!,000 d. 03,000

120. Eardigan Manufacturing ompany reported the following year-end informationA beginning wor/ in process in&entory, 0,000G cost of goods manufactured, 0,000G beginning finished goods in&entory,

!0,000G ending wor/ in process in&entory, '0,000G and ending finished goods in&entory, 40,000. Eowmuch is EardiganHs cost of goods sold for the year9a. 0,000 b. 0,000 c. '0,000 d. 1,000,000

Use the following information for questions 12112 .

Raw materials in&entory, Ianuary 1 20,000Raw materials in&entory, ecember 31 40,0008or/ in process, Ianuary 1 1 ,0008or/ in process, ecember 31 12,0005inished goods, Ianuary 1 40,000

5inished goods, ecember 31 32,000Raw materials purchases 1,000,000irect labor 4#0,000

5actory utilities 1!0,000ndirect labor !0,000

5actory depreciation 400,000(elling and administrati&e e*penses 420,000

8


9/12

121. irect materials used isa. 1,0#0,000. b. 1,020,000. c. 1,000,000. d. 0,000.

122. !ssume "our answer to question 121 a#o$e is %1&000&000. $otal manufacturing costs e"uala. 2,0#0,000. b. 2,0!4,000. c. 1, #0,000. d. 2,4 0,000.

123. !ssume "our answer to question 122 a#o$e is %2&000&000. ost of goods manufactured e"ualsa. 1, 2,000. b. 1, 4,000. c. 2,00#,000. d. 2,00 ,000.

124. !ssume "our answer to question 123 a#o$e is %2&0 0&000. $he cost of goods sold isa. 2,04#,000.b. 2,00 ,000. c. 2,032,000. d. 2,04 ,000.

Use the following information for questions 125128'

Raw materials in&entory, Ianuary 1 30,000Raw materials in&entory, ecember 31 #0,0008or/ in process, Ianuary 1 2',0008or/ in process, ecember 31 1 ,0005inished goods, Ianuary 1 #0,0005inished goods, ecember 31 4 ,000Raw materials purchases 1,!00,000

irect labor # 0,0005actory utilities 22!,000

ndirect labor '!,0005actory depreciation #00,000(elling and administrati&e e*penses #30,000

12!. irect materials used isa. 1,! 0,000. b. 1,!30,000. c. 1,!00,000. d. 1,4'0,000.

12#. !ssume "our answer to question 125 a#o$e is %1&500&000. $otal manufacturing costs e"uala. 3,0 0,000. b. 3,0 1,000. c. 2,' 0,000. d. 3,'20,000.

12'. !ssume "our answer to question 12( a#o$e is %3&000&000. ost of goods manufactured e"ualsa. 2, ,000. b. 2, 1,000. c. 3,00 ,000. d. 3,012,000.

12 . !ssume "our answer to question 127 a#o$e is %3&0(0&000. $he cost of goods sold isa. 3,0# ,000. b. 3,012,000. c. 3,04 ,000. d. 3,0'2,000.

12 . (amson ompany reported total manufacturing costs of 130,000, manufacturing o&erhead totaling2#,000, and direct materials totaling 32,000. Eow much is direct labor cost9

a. annot be determined b. 1 ,000c. ! ,000 d. '2,000

130. 7i&en the following data for Mehring ompany, compute


10/12

132. 7i&en the following data for 7lennon ompany, compute


11/12

c. Minimal finished goods in&entory on handd. +n understanding with customers that they may come to the showroom and select from in&entory on

hand

142. 8hich one of the following is a cost that would not li/ely be associated with computer-integratedmanufacturing9a. Manufacturing o&erhead associated with allocation of e"uipment depreciation

b. irect labor costs of a welder on the production floor c. Manufacturing o&erhead associated with allocation of the plant lease to the latest production rund. irect materials cost with se&eral fuse plates for a new automobile

143. 8hich one of the following is an acti&ity not associated with $6M9a. $ightening the bolts on a chassis so that the frame will not drop out

b. Redesigning the gas tan/ after fuel efficiency standards are not being metc. @erifying the 10 chec/ points associated with producing the highest "uality loaf of breadd. nsuring that the mattress %ust manufactured meets the standard of comfort of a random factory line

wor/er

144. 8hat is R Hs primary benefit9a. t can eliminate stand alone systems that do not share information easily for manage-mentHs use.

b. t allows management to rely on the simplest way to utilize information systems in a manufacturingen&ironment.

c. t permits line wor/ers to perform accounting and mar/eting tas/s.d. t calculates year end bonuses to a precision not a&ailable in traditional information systems

management.

14!. (ome companies implement systems to reduce defects in finished products with the goal of achie&ingzero defects. 8hat are these systems called9a. +cti&ity-based costing systems b. nterprise resource planning systems

c. @alue chain systems d. $otal "uality management systems

14#. Many companies now manufacture products that are untouched by human hands. 8hat do they use toachie&e this9a. +cti&ity-based costing b. omputer-integrated manufacturingc. nterprise resource planning systems d. $otal "uality management systems

14'. 8hen a company prepares a wor/sheet for a manufacturing company, to which column is the ndirect;abor account e*tended9a. $o the ad%ustment columns b. $o the income statement columnsc. $o the cost of goods manufactured columns d. $o the balance sheet columns

14 . 8hen a wor/sheet is prepared for a manufacturing company, an offsetting entry must be made to balancethe cost of goods manufactured columns. 8here does the offsetting entry appear9a. n the balance sheet debit column b. n the income statement debit columnc. n the balance sheet credit column d. n the income statement credit column

14 . 8hich one of the following accounts would not appear in the cost of goods manufactured columns of awor/sheet9a. nding 8or/ in rocess n&entory b. nding 5inished 7oods n&entoryc. Raw Materials n&entory d. irect ;abor

1!0. 8hen ma/ing closing entries for a manufacturing company, to which account do all accounts that appearon the cost of goods manufactured schedule get closed9

a. ncome (ummary b. Materials, ;abor, and )&erheadc. Manufacturing (ummary d. 5inished 7oods n&entory

1!1. roperty ta*es on a manufacturing plant are an element of a

roduct ost eriod osta. ?es >o

b. ?es ?es


12/12

c. >o ?esd. >o >o

1!2. 5or a manufacturing company, which of the following is an e*ample of a period cost rather than a productcost9a. epreciation on factory e"uipment b. 8ages of salespersonsc. 8ages of machine operators d. nsurance on factory e"uipment

1!3. 5or a manufacturing firm, cost of goods a&ailable for sale is computed by adding the beginning finishedgoods in&entory toa. cost of goods purchased. b. cost of goods manufactured.c. net purchases. d. total manufacturing costs.

1!4. f the cost of goods manufactured is less than the cost of goods sold, which of the following is correct9a. 5inished 7oods n&entory has increased. b. 8or/ in rocess n&entory has increased.c. 5inished 7oods n&entory has decreased. d. 8or/ in rocess n&entory has decreased.

1!!. $he principal difference between a merchandising and a manufacturing income statement is thea. cost of goods sold section. b. e*traordinary item section.c. operating e*pense section. d. re&enue section.

1!#. f the total manufacturing costs are greater than the cost of goods manufactured, which of the following iscorrect9a. 8or/ in rocess n&entory has increased. b. 5inished 7oods n&entory has increased.c. 8or/ in rocess n&entory has decreased. d. 5inished 7oods n&entory has decreased.

1!'. $he sum of the direct materials costs, direct labor costs, and manufacturing o&erhead incurred is thea. cost of goods manufactured. b. total manufacturing o&erhead.c. total manufacturing costs. d. total cost of wor/ in process.

1! . $he in&entory accounts that show the cost of completed goods on hand and the costs applicable to production that is only partially completed are, respecti&elya. 8or/ in rocess n&entory and Raw Materials n&entory.

b. 5inished 7oods n&entory and Raw Materials n&entory.c. 5inished 7oods n&entory and 8or/ in rocess n&entory.d. Raw Materials n&entory and 8or/ in rocess n&entory.

"En o! Te t"

12

lesson 1 intromas

Documents