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Exam 10: An Introduction to Management Accounting

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Question 41

Multiple Choice

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Which of the following costs should not be recorded as an expense?

A) Insurance on factory building
B) Sales commissions
C) Product shipping costs
D) Product advertising

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

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Question 42

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All costs incurred prior to delivery of the product to the customer are referred to as upstream costs.

A) True
B) False

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Question 43

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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 gross margin for the first year?

The following information relates to the operations of Cruz Manufacturing during the current year: Based on this information, what is the company's cost of goods sold?

Randall Company manufactures chocolate bars. The following were among Randall's manufacturing costs during the current year: Randall's direct labor costs amounted to:

Which of the following statements regarding the schedule of cost of goods manufactured and sold is correct?

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:

Ting Company started the accounting period with the following beginning balances: Raw Materials Inventory, $21,000; Work in Process Inventory, $45,000; and Finished Goods Inventory, $10,000. During the accounting period, the company purchased $30,000 of raw materials and ended the period with $8,000 in raw material inventory. Direct labor costs for the period were $60,000 and $63,000 of manufacturing overhead costs was allocated to work in process. Ending work in process was $41,000 and ending finished goods was $17,500. Goods were sold during the period for $162,500. The amount of cost of goods manufactured (i.e., amount transferred from work in process to finished goods) would be:

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

All of the following are downstream costs except:

Steuben Company produces dog houses. During the current year, Steuben Company incurred the following costs: Based on the above information, the amount of period costs shown on Steuben's income statement is:

Certified Management Accountants (CMA) must complete a specified number of continuing professional education credits each reporting period. Which of the four standards of ethical conduct issued by the Institute of Management Accountants likely motivated this requirement?

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

A company that uses a just in time inventory system:

Why do accountants normally calculate cost per unit as an average?

Which of the following most exemplifies the value-added principle?

Which of following practices is not considered an effective means of reengineering business systems?

Tisdale Company started the year with the following beginning account balances: Raw Materials Inventory, $42,000; Work in Process Inventory, $90,000; and Finished Goods Inventory, $20,000. During the year, the company purchased $60,000 of raw materials and ended the year with $16,000 of raw materials. Direct labor costs for the year were $120,000 and a total of $36,000 of manufacturing overhead costs were incurred. Ending work in process was $82,000 and ending finished goods was $35,000. Goods were sold to customers during the year for $360,000. How much gross margin would be reported for the year?

Product costs are reported on the income statement above gross margin.

Which of the following is not classified as manufacturing overhead?