Principles of Managerial Accounting Q and A

MANAGERIAL ACCOUNTING MULTIPLE CHOICE QUESTIONS 38. Managerial accounting applies to each of the following types of businesses except a. service firms. b. merchandising firms. c. manufacturing firms. d. Managerial accounting applies to all types of firms. 39. Managerial accounting information is generally prepared for a. stockholders. b. creditors. c. managers. d. regulatory agencies. 40. Managerial accounting information a. pertains to the entity as a whole and is highly aggregated. b. pertains to subunits of the entity and may be very detailed. c. is prepared only once a year. d. is constrained by the requirements of generally accepted accounting principles. 44. Managerial accounting does not encompass a. calculating product cost. b. calculating earnings per share. c. determining cost behavior. d. profit planning. 45. Managerial accounting is applicable to a. service entities. b. manufacturing entities. c. not-for-profit entities. d. all of these. 48. Financial statements for external users can be described as a. user-specific. b. general-purpose. c. special-purpose. d. managerial reports. 49. Managerial accounting reports can be described as a. general-purpose. b. macro-reports. c. special-purpose. d. classified financial statements. 53. Internal reports are generally a. aggregated. b. detailed. c. regulated. d. unreliable. 54. A distinguishing feature of managerial accounting is a. external users. b. general-purpose reports. c. very detailed reports. d. quarterly and annual reports. 55. What activities and responsibilities are not associated with management's functions? a. Planning b. Accountability c. Controlling d. Directing 56. Planning is a function that involves a. hiring the right people for a particular job. b. coordinating the accounting information system. c. setting goals and objectives for an entity. d. analyzing financial statements. 57. The managerial function of controlling a. 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 evaluation by management. 59. A manager that is establishing objectives is performing which management function? a. Controlling b. Directing c. Planning d. Constraining 60. The management function that requires managers to look ahead and establish objectives is a. controlling. b. directing. c. planning. d. constraining. 61. In determining whether planned goals are being met, a manager is performing the function of a. planning. b. follow-up. c. directing. d. controlling. 64. Both direct materials and indirect materials are a. raw materials. b. manufacturing overhead. c. merchandise inventory. d. sold directly to customers by a manufacturing company. 65. The work of factory employees that can be physically and directly associated with converting raw materials into finished goods is a. manufacturing overhead. b. indirect materials. c. indirect labor. d. direct labor. 66. Which one of the following would not be classified as manufacturing overhead? a. Indirect labor b. Direct materials c. Insurance on factory building d. Indirect materials 67. Manufacturing costs include a. direct materials and direct labor only. b. direct materials and manufacturing overhead only. c. direct labor and manufacturing overhead only. d. direct materials, direct labor, and manufacturing overhead. 68. Which one of the following is not a direct material? a. A tire used for a lawn mower b. Plastic used in the covered case for a home PC c. Steel used in the manufacturing of steel-radial tires d. Lubricant for a ball-bearing joint for a large crane 69. Which one of the following is not a cost element in manufacturing a product? a. Manufacturing overhead b. Direct materials c. Office salaries d. Direct labor 70. A manufacturing process requires small amounts of glue. The glue used in the production process is classified as a(n) a. period cost. b. indirect material. c. direct material. d. miscellaneous expense. 71. The wages of an hourly timekeeper in the factory would be classified as a. a period cost. b. direct labor. c. indirect labor. d. compliance costs. 73. Which of the following is not a manufacturing cost category? a. Cost of goods sold b. Direct materials c. Direct labor d. Manufacturing overhead 74. As current technology changes manufacturing processes, it is likely that direct a. labor will increase. b. labor will decrease. c. materials will increase. d. materials will decrease. 75. For the work of factory employees to be considered as direct labor, the work must be conveniently and a. indirectly associated with raw materials conversion. b. periodically associated with raw materials conversion. c. physically associated with raw materials conversion. d. promptly associated with raw materials conversion. 76. Which of the following is not classified as direct labor? a. Bottlers of beer in a brewery b. Copy machine operators at a copy shop c. Wages of supervisors d. Bakers in a bakery 77. Cotter pins and lubricants used irregularly in a production process are classified as a. miscellaneous expense. b. direct materials. c. indirect materials. d. nonmaterial materials. 79. Because of automation, which component of product cost is declining? a. Direct labor b. Direct materials c. Manufacturing overhead d. Advertising 80. The product cost that is most difficult to associate with a product is a. direct materials. b. direct labor. c. manufacturing overhead. d. advertising. 81. Manufacturing costs that cannot be classified as either direct materials or direct labor are known as a. period costs. b. nonmanufacturing costs. c. selling and administrative expenses. d. manufacturing overhead. 82. Which one of the following is an example of a period cost? a. A change in benefits for the union workers who work in the New York plant of a Fortune 1000 manufacturer b. Workers' compensation insurance on factory workers' wages allocated to the factory c. The cost of screens for a computer manufacturer d. A manager's salary for work that is done in the corporate head office 83. Which one of the following costs would not be inventoriable? a. Period costs b. Factory insurance costs c. Indirect materials d. Indirect labor costs 84. Direct materials and direct labor of a company total HK$8,000,000. If manufacturing overhead is HK$4,000,000, what is direct labor cost? a. HK$4,000,000 b. HK$8,000,000 c. HK$0 d. Cannot be determined from the information provided 85. Which of the following are period costs? a. Raw materials b. Direct materials and direct labor c. Direct labor and manufacturing overhead d. Selling expenses 86. Sales commissions are classified as a. overhead costs b. period costs. c. product costs. d. indirect labor. 87. Product costs consist of a. direct materials and direct labor only. b. direct materials, direct labor, and manufacturing overhead. c. selling and administrative expenses. d. period costs. 88. Which one of the following represents a period cost? a. The VP of Sales' salary and benefits b. Overhead allocated to the manufacturing operations c. Labor costs associated with quality control d. Fringe benefits associated with factory workers 89. Product costs are also called a. direct costs. b. overhead costs. c. inventoriable costs. d. capitalizable costs. 90. For inventoriable costs to become expenses under the matching principle, a. the product must be finished and in stock. b. the product must be expensed based on its percentage-of-completion. c. the product to which they attach must be sold. d. all accounts payable must be settled. 91. As inventoriable costs expire, they become a. selling expenses. b. gross profit. c. cost of goods sold. d. sales revenue. 92. A manufacturing company calculates cost of goods sold as follows: a. Beginning FG inventory + cost of goods purchased – ending FG inventory. b. Ending FG inventory – cost of goods manufactured + beginning FG inventory. c. Beginning FG inventory – cost of goods manufactured – ending FG inventory. d. Beginning FG inventory + cost of goods manufactured – ending FG inventory. 93. A manufacturing company reports cost of goods manufactured as a(n) a. current asset on the statement of financial position. b. administrative expense on the income statement. c. component in the calculation of cost of goods sold on the income statement. d. component of the raw materials inventory on the statement of financial position. 94. The subtotal, "Cost of goods manufactured" appears on a. a merchandising company's income statement. b. a manufacturing company's income statement. c. both a manufacturing and a merchandising company's income statement. d. neither a merchandising nor a manufacturing company's income statement. 95. Cost of goods manufactured in a manufacturing company is analogous to a. ending inventory in a merchandising company. b. beginning inventory in a merchandising company. c. cost of goods available for sale in a merchandising company. d. cost of goods purchased in a merchandising company. 96. Cost of goods sold a. only appears on merchandising companies' income statements. b. only appears on manufacturing companies' income statements. c. appears on both manufacturing and merchandising companies' income statements. d. is calculated exactly the same for merchandising and manufacturing companies. 97. Kushman Combines has £20,000 of ending finished goods inventory as of December 31, 2020. If beginning finished goods inventory was £10,000 and cost of goods sold was £50,000, how much would Kushman report for cost of goods manufactured? a. £70,000 b. £10,000 c. £60,000 d. £40,000 98. Cost of goods manufactured is calculated as follows: a. Beginning WIP + direct materials used + direct labor + manufacturing overhead + ending WIP. b. Direct materials used + direct labor + manufacturing overhead – beginning WIP + ending WIP. c. Beginning WIP + direct materials used + direct labor + manufacturing overhead – ending WIP. d. Direct materials used + direct labor + manufacturing overhead – ending WIP – beginning WIP. 99. If the amount of "Cost of goods manufactured" during a period exceeds the amount of "Total manufacturing costs" for the period, then a. ending work in process inventory is greater than or equal to the amount of the beginning work in process inventory. b. ending work in process is greater than the amount of the beginning work in process inventory. c. ending work in process is equal to the cost of goods manufactured. d. ending work in process is less than the amount of the beginning work in process inventory. 100. On the costs of goods manufactured schedule, depreciation on factory equipment a. is not listed because it is included with Depreciation Expense on the income statement. b. appears in the manufacturing overhead section. c. is not listed because it is not a product cost. d. is not an inventoriable cost. 101. On the costs of goods manufactured schedule, the item raw materials inventory (ending) appears as a(n) a. addition to raw materials purchases. b. addition to raw materials available for use. c. subtraction from raw materials available for use. d. subtraction from raw materials purchases. 102. Dolan Company's accounting records reflect the following inventories: Dec. 31, 2020 Dec. 31, 2019 Raw materials inventory €310,000 €260,000 Work in process inventory 300,000 160,000 Finished goods inventory 190,000 150,000 During 2020, €800,000 of raw materials were purchased, direct labor costs amounted to €670,000, and manufacturing overhead incurred was €640,000. The total raw materials available for use during 2020 for Dolan Company is a. €1,110,000. b. €660,000. c. €750,000. d. €1,060,000. 103. Dolan Company's accounting records reflect the following inventories: Dec. 31, 2020 Dec. 31, 2019 Raw materials inventory €310,000 €260,000 Work in process inventory 300,000 160,000 Finished goods inventory 190,000 150,000 During 2020, €800,000 of raw materials were purchased, direct labor costs amounted to €670,000, and manufacturing overhead incurred was €640,000. Dolan Company's total manufacturing costs incurred in 2020 amounted to a. €2,060,000. b. €2,020,000. c. €1,920,000. d. €2,110,000. 104. Dolan Company's accounting records reflect the following inventories: Dec. 31, 2020 Dec. 31, 2019 Raw materials inventory €310,000 €260,000 Work in process inventory 300,000 160,000 Finished goods inventory 190,000 150,000 During 2020, €800,000 of raw materials were purchased, direct labor costs amounted to €670,000, and manufacturing overhead incurred was €640,000. Assume Dolan Company's cost of goods manufactured for 2020 amounted to €1,890,000. Its cost of goods sold for the year is a. €2,000,000. b. €1,750,000. c. €1,850,000. d. €1,930,000. 105. What is work in process inventory generally described as? a. Costs applicable to units that have been started in production but are only partially completed b. Costs associated with the end stage of manufacturing that are almost always complete and ready for customers c. Costs strictly associated with direct labor d. Beginning stage production costs associated with labor costs dealing with bringing in raw materials from the shipping docks 106. Worth Limited reported the following year-end information: beginning work in process inventory, £180,000; cost of goods manufactured, £866,000; beginning finished goods inventory, £252,000; ending work in process inventory, £220,000; and ending finished goods inventory, £264,000. Worth’s cost of goods sold for the year is a. £854,000. b. £878,000. c. £826,000. d. £602,000. 107. Laflin Company reported the following year-end information: Beginning work in process inventory £1,080,000 Beginning raw materials inventory 300,000 Ending work in process inventory 900,000 Ending raw materials inventory 470,000 Raw materials purchased 950,000 Direct labor 900,000 Manufacturing overhead 720,000 Laflin Company's cost of goods manufactured for the year is a. £2,400,000. b. £2,580,000. c. £2,220,000. d. £2,760,000. 108. Benson Group’s accounting records reflect the following inventories: Dec. 31, 2019 Dec. 31, 2020 Raw materials inventory € 80,000 € 64,000 Work in process inventory 104,000 116,000 Finished goods inventory 100,000 92,000 During 2020, Benson purchased €1,450,000 of raw materials, incurred direct labor costs of €250,000, and incurred manufacturing overhead totaling €160,000. How much raw materials were transferred to production during 2020 for Benson? a. €1,386,000 b. €1,466,000 c. €1,450,000 d. €1,434,000 109. Benson Group’s accounting records reflect the following inventories: Dec. 31, 2019 Dec. 31, 2020 Raw materials inventory € 80,000 € 64,000 Work in process inventory 104,000 116,000 Finished goods inventory 100,000 92,000 During 2020, Benson purchased €1,450,000 of raw materials, incurred direct labor costs of €250,000, and incurred manufacturing overhead totaling €160,000. How much is total manufacturing costs incurred during 2020 for Benson? a. €1,864,000 b. €1,876,000 c. €1,860,000 d. €1,872,000 110. Benson Group’s accounting records reflect the following inventories: Dec. 31, 2019 Dec. 31, 2020 Raw materials inventory € 80,000 € 64,000 Work in process inventory 104,000 116,000 Finished goods inventory 100,000 92,000 During 2020, Benson purchased €1,450,000 of raw materials, incurred direct labor costs of €250,000, and incurred manufacturing overhead totaling €160,000. Assume Benson’s cost of goods manufactured for 2020 amounted to €1,660,000. How much would it report as cost of goods sold for the year? a. €1,668,000 b. €1,568,000 c. €1,760,000 d. €1,652,000 111. Walker Company reported the following year-end information: Beginning work in process inventory £ 46,000 Beginning raw materials inventory 24,000 Ending work in process inventory 50,000 Ending raw materials inventory 15,000 Raw materials purchased Direct labor Manufacturing overhead 825,000 440,000 100,000 How much is Walker’s cost of goods manufactured for the year? a. £834,000 b. £1,374,000 c. £1,370,000 d. £1,378,000 112. Ogleby AG’s accounting records reflect the following inventories: Dec. 31, 2019 Dec. 31, 2020 Raw materials inventory €120,000 € 96,000 Work in process inventory 156,000 174,000 Finished goods inventory 150,000 138,000 During 2020, Ogleby purchased €980,000 of raw materials, incurred direct labor costs of $ €175,000, and incurred manufacturing overhead totaling €224,000. How much is total manufacturing costs incurred during 2020 for Ogleby? a. €1,385,000 b. €1,403,000 c. €1,379,000 d. €1,415,000 113. Ogleby AG’s accounting records reflect the following inventories: Dec. 31, 2019 Dec. 31, 2020 Raw materials inventory €120,000 € 96,000 Work in process inventory 156,000 174,000 Finished goods inventory 150,000 138,000 During 2020, Ogleby purchased €980,000 of raw materials, incurred direct labor costs of €175,000, and incurred manufacturing overhead totaling €224,000. How much would Ogleby report as cost of goods manufactured for 2020? a. €1,229,000 b. €1,397,000 c. €1,391,000 d. €1,385,000 114. Wasson Company reported the following year-end information: Beginning work in process inventory Beginning raw materials inventory Ending work in process inventory Ending raw materials inventory Raw materials purchased Direct labor Manufacturing overhead HK$ 35,000 18,000 38,000 15,000 560,000 210,000 120,000 How much is Wasson’s total cost of work in process for the year? a. HK$925,000 b. HK$893,000 c. HK$890,000 d. HK$928,000 115. Edmiston Group reported the following year-end information: beginning work in process inventory, £80,000; cost of goods manufactured, £750,000; beginning finished goods inventory, £50,000; ending work in process inventory, £70,000; and ending finished goods inventory, £40,000. How much is Edmiston’s cost of goods sold for the year? a. £750,000 b. £760,000 c. £740,000 d. £770,000 116. Using the following information, compute the direct materials used. Raw materials inventory, January 1 € 20,000 Raw materials inventory, December 31 40,000 Work in process, January 1 18,000 Work in process, December 31 12,000 Finished goods, January 1 40,000 Finished goods, December 31 32,000 Raw materials purchases 1,700,000 Direct labor 760,000 Factory utilities 150,000 Indirect labor 50,000 Factory depreciation 400,000 Operating expenses 420,000 a. b. c. d. 117. €1,760,000. €1,720,000. €1,700,000. €1,680,000. Assuming that the direct materials used are €1,700,000, compute the total manufacturing costs using the following information. Raw materials inventory, January 1 Raw materials inventory, December 31 Work in process, January 1 Work in process, December 31 Finished goods, January 1 Finished goods, December 31 Raw materials purchases Direct labor Factory utilities Indirect labor Factory depreciation Operating expenses a. b. c. d. €3,060,000. €3,066,000. €2,860,000. €3,480,000. € 20,000 40,000 18,000 12,000 40,000 32,000 1,700,000 760,000 150,000 50,000 400,000 420,000 118. Assuming €3,000,000 is the total manufacturing costs, compute the cost of goods manufactured using the following information. Raw materials inventory, January 1 Raw materials inventory, December 31 Work in process, January 1 Work in process, December 31 Finished goods, January 1 Finished goods, December 31 Raw materials purchases Direct labor Factory utilities Indirect labor Factory depreciation Operating expenses a. b. c. d. 119. 20,000 40,000 18,000 12,000 40,000 32,000 1,700,000 760,000 150,000 50,000 400,000 420,000 €3,014,000. €2,994,000. €3,006,000. €3,008,000. Assuming €3,040,000 is the cost of goods manufactured, compute the cost of goods sold using the following information. Raw materials inventory, January 1 Raw materials inventory, December 31 Work in process, January 1 Work in process, December 31 Finished goods, January 1 Finished goods, December 31 Raw materials purchases Direct labor Factory utilities Indirect labor Factory depreciation Operating expenses a. b. c. d. 120. € € 20,000 40,000 18,000 12,000 40,000 32,000 1,700,000 760,000 150,000 50,000 400,000 420,000 €3,046,000. €3,008,000. €3,032,000. €3,048,000. Using the following information, compute the cost of direct materials used. Raw materials inventory, January 1 Raw materials inventory, December 31 Work in process, January 1 Work in process, December 31 Finished goods, January 1 Finished goods, December 31 Raw materials purchases Direct labor Factory utilities Indirect labor € 30,000 60,000 27,000 18,000 60,000 48,000 1,800,000 890,000 225,000 75,000 Factory depreciation Operating expenses a. b. c. d. 121. 500,000 630,000 €1,740,000. €1,830,000. €1,800,000. €1,770,000. Assuming the cost of direct materials used is €1,800,000, compute the total manufacturing costs using the information below. Raw materials inventory, January 1 Raw materials inventory, December 31 Work in process, January 1 Work in process, December 31 Finished goods, January 1 Finished goods, December 31 Raw materials purchases Direct labor Factory utilities Indirect labor Factory depreciation Operating expenses a. b. c. d. € 30,000 60,000 27,000 18,000 60,000 48,000 1,800,000 890,000 225,000 75,000 500,000 630,000 €3,490,000. €3,499,000. €3,190,000. €4,120,000. 122.Assuming that the total manufacturing costs are €3,400,000, compute the cost of goods manufactured using the information below. Raw materials inventory, January 1 Raw materials inventory, December 31 Work in process, January 1 Work in process, December 31 Finished goods, January 1 Finished goods, December 31 Raw materials purchases Direct labor Factory utilities Indirect labor Factory depreciation Operating expenses a. b. c. d. 123. € 30,000 60,000 27,000 18,000 60,000 48,000 1,800,000 890,000 225,000 75,000 500,000 630,000 €3,421,000. €3,391,000. €3,409,000. €3,142,000. Assuming that the cost of goods manufactured is €3,460,000 compute the cost of goods sold using the following information. Raw materials inventory, January 1 € 30,000 Raw materials inventory, December 31 Work in process, January 1 Work in process, December 31 Finished goods, January 1 Finished goods, December 31 Raw materials purchases Direct labor Factory utilities Indirect labor Factory depreciation Operating expenses a. b. c. d. 60,000 27,000 18,000 60,000 48,000 1,800,000 890,000 225,000 75,000 500,000 630,000 €3,469,000. €3,412,000. €3,448,000. €3,472,000. 124. Samson Company reported total manufacturing costs of £320,000, manufacturing overhead totaling £52,000, and direct materials totaling £64,000. How much is direct labor cost? a. Cannot be determined from the information provided. b. £268,000 c. £256,000 d. £204,000 125. Given the following data for Mehring Limited, compute (A) total manufacturing costs and (B) cost of goods manufactured: Direct materials used Direct labor Manufacturing overhead Operating expenses a. b. c. d. (A) £620,000 £635,000 £635,000 £650,000 £230,000 150,000 255,000 263,000 Beginning work in process Ending work in process Beginning finished goods Ending finished goods £30,000 15,000 38,000 23,000 (B) £650,000 £620,000 £650,000 £665,000 126. Penner Company reported total manufacturing costs of €450,000, manufacturing overhead totaling €78,000, and direct materials totaling €96,000. How much is direct labor cost? a. Cannot be determined from the information provided. b. €624,000 c. €354,000 d. €276,000 127. Given the following data for Glennon Group, compute (A) total manufacturing costs and (B) costs of goods manufactured: Direct materials used Direct labor Manufacturing overhead Operating expenses €270,000 200,000 250,000 350,000 Beginning work in process Ending work in process Beginning finished goods Ending finished goods €40,000 20,000 50,000 30,000 a. b. c. d. 128. (A) €700,000 €720,000 €720,000 €740,000 (B) €740,000 €700,000 €740,000 €760,000 Barton Company has beginning work in process inventory of €144,000 and total manufacturing costs of €686,000. If cost of goods manufactured is €660,000, what is the cost of the ending work in process inventory? a. €150,000. b. €118,000. c. €190,000. d. €170,000. 129. Gammil Limited has beginning and ending raw materials inventories of £96,000 and £120,000, respectively. If direct materials used were £490,000, what was the cost of raw materials purchased? a. £490,000. b. £520,000. c. £466,000. d. £514,000. 130. Molina Company has beginning and ending work in process inventories of €130,000 and €145,000 respectively. If total manufacturing costs are €680,000, what is the total cost of goods manufactured? a. €810,000. b. €825,000. c. €665,000. d. €695,000. 131. Costas AG has beginning and ending raw materials inventories of €64,000 and €80,000, respectively. If direct materials used were €310,000, what was the cost of raw materials purchased? a. €310,000. b. €330,000. c. €294,000. d. €326,000. 132. Wood Company has beginning work in process inventory of €138,000 and total manufacturing costs of €477,000. If cost of goods manufactured is €480,000, what is the cost of the ending work in process inventory? a. €120,000. b. €141,000. c. €150,000. d. €135,000. 133. Given the following data for Harder Group, compute cost of goods manufactured: Direct materials used Direct labor Manufacturing overhead Operating expenses £120,000 200,000 180,000 175,000 Beginning work in process Ending work in process Beginning finished goods Ending finished goods £20,000 10,000 25,000 15,000 a. b. c. d. £490,000 £500,000 £510,000 £520,000 134. Which one of the following does not appear on the statement of financial position of a manufacturing company? a. Finished goods inventory b. Work in process inventory c. Cost of goods manufactured d. Raw materials inventory 144. Property taxes on a manufacturing plant are an element of a a. b. c. d. Product Cost Yes Yes No No Period Cost No Yes Yes No 145. For a manufacturing company, which of the following is an example of a period cost rather than a product cost? a. Depreciation on factory equipment b. Wages of salespersons c. Wages of machine operators d. Insurance on factory equipment 146. For a manufacturing firm, cost of goods available for sale is computed by adding the beginning finished goods inventory to a. cost of goods purchased. b. cost of goods manufactured. c. net purchases. d. total manufacturing costs. 147. If the cost of goods manufactured is less than the cost of goods sold, which of the a. Finished Goods Inventory has increased. b. Work in Process Inventory has increased. c. Finished Goods Inventory has decreased. d. Work in Process Inventory has decreased. 149. If the total manufacturing costs are greater than the cost of goods manufactured, which of the following is correct? a. Work in Process Inventory has increased. b. Finished Goods Inventory has increased. c. Work in Process Inventory has decreased. d. Finished Goods Inventory has decreased. 150. The sum of the direct materials costs, direct labor costs, and manufacturing overhead incurred is the a. cost of goods manufactured. b. total manufacturing overhead. c. total manufacturing costs. d. total cost of work in process. 151. The inventory accounts that show the cost of completed goods on hand and the costs applicable to production that is only partially completed are, respectively a. Work in Process Inventory and Raw Materials Inventory. b. Finished Goods Inventory and Raw Materials Inventory. c. Finished Goods Inventory and Work in Process Inventory. d. Raw Materials Inventory and Work in Process Inventory.