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Exam 18: Managerial Accounting Concepts and Principles

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Question 51

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Control is the process of monitoring planning decisions and evaluating an organization's activities and employees.

A) True
B) False

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Question 52

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Expenditures directly associated with the manufacture of finished goods that include direct materials and direct labor, are ______________costs.

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Question 53

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Product costs are expenditures necessary and integral to finished products.

________ is an activity that provides financial and nonfinancial information to an organization's managers and other internal decision makers.

The main difference between the cost of goods sold of a manufacturer and a merchandiser is that the manufacturer includes cost of goods manufactured rather than cost of goods purchased.

Products that have been completed and are ready to be sold by the manufacturer are called:

Which of the following represents the correct formula for calculating cost of goods manufactured?

A manufacturing company's beginning finished goods inventory was $29,000; cost of goods manufactured was $316,000; and the ending finished goods inventory was $31,000. What is the cost of goods sold for that year?

Just-in-time manufacturing (JIT) focuses on quality improvement and applies this standard to all aspects of business activities.

A financial report that summarizes the amounts and types of costs that were incurred in the manufacturing process during the period is a:

All of the following statements regarding manufacturing costs are true except:

For each item shown below, classify it as a product cost or a period cost, by placing an X in the appropriate column. For each item that is a product cost, also indicate whether it is a direct cost or an indirect cost with respect to a unit of finished product.

________ inventory consists of goods a company acquires to use in making products.

Waters, Inc. reported the following data regarding costs and inventories for the current year: beginning finished goods inventory, $5,000; cost of goods manufactured, $21,500; ending finished goods inventory, $4,000. Cost of goods sold for Waters, Inc. equals ________.

Expenditures necessary and integral to the manufacture of finished products are ________ costs.

Which of the following is not part of the sales activity in the flow of manufacturing activities?

Cost concepts such as variable, fixed, mixed, direct, and indirect apply only to manufacturers and not to service companies.

The following information is available for the year ended December 31: $\begin{array} { l | r } \text { Beginning raw materials inventory } & \$ 1,000 \\\hline \text { Raw materials purchases } & 86,000 \\\hline \text { Ending raw materials inventory } & 10,400 \\\hline \text { Manufacturing supplies expense } & 900\end{array}$ The amount of raw materials used in production for the year is:

Selling and administrative expenses are normally period costs.

Match the following terms with the appropriate definition. ________ (1) Direct materials ________ (2) Indirect costs ________ (3) Product costs ________ (4) Prime costs (5) Fixed costs (6) Direct labor (7) Period costs (8) Conversion costs (9) Factory overhead (10) Variable costs (a) Costs that flow directly to the current income statement as expenses. (b) Costs that change in proportion to changes in volume of activity. (c) The efforts of employees who physically convert materials to finished products. (d) Manufacturing expenditures that cannot be separately or readily traced to finished goods. (e) Expenditures necessary and integral to finished products. (f) Expenditures incurred in the process of converting raw materials to finished products; include direct labor and factory overhead. (g) Tangible components of a finished product separately and readily traced through the manufacturing process. (h) Expenditures directly associated with the manufacture of finished products; include direct materials and direct labor. (i) Costs that do not change in total with changes in the volume of activity. (j) Costs that are incurred for the benefit of more than one cost object.