Question 1

Cost of goods sold is equal to the cost of goods:

Accepted Answer

A)  manufactured minus ending finished goods.
B)  available for sale minus beginning finished goods.
C)  available for sale minus ending finished goods.
D)  manufactured minus beginning finished goods.E) C) and D)
F) B) and D)

Question 2

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

Accepted Answer

A) True 
 B)False

Question 3

Ringgold Company had beginning finished goods of $36,000. During the period, the company produced goods that cost $150,000. If the ending balance in the Finished Goods Inventory account was $24,000, the amount of cost of goods sold was:

Accepted Answer

A)  $162,000.
B)  $150,000.
C)  $138,000.
D)  none of these.E) All of the above
F) C) and D)

Question 4

Recording depreciation on manufacturing equipment will:

Accepted Answer

A)  decrease total assets, total equity, and net income.
B)  not affect total assets or net income.
C)  decrease total assets, decrease net income, and increase total equity.
D)  not affect total assets, and decrease net income.E) None of the above
F) All of the above

Question 5

Guest Corporation estimated that total overhead cost would be $23,000 for the current year, but actual overhead costs were $25,500; as a result, Guest spent $2,500 more than expected for overhead cost. This type of variance is known as a(n) :

Accepted Answer

A)  material variance.
B)  activity variance.
C)  volume variance.
D)  spending variance.E) A) and B)
F) None of the above

Question 6

Herald Company paid $2,800 cash for production supplies. The recognition of this event will:

Accepted Answer

A)  not impact total assets.
B)  increase expenses.
C)  decrease equity.
D)  None of these.E) A) and B)
F) C) and D)

Question 7

Company X manufactures 3-ring notebooks. All of the following are considered indirect costs except:

Accepted Answer

A)  cardboard used in production of the notebooks.
B)  depreciation on manufacturing equipment.
C)  factory utilities.
D)  salaries for production supervisors.E) A) and C)
F) A) and B)

Question 8

Orlando Company paid $700 cash for production workers' wages. How does this transaction affect the financial statements?   Assets = Liab. + Equity  Rev. − Exp. = Net Inc.  Cash + WIP Inv. \begin{array}{|l|c|c|c|c|c|c|c|c|c|c|c|}\hline &{	ext { Assets }} && = & 	ext { Liab. } & + & 	ext { Equity } & 	ext { Rev. } & - & 	ext { Exp. } & = & 	ext { Net Inc. } \\hline 	ext { Cash } & + & 	ext { WIP Inv. } & & & & & & & & & \\hline\end{array} Cash ​ Assets +​ WIP Inv. ​=​ Liab. ​+​ Equity ​ Rev. ​−​ Exp. ​=​ Net Inc. ​​

Accepted Answer

A)    (700) +700= NA + NA  NA − NA = NA \begin{array}{|l|l|l|l|l|l|l|l|l|l|l|l|}\hline(700)  & + & 700 & = & 	ext { NA } & + & 	ext { NA } & 	ext { NA } & - & 	ext { NA } & = & 	ext { NA } \\hline\end{array}(700) ​+​700​=​ NA ​+​ NA ​ NA ​−​ NA ​=​ NA ​​ 
B)    (700) + NA = (700)  + NA  NA − NA = NA \begin{array}{|l|l|l|l|l|l|l|l|l|l|l|l|}\hline(700)  & + & 	ext { NA } & = & 	ext { (700)  } & + & 	ext { NA } & 	ext { NA } & - & 	ext { NA } & = & 	ext { NA } \\hline\end{array}(700) ​+​ NA ​=​ (700)  ​+​ NA ​ NA ​−​ NA ​=​ NA ​​ 
C)    (700) + NA = NA +(700)  NA −700= (700)  \begin{array}{|l|l|l|l|l|l|l|l|l|l|l|l|}\hline(700)  & + & 	ext { NA } & = & 	ext { NA } & + & (700)  & 	ext { NA } & - & 700 & = & 	ext { (700)  } \\hline\end{array}(700) ​+​ NA ​=​ NA ​+​(700) ​ NA ​−​700​=​ (700)  ​​ 
D)     NA +700=700+ NA  NA − NA = NA \begin{array}{|l|l|l|l|l|l|l|l|l|l|l|l|}\hline 	ext { NA } & + & 700 & = & 700 & + & 	ext { NA } & 	ext { NA } & - & 	ext { NA } & = & 	ext { NA } \\hline\end{array} NA ​+​700​=​700​+​ NA ​ NA ​−​ NA ​=​ NA ​​E) B) and D)
F) A) and B)

Question 9

For a manufacturing business, cost of indirect materials is first recorded in the:

Accepted Answer

A)  Raw Materials Inventory account.
B)  Supplies Inventory account.
C)  Work In Process Inventory account.
D)  Manufacturing Overhead account.E) B) and D)
F) B) and C)

Question 10

Describe the basic differences between absorption and variable costing. Why are managers sometimes motivated to produce too much inventory when income is computed under an absorption costing system?

Accepted Answer

Answers will vary
Absorption costing is ...

Question 11

The work in process account is debited when production workers are paid.

Accepted Answer

A) True 
 B)False

Question 12

Lake Manufacturing estimated its product costs and production volume for the upcoming year by quarter as follows:
The company expects a significant increase in volume in the fourth quarter due to holiday sales. The company does not expect overhead costs, which are predominately fixed, to vary with production volume or to vary significantly from previous years. Selling prices are established using a cost plus pricing strategy where cost is the product's estimated quarterly cost. However, the company finds the wide variations in short-term unit cost difficult to use. Specifically, unit cost fluctuations complicate pricing decisions and many other decisions where cost is a consideration.Required:
1) Compute the company's expected cost per unit for each quarter of the year.2) How would you suggest that overhead costs be estimated to solve the company's unit cost problem? Calculate the unit cost per quarter based on your recommendation.

Accepted Answer

Answers will vary
1) Expected quarterly ...

Question 13

Describe the schedule of cost of goods manufactured and sold. What information does it include, and how is it used?

Accepted Answer

Answers will vary
The schedule of cost o...

Question 14

Applied overhead costs are recorded as decreases in the manufacturing overhead account.

Accepted Answer

A) True 
 B)False

Question 15

Cost of goods sold must be determined prior to computing cost of goods manufactured.

Accepted Answer

A) True 
 B)False

Question 16

Describe the conflict between the need for cost information to make managerial decisions and the timing of the availability of actual cost data. How do companies resolve this conflict?

Accepted Answer

Answers will vary
There are two kinds of...

Question 17

Oakland Company paid $200 cash for various manufacturing overhead costs, not before recorded. How does this transaction affect the financial statements?   Assets = Liab. + Equity  Rev. − Exp. = Net Inc.  Cash + Mfg. OH\begin{array} { | l | l | l | l | l | l | l | l | l | l |  } \hline  { 	ext { Assets } } & = & 	ext { Liab. } & + & 	ext { Equity } & 	ext { Rev. } & - & 	ext { Exp. } & = & 	ext { Net Inc. } \\hline 	ext { Cash } & + & 	ext { Mfg. } \mathrm { OH } & & & & & & &  \\hline\end{array} Assets  Cash ​=+​ Liab.  Mfg. OH​+​ Equity ​ Rev. ​−​ Exp. ​=​ Net Inc. ​​

Accepted Answer

A)    (200) +200= NA + NA  NA − NA = NA \begin{array} { | l | l | l | l | l | l | l | l | l | l | l | l | } \hline ( 200 )  & + & 200 & = & 	ext { NA } & + & 	ext { NA } & 	ext { NA } & - & 	ext { NA } & = & 	ext { NA } \\hline\end{array}(200) ​+​200​=​ NA ​+​ NA ​ NA ​−​ NA ​=​ NA ​​ 
B)    (200) + NA =200+ NA  NA − NA = NA \begin{array} { | l | l | l | l | l | l | l | l | l | l | l | l | } \hline ( 200 )  & + &  	ext { NA }& = &200 & + & 	ext { NA } & 	ext { NA } & - & 	ext { NA } & = & 	ext { NA } \\hline\end{array}(200) ​+​ NA ​=​200​+​ NA ​ NA ​−​ NA ​=​ NA ​​ 
C)    (200) + NA = NA +(200)  NA −200=(200) \begin{array} { | l | l | l | l | l | l | l | l | l | l | l | l | } \hline ( 200 )  & + & 	ext { NA } & = & 	ext { NA } & + & ( 200 )  & 	ext { NA } & - & 200 & = & ( 200 )  \\hline\end{array}(200) ​+​ NA ​=​ NA ​+​(200) ​ NA ​−​200​=​(200) ​​ 
D)    (200) +(200) = NA + NA  NA − NA = NA \begin{array}{|l|l|l|l|l|l|l|l|l|l|l|l|}\hline(200)  & + & (200)  & = & 	ext { NA } & + & 	ext { NA } & 	ext { NA } & - & 	ext { NA } & = & 	ext { NA } \\hline\end{array}(200) ​+​(200) ​=​ NA ​+​ NA ​ NA ​−​ NA ​=​ NA ​​E) B) and D)
F) A) and B)

Question 18

The cost of direct materials flow through all of the following accounts except:

Accepted Answer

A)  Manufacturing Overhead.
B)  Work in Process Inventory.
C)  Finished Goods Inventory.
D)  Cost of Goods Sold.E) None of the above
F) All of the above

Question 19

The accounting records for Moss Manufacturing Company included the following cost information relating to its first year of operations: Assume the company produced 10,000 units of inventory and sold 6,000 of these units for $196,000. What amount of finished goods will be reported on the balance sheet at the end of the year under variable costing?
  Direct materials $60,000 Direct labor $80,000 Fixed manufacturing overhead $100,000 Variable manufacturing overhead $20,000\begin{array} { | l | c r | } \hline 	ext { Direct materials } & \$ & 60,000 \\hline 	ext { Direct labor } & \$ & 80,000 \\hline 	ext { Fixed manufacturing overhead } & \$ & 100,000 \\hline 	ext { Variable manufacturing overhead } & \$ & 20,000 \\hline\end{array} Direct materials  Direct labor  Fixed manufacturing overhead  Variable manufacturing overhead ​$$$$​60,00080,000100,00020,000​​

Accepted Answer

A)  $100,000
B)  $96,000
C)  $64,000
D)  None of these. E) A) and B)
F) A) and C)

Question 20

Purchasing production supplies for cash is a(n) :

Accepted Answer

A)  asset source transaction.
B)  asset exchange transaction.
C)  asset use transaction.
D)  claims exchange transaction.E) B) and D)
F) C) and D)

Exam 11: Product Costing in Service and Manufacturing Entities

Correct Answer
verified

Describe the schedule of cost of goods manufactured and sold. What information does it include, and how is it used?

Correct Answer
verified
Answers will vary
The schedule of cost o...
View Answer

Company X manufactures 3-ring notebooks. All of the following are considered indirect costs except:

Correct Answer
verified

Herald Company paid $2,800 cash for production supplies. The recognition of this event will:

Correct Answer
verified

Guest Corporation estimated that total overhead cost would be $23,000 for the current year, but actual overhead costs were $25,500; as a result, Guest spent $2,500 more than expected for overhead cost. This type of variance is known as a(n) :

Correct Answer
verified

The cost of direct materials flow through all of the following accounts except:

Correct Answer
verified

Ringgold Company had beginning finished goods of $36,000. During the period, the company produced goods that cost $150,000. If the ending balance in the Finished Goods Inventory account was $24,000, the amount of cost of goods sold was:

Correct Answer
verified

Applied overhead costs are recorded as decreases in the manufacturing overhead account.

Correct Answer
verified

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

Correct Answer
verified

Cost of goods sold is equal to the cost of goods:

Correct Answer
verified

The work in process account is debited when production workers are paid.

Correct Answer
verified

Describe the conflict between the need for cost information to make managerial decisions and the timing of the availability of actual cost data. How do companies resolve this conflict?

Correct Answer
verified
Answers will vary
There are two kinds of...
View Answer

For a manufacturing business, cost of indirect materials is first recorded in the:

Correct Answer
verified

Describe the basic differences between absorption and variable costing. Why are managers sometimes motivated to produce too much inventory when income is computed under an absorption costing system?

Correct Answer
verified
Answers will vary
Absorption costing is ...
View Answer

Cost of goods sold must be determined prior to computing cost of goods manufactured.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Answers will vary
1) Expected quarterly ...
View Answer

Purchasing production supplies for cash is a(n) :

Correct Answer
verified

Recording depreciation on manufacturing equipment will:

Correct Answer
verified

Correct Answer
verified

Exam 11: Product Costing in Service and Manufacturing Entities

Correct AnswerverifiedShow Answer

Describe the schedule of cost of goods manufactured and sold. What information does it include, and how is it used?

Correct AnswerverifiedAnswers will varyThe schedule of cost o...View AnswerShow Answer

Company X manufactures 3-ring notebooks. All of the following are considered indirect costs except:

Correct AnswerverifiedShow Answer

Herald Company paid $2,800 cash for production supplies. The recognition of this event will:

Correct AnswerverifiedShow Answer

Guest Corporation estimated that total overhead cost would be $23,000 for the current year, but actual overhead costs were $25,500; as a result, Guest spent $2,500 more than expected for overhead cost. This type of variance is known as a(n) :

Correct AnswerverifiedShow Answer

The cost of direct materials flow through all of the following accounts except:

Correct AnswerverifiedShow Answer

Ringgold Company had beginning finished goods of $36,000. During the period, the company produced goods that cost $150,000. If the ending balance in the Finished Goods Inventory account was $24,000, the amount of cost of goods sold was:

Correct AnswerverifiedShow Answer

Applied overhead costs are recorded as decreases in the manufacturing overhead account.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Cost of goods sold is equal to the cost of goods:

Correct AnswerverifiedShow Answer

The work in process account is debited when production workers are paid.

Correct AnswerverifiedShow Answer

Describe the conflict between the need for cost information to make managerial decisions and the timing of the availability of actual cost data. How do companies resolve this conflict?

Correct AnswerverifiedAnswers will varyThere are two kinds of...View AnswerShow Answer

For a manufacturing business, cost of indirect materials is first recorded in the:

Correct AnswerverifiedShow Answer

Describe the basic differences between absorption and variable costing. Why are managers sometimes motivated to produce too much inventory when income is computed under an absorption costing system?

Correct AnswerverifiedAnswers will varyAbsorption costing is ...View AnswerShow Answer

Cost of goods sold must be determined prior to computing cost of goods manufactured.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedAnswers will vary1) Expected quarterly ...View AnswerShow Answer

Purchasing production supplies for cash is a(n) :

Correct AnswerverifiedShow Answer

Recording depreciation on manufacturing equipment will:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified
Answers will vary
The schedule of cost o...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Answers will vary
There are two kinds of...
View Answer

Correct Answer
verified

Correct Answer
verified
Answers will vary
Absorption costing is ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Answers will vary
1) Expected quarterly ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified