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Exam 10: An Introduction to Management Accounting

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Question 1

True/False

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A potential negative effect of using a just in time inventory system is the immediate impact of labor strikes on the transportation system such as railroad.

A) True
B) False

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Question 2

Multiple Choice

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Select the incorrect statement regarding costs and expenses.

A) Some costs are initially recorded as expenses while others are initially recorded as assets.
B) Expenses are incurred when assets are used to generate revenue.
C) Manufacturing-related costs are initially recorded as expenses.
D) Non-manufacturing costs should be expensed in the period in which they are incurred.

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

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Question 3

Multiple Choice

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Manufacturing costs that cannot be traced to specific units of product in a cost-effective manner are:

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?

Senior executives focus on financial data when comparing the performance of their companies to that of competitors.

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 was Silverman's net income for the first year in operation?

What costs are treated as product costs for a manufacturing company?

Which of the following is not one of the four Standards of Ethical Conduct for Management Accountants?

What part do management accountants play in corporate governance?

A company uses sandpaper to prepare its product for finishing. Most manufacturers would classify the sandpaper as direct material because it is physically consumed in the production process.

Which of the following best represents a characteristic of managerial accounting?

Financial accounting information is reported periodically, primarily at the end of each fiscal year. When is managerial accounting information reported to managers of an organization?

A merchandising business paid $2,500 to purchase inventory and $50 to have the inventory delivered to its customers. Its product costs were $2,550.

Identify the false statement regarding how product costs in a manufacturing company differ from product costs in a service or merchandising company.

The sequence of activities through which an organization provides products to its customers is called a supply chain.

How do information needs of employees change moving up the organization chart?

What are indirect costs, and how are the indirect costs incurred to make products accounted for?

How does the Sarbanes-Oxley Act of 2002 affect the responsibilities of the managers of publicly held US corporations?

During its first year of operations, Forrest Company paid $30,000 for direct materials and $50,000 in wages for production workers. Lease payments, utility costs, and depreciation on factory equipment totaled $15,000. General, selling, and administrative expenses were $20,000. The average cost to produce one unit was $2.50. How many units were produced during the period?

The following information relates to Minimart's 2012 accounting period: $\begin{array}{|l|r|}\hline \text { Raw materials used } & \$ 17,000 \\\hline \text { Direct labor wages and salaries } & 33,000 \\\hline \text { Sales salaries } & 25,000 \\\hline \text { Depreciation on manufacturing equipment } & 3,000 \\\hline \text { Rent on manufacturing facilities } & 4,000 \\\hline \text { Administrative supplies and utilities } & 5,000 \\\hline \text { Sales revenue } & 105,000 \\\hline \text { Units of products produced } & 4,000 \\\hline \text { Units of products sold } & 4,000 \\\hline\end{array}$ Minimart's work in process inventory at the beginning of 2012 was $12,000, and work in process inventory at the end of 2012 was $10,000. Minimart's cost of goods manufactured in 2012 equal: