Questions and Answers of Financial And Managerial Accounting

Direct materials inventories are kept in pounds in Byrd Company, and the total pounds of direct materials needed for production is 9,500. If the beginning inventory is 1,000 pounds and the desired
The formula for computing the direct labor budget is to multiply the direct labor cost per hour by the:(a) total required direct labor hours.(b) physical units to be produced.(c) equivalent units to
Each of the following budgets is used in preparing the budgeted income statement except the:(a) sales budget.(b) selling and administrative budget.(c) capital expenditure budget.(d) direct labor
The budgeted income statement is:(a) the end-product of the operating budgets.(b) the end-product of the financial budgets.(c) the starting point of the master budget.(d) dependent on cash receipts
The budgeted balance sheet is:(a) developed from the budgeted balance sheet for the preceding year and the budgets for the current year.(b) the last operating budget prepared.(c) used to prepare the
The format of a cash budget is:(a) Beginning cash balance + Cash receipts + Cash from financing - Cash disbursements = Ending cash balance.(b) Beginning cash balance + Cash receipts - Cash
Expected direct materials purchases in Read Company are $70,000 in the first quarter and $90,000 in the second quarter. Forty percent of the purchases are paid in cash as incurred, and the balance is
The budget for a merchandiser differs from a budget for a manufacturer because:(a) a merchandise purchases budget replaces the production budget.(b) the manufacturing budgets are not applicable.(c)
In most cases, not-for-profit entities:(a) prepare budgets using the same steps as those used by profit-oriented businesses.(b) know budgeted cash receipts at the beginning of a time period, so they
In Strassel Company’s flexible budget graph, the fixed cost line and the total budgeted cost line intersect the vertical axis at $36,000. The total budgeted cost line is $186,000 at an activity
Lawler Company expects to produce 40,000 units of product CV93 during the current year.Budgeted variable manufacturing costs per unit are direct materials $6, direct labor $15, and overhead $24.
Midwest Division operates as a profit center. It reports the following for the year:Prepare a responsibility report for the Midwest Division for December 31, 2014. Sales Variable costs Controllable
The service division of Metro Industries reported the following results for 2014.Management is considering the following independent courses of action in 2015 in order to maximize the return on
Glenda Company uses a flexible budget for manufacturing overhead based on direct labor hours. For 2014, the master overhead budget for the Packaging Department based on 300,000 direct labor hours was
Budgetary control involves all but one of the following:(a) modifying future plans.(b) analyzing differences.(c) using static budgets.(d) determining differences between actual and planned results.
Budget reports are prepared:(a) daily.(b) weekly.(c) monthly.(d) All of the above.
A production manager in a manufacturing company would most likely receive a:(a) sales report.(b) income statement.(c) scrap report.(d) shipping department overhead report.
A static budget is:(a) a projection of budget data at several levels of activity within the relevant range of activity.(b) a projection of budget data at a single level of activity.(c) compared to a
A static budget is useful in controlling costs when cost behavior is:(a) mixed.(b) fixed.(c) variable.(d) linear.
At zero direct labor hours in a flexible budget graph, the total budgeted cost line intersects the vertical axis at $30,000. At 10,000 direct labor hours, a horizontal line drawn from the total
At 9,000 direct labor hours, the flexible budget for indirect materials is $27,000. If $28,000 of indirect materials costs are incurred at 9,200 direct labor hours, the flexible budget report should
Under responsibility accounting, the evaluation of a manager’s performance is based on matters that the manager:(a) directly controls.(b) directly and indirectly controls.(c) indirectly
Responsibility centers include:(a) cost centers.(b) profit centers.(c) investment centers.(d) All of the above.
Responsibility reports for cost centers:(a) distinguish between fixed and variable costs.(b) use static budget data.(c) include both controllable and noncontrollable costs.(d) include only
The accounting department of a manufacturing company is an example of:(a) a cost center. (b) a profit center. (c) an investment center.(d) a contribution center.
To evaluate the performance of a profit center manager, upper management needs detailed information about:(a) controllable costs.(b) controllable revenues.(c) controllable costs and revenues.(d)
In a responsibility report for a profit center, controllable fixed costs are deducted from contribution margin to show:(a) profit center margin.(b) controllable margin.(c) net income.(d) income from
In the formula for return on investment (ROI), the factors for controllable margin and operating assets are, respectively:(a) controllable margin percentage and total operating assets.(b)
A manager of an investment center can improve ROI by:(a) increasing average operating assets.(b) reducing sales.(c) increasing variable costs.(d) reducing variable and/or controllable fixed costs.
The Wellstone Division operates as a profit center. It reports the following for the year.Budget Actual Sales $2,000,000 $1,860,000 Variable costs 800,000 760,000 Controllable fixed costs 550,000
Standards differ from budgets in that:(a) budgets but not standards may be used in valuing inventories.(b) budgets but not standards may be journalized and posted.(c) budgets are a total amount and
Standard costs:(a) are imposed by governmental agencies.(b) are predetermined unit costs which companies use as measures of performance.(c) can be used by manufacturing companies but not by service
The advantages of standard costs include all of the following except:(a) management by exception may be used.(b) management planning is facilitated.(c) they may simplify the costing of
Normal standards:(a) allow for rest periods, machine breakdowns, and setup time.(b) represent levels of performance under perfect operating conditions.(c) are rarely used because managers believe
The setting of standards is:(a) a managerial accounting decision.(b) a management decision.(c) a worker decision.(d) preferably set at the ideal level of performance.
Each of the following formulas is correct except:(a) Labor price variance = (Actual hours x Actual rate) - (Actual hours x Standard rate).(b) Total overhead variance = Actual overhead - Overhead
In producing product AA, 6,300 pounds of direct materials were used at a cost of $1.10 per pound. The standard was 6,000 pounds at $1.00 per pound. The direct materials quantity variance is:(a) $330
In producing product ZZ, 14,800 direct labor hours were used at a rate of $8.20 per hour. The standard was 15,000 hours at $8.00 per hour. Based on these data, the direct labor:(a) quantity variance
Which of the following is correct about the total overhead variance?(a) Budgeted overhead and budgeted overhead applied are the same.(b) Total actual overhead is composed of variable overhead, fixed
The formula for computing the total overhead variance is:(a) actual overhead less overhead applied.(b) overhead budgeted less overhead applied.(c) actual overhead less overhead budgeted.(d) No
Which of the following is incorrect about variance reports?(a) They facilitate “management by exception.”(b) They should only be sent to the top level of management.(c) They should be prepared as
In using variance reports to evaluate cost control, management normally looks into:(a) all variances.(b) favorable variances only.(c) unfavorable variances only.(d) both favorable and unfavorable
Generally accepted accounting principles allow a company to:(a) report inventory at standard cost but cost of goods sold must be reported at actual cost.(b) report cost of goods sold at standard cost
Which of the following would not be an objective used in the customer perspective of the balanced scorecard approach?(a) Percentage of customers who would recommend product to a friend.(b) Customer
Which of the following is incorrect about a standard cost accounting system?(a) It is applicable to job order costing.(b) It is applicable to process costing.(c) It reports only favorable
The formula to compute the overhead volume variance is:(a) Fixed overhead rate x (Standard hours - Actual hours).(b) Fixed overhead rate x (Normal capacity hours - Actual hours).(c) Fixed overhead
The basic tools of financial analysis are the same under both GAAP and IFRS except that:(a) horizontal analysis cannot be done because the format of the statements is sometimes different.(b) analysis
Under IFRS:(a) the reporting of discontinued items is different than GAAP.(b) the reporting of extraordinary items is prohibited.(c) the reporting of changes in accounting principles is different
Parmalane reports the following information:Sales revenue $500,000 Cost of goods sold 200,000 Operating expense 40,000 Unrealized loss on non-trading securities 10,000 Parmalane should report the
Assuming the same information as in Question 4, Parmalane should report the following using a one-statement approach under IFRS:(a) net income of $260,000 and comprehensive income of $270,000.(b) net
Indicate whether the following statements are true or false.1. Managerial accountants have a single role within an organization, collecting and reporting costs to management.2. Financial accounting
A bicycle company has these costs: tires, salaries of employees who put tires on the wheels, factory building depreciation, lubricants, spokes, salary of factory manager, handlebars, and salaries of
The following information is available for Keystone Company.Prepare the cost of goods manufactured schedule for the month of March. Raw materials inventory Work in process inventory Materials
Match the descriptions that follow with the corresponding terms. Descriptions: 1. All activities associated with providing a product or service. 2. A method of allocating overhead based on each
Superior Company has the following cost and expense data for the year ending December 31, 2014.Instructions (a) Prepare a cost of goods manufactured schedule for Superior Company for 2014.(b) Prepare
Managerial accounting:(a) is governed by generally accepted accounting principles.(b) places emphasis on special-purpose information.(c) pertains to the entity as a whole and is highly aggregated.(d)
The management of an organization performs several broad functions. They are:(a) planning, directing, and selling.(b) planning, directing, and controlling.(c) planning, manufacturing, and
After passage of the Sarbanes-Oxley Act:(a) reports prepared by managerial accountants must by audited by CPAs.(b) CEOs and CFOs must certify that financial statements give a fair presentation of the
Direct materials are a: Product Cost (a) Yes (b) Yes (c) Yes (d) No Manufacturing Overhead Yes No Yes No Period Cost No No Yes No
Which of the following costs would a computer manufacturer include in manufacturing overhead?(a) The cost of the disk drives.(b) The wages earned by computer assemblers.(c) The cost of the memory
Which of the following is not an element of manufacturing overhead?(a) Sales manager’s salary.(b) Plant manager’s salary.(c) Factory repairman’s wages.(d) Product inspector’s salary.
Indirect labor is a:(a) nonmanufacturing cost.(b) raw material cost.(c) product cost.(d) period cost.
Which of the following costs are classified as a period cost?(a) Wages paid to a factory custodian.(b) Wages paid to a production department super visor.(c) Wages paid to a cost accounting department
For the year, Redder Company has cost of goods manufactured of $600,000, beginning finished goods inventory of $200,000, and ending finished goods inventory of $250,000. The cost of goods sold is:(a)
Cost of goods available for sale is a step in the calculation of cost of goods sold of:(a) a merchandising company but not a manufacturing company.(b) a manufacturing company but not a merchandising
A cost of goods manufactured schedule shows beginning and ending inventories for:(a) raw materials and work in process only.(b) work in process only.(c) raw materials only.(d) raw materials, work in
A manufacturer may report three inventories on its balance sheet: (1) raw materials, (2) work in process, and (3) finished goods. Indicate in what sequence these inventories generally appear on a
Which of the following managerial accounting techniques attempts to allocate manufacturing overhead in a more meaningful fashion?(a) Just-in-time inventory.(b) Total quality management.(c) Balanced
Corporate social responsibility refers to:(a) the practice by management of reviewing all business processes in an effort to increase productivity and eliminate waste.(b) an approach used to allocate
During the current month, Ringling Company incurs the following manufacturing costs:(a) Raw material purchases of $4,200 on account.(b) Incurs factory labor of $18,000. Of that amount, $15,000
Danielle Company is working on two job orders. The job cost sheets show the following:Direct materials—Job 120 $6,000; Job 121 $3,600 Direct labor—Job 120 $4,000; Job 121 $2,000 Manufacturing
During the current month, Onyx Corporation completed Job 109 and Job 112. Job 109 cost $19,000 and Job 112 cost $27,000. Job 112 was sold on account for $42,000. Journalize the entries for the
For Karr Company, the predetermined overhead rate is 140% of direct labor cost. During the month, Karr incurred $90,000 of factory labor costs, of which $80,000 is direct labor and $10,000 is
Cardella Company applies overhead on the basis of direct labor costs. The company estimates annual overhead costs will be $760,000, and annual direct labor costs will be $950,000.During February,
A company is more likely to use a job order cost system if:(a) it manufactures a large volume of similar products.(b) its production is continuous.(c) it manufactures products with unique
When incurred, factory labor costs are debited to:(a) Work in Process.(b) Factory Wages Expense.(c) Factory Labor.(d) Factory Wages Payable.
The source documents for assigning costs to job cost sheets are:(a) invoices, time tickets, and the predetermined overhead rate.(b) materials requisition slips, time tickets, and the actual overhead
In recording the issuance of raw materials in a job order cost system, it would be incorrect to:(a) debit Work in Process Inventory.(b) debit Finished Goods Inventory.(c) debit Manufacturing
The entry when direct factory labor is assigned to jobs is a debit to:(a) Work in Process Inventory and a credit to Factory Labor.(b) Manufacturing Overhead and a credit to Factory Labor.(c) Factory
Mynex Company completes Job No. 26 at a cost of $4,500 and later sells it for $7,000 cash. A correct entry is:(a) debit Finished Goods Inventory $7,000 and credit Work in Process Inventory $7,000.(b)
Indicate whether each of the following statements is true or false.1. A law firm is likely to use process costing for major lawsuits.2. A manufacturer of paintballs is likely to use process
Ruth Company manufactures ZEBO through two processes: blending and bottling. InJune, raw materials used were Blending $18,000 and Bottling $4,000. Factory labor costswere Blending $12,000 and
The fabricating department has the following production and cost data for the current month.Materials are entered at the beginning of the process. The ending work in process unitsare 30% complete as
In March, Rodayo Manufacturing had the following unit production costs: materials $6and conversion costs $9. On March 1, it had zero work in process. During March, Rodayotransferred out 12,000 units.
Karlene Industries produces plastic ice cube trays in two processes: heating and stamping.All materials are added at the beginning of the Heating Department process. Karlene usesthe weighted-average
Which of the following items is not characteristic of a process cost system?(a) Once production begins, it continues until the fi nished product emerges.(b) The products produced are heterogeneous in
Indicate which of the following statements is not correct.(a) Both a job order and a process cost system track the same three manufacturing cost elements—direct materials, direct labor, and
In a process cost system, the flow of costs is:(a) work in process, cost of goods sold, finished goods.(b) finished goods, work in process, cost of goods sold.(c) finished goods, cost of goods sold,
In making journal entries to assign raw materials costs, a company using process costing:(a) debits Finished Goods Inventory.(b) often debits two or more work in process accounts.(c) generally
In a process cost system, manufacturing overhead:(a) is assigned to finished goods at the end of each accounting period.(b) is assigned to a work in process account for each job as the job is
Conversion costs are the sum of:(a) fixed and variable overhead costs.(b) labor costs and overhead costs.(c) direct material costs and overhead costs.(d) direct labor and indirect labor costs.
The Mixing Department’s output during the period consists of 20,000 units completed and transferred out, and 5,000 units in ending work in process 60% complete as to materials and conversion costs.
In RYZ Company, there are zero units in beginning work in process, 7,000 units started into production, and 500 units in ending work in process 20% completed. The physical units to be accounted for
Mora Company has 2,000 units in beginning work in process, 20% complete as to conversion costs, 23,000 units transferred out to finished goods, and 3,000 units in ending work in process 331 3%
Fortner Company has no beginning work in process; 9,000 units are transferred out and 3,000 units in ending work in process are one-third finished as to conversion costs and fully complete as to
Largo Company has unit costs of $10 for materials and $30 for conversion costs. If there are 2,500 units in ending work in process, 40% complete as to conversion costs, and fully complete as to
A production cost report:(a) is an external report.(b) shows both the production quantity and cost data related to a department.(c) shows equivalent units of production but not physical units.(d)
Hollins Company uses the FIFO method to compute equivalent units. It has 2,000 units in beginning work in process, 20% complete as to conversion costs, 25,000 units started and completed, and 3,000
KLM Company uses the FIFO method to compute equivalent units. It has no beginning work in process; 9,000 units are started and completed and 3,000 units in ending work in process are one-third
Toney Company uses the FIFO method to compute equivalent units. It has unit costs of $10 for materials and $30 for conversion costs. If there are 2,500 units in ending work in process, 100% complete

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