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Name Mid Term Test 1 True False Indicate whether the statement is true or false 1 1 . Management accounting exists primarily for the benefit of people inside a company I Managerial accounting primarily provides information on past performance Managerial accounting's main emphasis is on full and accurate accounting for and disclosure of a company's operating results 4 . Inventoriable cost is a synonym of product cost 5 . Property taxes and equipment depreciation are examp examples of indirect manufacturing costs 6 . The costs of labor for maintenance and inspections are examples of direct labor 7 . Both indirect materials and indirect labor are overhead costs At the end of an accounting period , the balance in the F the Finished Goods Inventory account is the sum of costs of products completed and the cost of goods sold as of that date The costs of materials used in production are transferred from the Materials Inventory account directly to the Cost of Goods Sold account 10 . Indirect product costs incurred are charged directly to the Cost of Goods Sold account 1 . As units are completed their costs are Is are transferred from the Materials Inventory account to the Finished Goods Inventory account 12 . Overhead costs can be directly be directly traced to products once the products are completed 13 . Overhead costs are traced to products in the same way that direct materials and direct labor are traced 14 . Product costs can be found on both the balance sheet and the income statement 15 . Product unit cost is the sum of direct materials , direct labor , and overhead divided by the total number of units produced 16 . The key to the preparation of an income statement for a manufacturing company is proper determination of the cost of goods manufactured 17 . The amount of cost of goods sold and cost of goods manufactured will be the same if a company sells all of the units it produced18 . Manufacturing costs incurred in an accounting period cannot be included in the cost of goods sold for the subsequent accounting period 19 . Managers use managerial accounting principles to guide their actions and decisions in the management process 20 . The overriding goal of a business is to increase the value of the stakeholders interest in the business 1 . The evaluation stage of management process includes comparing ac tual with the established standards 22 . Management accounting accumulates , maintains , and processes an of an organization's financial and nonfinancial information 23 . The four stages of the management process are planning , performing , evaluating , and communicating 24 . A manager should focus on the purpose of a report while preparing it 25 . All ethical conflicts are resolved by the accountant of a company 26 . Although the purpose of the confidentiality standard is to encourage management accountants to remain loyal to their company , failure to disclose knowledge of into internal illegal acts to outside authorities can result in the accountants being charged as an accessory to the crime 27 . A job order costing system measures costs of each processes using an inventory account for each . 8 . Companies that produce custom anies that produce custom- made products usually use a process costing system 29 . Job order costing is used by companies that make unique or special -order produc 30 . When a job has been completed , all of the costs assigned to that job are moved to the Cost of Goods Sold account 1 . In a job order costing system , when indirect materials are used , the Overhead account is increased 32 . If applied overhead exceeds actual overhead , cost of goods sold must be increased by the amount of the overapplied overhead in a job order costing system 33 . The ending balance of Work in Process account is compared with the total costs shown on the job order cos cards to ensure correctness 34 . Once the products are completed , packaged , and ready for sale , their costs are transferred to the Finished Goods Inventory accoun 35 . In a process costing system while computing the cost per equivalent unit regardless of the cost approach used , cost of beginning inventory is ignoredName: ID: A 36. Total conversion costs for the period include direct materials, direct labor, and overhead. 37. Equivalent units are defined as the number of units completed and sold during the current period 38. Regardless of beginning inventory levels, beginning inventory is always ignored while computing the equiv ivalent units of production. 39. In a process costing system, the amount of total costs to be accounted for is made up of direct materials and conversion costs incurred during the current period plus those costs included in the beginning Work in Process Inventory account. 40. Managers prepare process cost reports in the evaluating stage of the management process. Multiple Choice Identify the choice that best completes the statement or answers the question. 1. Management accounting reports are primarily used by parties inside the organization. must be prepared on a periodic basis. c. are generally publicly available. d. are based on generally accepted accounting principles. Which of the following user groups will use managerial accounting information for decision-making purposes? a. Customers b. Lenders c. Employees Stockholders 3. The unit of measurement used in management accounting reports is primarily the historical dollar. usually current replacement cost. c. d. any measurement unit that is useful in a particular situation. the measurement unit used by competing companies. 4. Which of the following is not a reason to classify costs as either product or period costs? a. b. To determine unit manufacturing costs To determine if the costs are fixed or variable c. To analyze costs for control purposes d. To report production costs on the income statement 5. Period cost is also called a. variable cost. b. direct cost. c. value-adding cost. d. noninventoriable cost. 12inlunch was ID : A 6 . Which of the following is not a product cost ? a . Depreciation on office furniture Manufacturing overhead Direct labor Direct materials Materials and supplies that cannot be traced conveniently to specific products are called indirect materials b . raw materials C . waste materials d . direct materials Which of the following costs is considered overhead ? Indirect labor costs only Direct materials costs only Both indirect materials and indirect labor cost Direct materials and direct labor costs 9 . Which of the following is not a product cost ? a . Indirect materials costs b . Packaging costs Direct labor costs d . Overhead costs 10 . Which of the following equations is correct ? Total Manufacturing Costs - Direct Materials + Direct Labor + Selling Costs b . Total Manufacturing Costs - Direct Materials + Direct Labor + Overhead Total Manufacturing Costs - Direct Labor + Overhead + Selling Costs + Administrative d . Total Manufacturing Costs = Product Costs + Period Costs 1 . Which of the following accounts decreases when cost of goods manufactured is recorded ? Work in Process Inventory b . Finished Goods Inventory Overhead Cost of Goods Sold 12 . To calculate the total cost of goods manufactured from total manufacturing costs a subtract all period costs from total manufacturing costs b . add beginning and subtract ending finished goods inventory to total manufacturing costs you must know how many goods were sold during the period d . add beginning and subtract ending work in process inventory to total manufacturing 13 . Which of the following is exclusive to a production - oriented company ? Balance sheet 6 . Statement of cash flows Income statement d . Statement of cost of goods manufacturedName : 14 . The Finished Goods Inventory and the Cost of Goods Sold for a man manufacturing company for the year 2014 are as follows : May I Finished Goods Invento Inventory , $470 , 500 May 31 Finished Goods Inventory , $ 125 000 Cost of Goods Sold for the year , $1 1 10 , 100 . The cost of goods manufactured for the month was $1 455 500 b . 8595 , 500 C. $985, 000 d . 8764 , 500 15 . Which of the following account balances is not reported on the balance sheet ? Materials Inventory 6 . Manufacturing Patents Cost of Goods Sold d . Work in Process Inventory 16 . The following are costs for a selected period direct materials used in production , $75 000 ; direct labor cost of converting materials into product , $150,090 total ind otal indirect costs of manufacturing , $45 090 . What is the unit cost of manufacturing 30 090 units in this period ? 2 87.50 b . 89.00 C. 8600 d. $4.00 17 . Which of the following represents normal cost measurement ? 2 . Actual Direct Materials + Actual Direct Labor + Actual Overhead b . Actual Direct Materials + Actual Direct Labor + Estim stimated Overhead Estimated Direct Materials + Estimated Direct Labor + Actual Overhead d . Actual Direct Materials + Estimated Direct Labor + Estimated Overhead 18 . If a management accountant confides to a relative that his or her company has a confidential plan to merge with another company in the near future , the accountant has a . not violated ethical standards b . violated ethical standards only if the relative owns stock in the compan information violated ethical standards because the relative could stand to gain personally from tha not violated ethical standards because the information was relayed to a family member 19 . Which of the following accurately describes a difference between job order and process costing systems ? In job order costing systems , overhead costs are treated as product costs , whereas in process costing systems , overhead costs are treated as period costs b . Job order costing systems do not assign costs to production , whereas process costing systems do In job order costing systems , costs are traced to a specific job order , whereas in process costing systems , costs are traced to work cells and then assigned to produc manufactured . In a job order costing system , selling costs are treated as period costs , whereas they are treated as product costs in a process costing system .20 . A job order costing system measures product costs a . using process cost reports b . in several Work in Process Inventory account C . with regard to the process that created the cost d . for each completed unit 1 . Costs assigned to the building of a ship should appear on the income statement when the ship is completed b . the ship is sold C . the purchase order to manufacture the ship is received cash is collected for the sale of the ship 22 . The Work in Process Inventory account in a job order costing system consists of time conversion cards b . job conversion cards c . job order cost card d . product cost cards 23 . When direct materials are issued from inventory to production under a job order costing system , an increase is recorded in the Overhead account Work in Process Inventory account Materials Inventory account d . Finished Goods Inventory account 24 . The provides the most direct means of calculating unit costs for a job a job order cost card b . Finished Goods Inventory account c . general ledger Materials Inventory account 25 . Applied overhead is less than actual overhead incurred during the year . Which of the following journal entries is made to close the Overhead account if this difference is immaterial ? Overhead Work in Process 6 . Cost of Goods Sold Overhead Overhead Finished Goods Inventory Cost of Goods Sold Finished Goods Inventory 26 . The costs of completed jobs in a service organization is transferred to the Work in Process Inventory entory account b . Finished Goods Inventory account Cost of Goods Sold account d . Cost of Services account27 . Ad -on International is an advertising company . It estimated the overhead costs for March , 2014 , to be 5950 090 and direct labor hours to be 5 , 100 hours In March , it incurred overhead costs of $1 150 090 and 5. 100 labor hours What is the overapplied or underapplied overhead for Ad - on International for March , 2014 ? $181 000 underapplied b . $181 000 overapplied C. $19,000 underapplied d . $19000 overapplied 28 . Which of the following will help mangers set reasonable selling prices ? a . Previous year net income of the company b . Number of employees in the company Unit cost knowledge of the product d . Previous year's income tax variance 29 . Which of the following is related to performing in the management process ? Comparison of job estimates with actual job costs Preparation of financial statement Computation of a job's cost per unit d . Selection of a predetermined overhead rate 30 . WinLaw is a legal sery gal services provider . It is planning to extend its operations by providing tax consu Itancy ervices . Which of the following statements will be true if the company extends its operation as p lanned The cost of providing legal services is hi legal services is high as tax consultancy service will be in its initia b . The company cannot extend its operations since it requires additional staff The company should know the unit it service cost of tax services before determining the d . The company should drop this service line if it makes lesser profit than legal services 31 . Process costing is a system of inventory management b . manufacturing c . product costing d . product placement 32 . Which of the following items most likely would be manufactured using a process costing system ? Advertising services Fruit juices produced Construction of a shopping mall d . Wedding gowns 33 . Process costing is applicable to production operations that a . utilize several processes , departments , or work cells in a series b . do not assign overhead costs to operations c . produce products that are made to order d . produce unique productsID : A 34 . Which of the following is not a characteristic of a process costing system ? A specific time period is used b . Several Work in Process Inventory accounts are used Product costs are grouped by processes , departments , or work cells I . More suitable when customized products are manufactured 35 . In a process costing system , some of the increases to Department C's Work in Process Inventory account would come from Department B 's Finished Goods Inventory account Materials Inventory account Cost of Goods Sold account d . Work in Process Inventory account 36 . Equivalent production is also called 2 . conversion costs b . completed work cell units c . equivalent units d . equivalent transfer 37 . The use of the FIFO costing method would result in a company's process cost report showing a units transferred out as one amount with no distinction made for beginning inventory b . units transferred out as two amounts one for beginning inventory and the other for units tarted and completed during the month C . units transferred out as two amounts one for units completed during the period and one for ending inventory units transferred out as three amounts one for beginning inventory , one for units started and completed during the period , and one for ending inventory The following unit data were asse assembled for the heating process of Morgan Processing Inc . for the month of August Direct materials are added at the beginning of the process . Conversion costs are added uniformly over the production process . The company uses the FIFO process costing method Beginning work in process inventory ( 30 percent complete ) 5000 Units started in August Ending work in process ( 60 percent complete ) 4 4.000 4, 500 38 . The number of equivalent units produced by Morgan Proces 2 39 500 sing with respect to direct materials costs is b 44000 C. 49,000 d . 48.500Name: ID: A The Taylor Company uses a process costing system. Assume that direct materials are added at the beginning of the period and that direct labor and overhead are added continuously throughout the process. The company uses the FIFO costing method. The following data are available for one of its accounting periods Units Beginning work in process 26,000 (70 percent complete for conversion costs) Units started 180,000 Units transferred out 191,000 Ending work in process 15,000 (60 percent complete for conversion costs) 39. Assume that you have calculated a direct materials cost per unit of $4 and a conversion cost per unit of $7. Under this assumption, the ending balance for Work in Process Inventory of Taylor Company would be $82,000. b. $165,000 c. $99,000. d. $123,000. 40. Equivalent units for conversion costs of Taylor Company are 207,800. 192,200 c. 181,800 d. 200,000 The first processing During October, Department A of Answer Inc. started 320,000 units of product in a particular manufacturing process. The beginning work in process inventory was 50,000 units, and the ending inventory was 30,000 units. Direct materials are introduced at the start of processing, and beginning and ending inventories are considered to be 50 percent complete with respect to conversion costs. Department A uses the FIFO costing method. 41. The number of equivalent units for conversion costs of Answer was a. 345,000. b. 330,000. c. 360,000. d. 375,000 LOName ID : A 42 . Information for the current month for Process D is shown below Direct Materials Conversion Costs Beginning work in process inventory $ 6.400 $ 9.600 Current month's costs $31 . 740 851 100 Equivalent units based on the FIFO costing method 69000 70 000 Units completed - 72000 Units in ending work in process inventory - 5 00 Direct materials are added at the beginning of the process Beginning work in process is 50 percent complete as to conversion costs ending work in process inventory is 40 percent complete . Determine the cost of ending work in process inventory 2 87.040 b . 85. 120 C. $3 . 200 d. $3 760 43 . Weston Company uses the Welding Department , started th s the FIFO method in its process costing system . The first processing department , the ed the month with 18 000 units in its beginning work in process inventory that were 50 percent complete with respect to conversion costs . The conversion costs in the beginning work in process inventory were $52 200 . An additional 55 000 units were started into production during the month There were 16 000 units in the ending work in process inventory of the Welding Department that were 20 percent complete with respect to conversion costs . A total of $284 160 in conversion costs were incurred in the department during the month . What would be the cost per equivalent unit for conversion costs for the a . 85.550 month on the department's process cost report ? ( Round to three decimal places . ) b. $4.608 C. SS. 800 d. 85.167ID : A 44 . Use the following data from Dusk International , a company using a process costing system , to answer the questions below Beginning Work in Process Inventory on June 3 000 units 100 percent complete as to direct materials 75 percent complete as to conversion costs Units Started During June 12000 units Ending Work in Process Inventory on June 30 2 .500 units - 106 percent complete as to direct materials 40 percent complete as to conversion costs The company uses average process costing method mits completed and transferred out of the department during the month totaled 12000 b . 12.500 1 1. 250 d . 9.500 Cloud Nine International uses a process costing system Assume that direct materials are added at beginning of the period and that direct od and that direct labor and overhead are added continuously throughout the process periods The company uses the average costing method . The following data are available for one of its accounting Beginning work in process 26000 ( 70 percent complete for conversion costs ) Units started 180.000 Inits transferred ou 191000 Ending work in process 15 000 ( 60 percent complete for conversion costs ) 45 . Assume that you have calculated a direct materials cost per unit of $5 and a conversion cost per unit of $8 Under this assumption , the ending balance for Work in Process Inventory of Cloud Nine International would $147.000 b . $165000 C . $123.000 d . $195000ID: A Name: Matching The costs listed below are related to a manufacturer of All-natural ice cream. Classify the following costs as a. Direct Material b. Direct Labor c. Overhead 1. Maintenance on factory building 2. Cream 3. Mixing department wages 4. Vanilla 5. Factory supervisor's salary 6. Machine oil for mixing machines 7. Sugar 8. Machine operator wages . Factory maintenance labor 10. Depreciation on factory equipment Match the following key terms with their meaning: Cost allocation b. Cost driver c. Cost object d. Cost pool 11. Process of assigning indirect costs 12. The collection of indirect costs assigned 13. An allocation base Match the following with their meanings given below: Process costing system b. Conversion cost c. Equivalent production d. Process cost report 14. Used to track and analyze costs for a department 15. Combination of direct labor and overhead 12