Introduction to Managerial Accounting, 7th Canadian Edition, 7e Brewer, Garrison, Noreen, Kalagnanam, Vaidyanathan (Test Bank All Chapters) Answers at the end of each chapter.
Chapter 1 Student name:__________ 1) Managers carry out three major activities: planning, implementation, and control. ⊚ true ⊚ false
2) The theory of constraint (TOC) framework focuses on effectively managing constraints as
the key to success. ⊚ true ⊚ false
3) Managerial Accounting reports are prepared for external users while Financial Accounting
reports are prepared for internal users. ⊚ true ⊚ false
4) Merchandising firms largely refer to retail and wholesale outlets that buy goods from
suppliers and resell them to customers. ⊚ true ⊚ false
5) Merchandising and manufacturing firms generate revenue by selling products. ⊚ true ⊚ false
6) Service firms do not sell any products but generate revenues by offering one or more types of
services. ⊚ true ⊚ false
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7) Managers assign tasks to employees, arbitrate disputes, answer questions, solve on the spot
problems, and make many decisions that affect customers and employees, which in turn, will likely influence future financial and nonfinancial performance. ⊚ true ⊚ false
8) Planning involves selecting a course of action and specifying how the action will be
implemented. ⊚ true ⊚ false
9) Control involves the process of instituting procedures and then obtaining feedback to ensure
that all parts of the organization are functioning effectively and moving toward overall company goals. ⊚ true ⊚ false
10) Strategy pertains to the general direction in which an organization plans to move to achieve
its goals and objectives. ⊚ true ⊚ false
11) Management accountants are not required to follow the generally accepted accounting
principles that are used for external financial reporting when preparing reports for internal users. ⊚ true ⊚ false
12) Management accounting information is primarily concerned with reports on the organization
while financial accounting focuses more on the individual segments of the organization. ⊚ true ⊚ false
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13) The Code of Ethics for Professional Accountants established by the International Federation
of Accountants governs only the activities of accountants in public practice. ⊚ true ⊚ false
14) Performance reports provide formal feedback to assist in determining whether operations and
performance are on track. ⊚ true ⊚ false
15) Planning includes identifying alternatives and then selecting the one that does the best job of
furthering the organization's objectives. ⊚ true ⊚ false
16) Reduction in tariffs, quotas, and other barriers to free trade; improvements in global
transportation system; and increasing sophistication in international trade markets, are several factors that have led to an increase in worldwide competition in many industries. ⊚ true ⊚ false
17) One major implication of globalization for many organizations is that they must find new
ways of conducting business. ⊚ true ⊚ false
18) The main idea underlying the lean business model is the elimination of waste. ⊚ true ⊚ false
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19) Companies that use the just-in-time (JIT) approach purchase materials and produce units only
as needed to meet actual customer demand. ⊚ true ⊚ false
20) Among other things, companies using the just-in-time (JIT) approach, produce only in
response to a customer order meaning that workers will not be idle whenever demand falls below the company's production capacity. ⊚ true ⊚ false
21) Defects can be tolerated in a just-in-time (JIT) system. ⊚ true ⊚ false
22) There are two major characteristics of total quality management. ⊚ true ⊚ false
23) Many Canadian organizations have successfully implemented quality management principles
and have received recognition from Excellence Canada. ⊚ true ⊚ false
24) Process reengineering diagrams a business process in detail, questions it, and then completely
redesigns it to eliminate unnecessary steps, reduce opportunities for errors, and reduce costs. ⊚ true ⊚ false
25) Process reengineering is usually strongly accepted by all employees within an organization. ⊚ true ⊚ false
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26) Effective corporate governance enhances stakeholders' confidence that an organization is
being managed in their best interests rather than solely in the interests of top management and certain key individuals. ⊚ true ⊚ false
27) Codes of ethics almost always provide employees with very specific and detailed instructions
about what they can do and not do. ⊚ true ⊚ false
28) The PDCA Cycle is a system of continuous improvement in which a planning committee
selects from a list of alternatives for improvement and moves to fully implement immediately the chosen improvement. ⊚ true ⊚ false
29) The control phase includes preparing budgets for the upcoming period. ⊚ true ⊚ false
30) The planning phase includes preparing budgets for the upcoming period. ⊚ true ⊚ false
31) The control phase includes analyzing actual results, comparing to the budget and identifying
why differences occurred. ⊚ true ⊚ false
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32) The implementation phase includes analyzing actual results, comparing to the budget and
identifying why differences occurred. ⊚ true ⊚ false
33) Merchandising firms buy and sell finished goods whereas manufacturing firms make their
products and then sell them to retailers. ⊚ true ⊚ false
34) Financial accounting is primarily concerned with: A) reporting to external investors and creditors. B) long term decision making. C) feasibility analysis. D) reporting exclusively to internal users.
35) Managerial accounting emphasizes the future in addition to historical reports, whereas
financial accounting: A) emphasizes a future perspective. B) emphasizes individual organizational units. C) emphasizes timeliness. D) emphasizes a historical perspective.
36) In order to eliminate waste, companies must adopt and implement one or more management
practices that focus on different aspects of the lean business model such as: A) Just-in-Time. B) maintaining inventories large enough to shield against all unanticipated disruptions. C) Activity-Based Costing. D) multi-dimensional performance measurement systems.
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37) Companies using the just-in-time (JIT) approach hope to achieve: A) the hiring of specialized workers to increase production. B) gains in production flexibility. C) reduction of costs associated with setup by producing in large batches. D) reduced defect rates, resulting in less waste and greater customer satisfaction.
38) Which of the following is NOT a benefit of a just-in-time (JIT) system? A) Funds that have been tied up in inventories can be used elsewhere. B) Areas previously used to store inventories are made available for other more
productive uses. C) The time required to fill an order is reduced, resulting in quicker response to customers and consequentially greater potential sales. D) Production workers are always busy.
39) Which of the following is a benefit of a just-in-time (JIT) system? A) Funds that have been tied up in inventories can be used elsewhere. B) Scrap costs are reduced. C) Fewer field warranty visits are required. D) Production workers are always busy.
40) In using total quality management (TQM), the key focus is: A) employee focus. B) management focus. C) customer focus. D) executive focus.
41) What is the professional designation for most professional accountants in Canada? A) Chartered Professional Accountants B) Chartered Management Accountants C) Chartered Certified Accountants D) Certified Public Accountants
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42) Corporate governance: A) is a department within Canada Revenue with a mandate to ensure all corporations file
annual tax returns. B) if effective, should enhance stakeholders' confidence that the organization is being managed in their best interests. C) ensures the personal interests of top management are fully achieved. D) is only important to non-publicly traded companies.
43) Benchmarking begins with: A) completely redesigning a business process to improve it. B) determining the constraints within a given manufacturing process. C) studying organizations that are the best at a task. D) a determination to only build products to meet specific customer orders.
44) Activities that do not add value to a product or service that customers are willing to pay for
are: A) B) C) D)
normal business activities. non-value-added activities. part of the overhead costs of a business. a constraint.
45) A manufacturing business which operates five days per week has four different departments
involved in producing each unit of its product. Maximum daily production capacities of each are: Department A – 120 units; Department B – 100 units; Department C – 80 units, and Department D – 140 units. Maximum weekly output of completed units is? A) 400 B) 475 C) 550 D) 675
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46) The management cycle proceeds in what order? A) Control, implementation, planning B) Planning, implementation, control C) Implementation, planning, control D) Implementation, control, planning
47) A manufacturing business has four different departments involved in producing each unit of
its product. Maximum daily production capacities of each are: Department A – 60 units; Department B - 125 units; Department C - 100 units, and Department D - 115 units.
47.1)
Which department would be considered first in looking at ways to improve output capacity? A) A B) B C) C D) D
47.2)
Alternative A - increase Department B's output to 210 units per day. Alternative B - increase Department C's output to 115 units per day. Alternative C - increase both Department A's and Department C's outputs to 125 units per day. Alternative D - increase Department D's output to 200 units per day. Assuming the costs of each alternative are similar and that only one can be chosen, which alternative would yield the best results for the business? A) A B) B C) C D) D
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48) Which of the following statements isNOT true? A) Managerial accounting has a strong orientation towards the future B) Financial accounting, due to the requirements of regulation, is mandatory for
businesses. C) Financial accounting and managerial accounting are independent of each other. D) Financial accounting presents a historical perspective of business activities.
49) Managerial accounting is regulated by: A) GAAP. B) No prescribed standards are followed. C) ASPE. D) IFRS
50) A manufacturing company has implemented just in time (JIT) into their process. JIT is part
of: A) B) C) D)
the lean business model. process re-engineering. total quality management the theory of constraints.
51) The implementation phase includes all these activities EXCEPT: A) making Short-term and Long-term decisions. B) selecting a course of action. C) assign tasks to employees D) solve on-the-spot problems
52) Which of the following would be an implementation activity? A) Hiring replacement employees. B) Developing a new budget C) Variance analysis D) Developing the strategic plan
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53) The planning phase includes all these activities EXCEPT: A) organizing and allocating resources. B) selecting a course of action. C) identifying alternatives D) preparing budgets.
54) A cost report which focuses on a 10% reduction of costs in the upcoming period is an
example of: A) a company's vision B) a company's mission C) a company's strategy D) a company's objectives.
55) Which of the following is not an implication of globalization? A) New strategies B) New managerial and operational practices C) Hiring a new CEO from a foreign country D) Sophisticated managerial accounting systems
56) In the Plan-Do-Check-Act Cycle, which of the following is NOT a part of the ‘plan’ phase? A) B) C) D)
Collect data Evaluate data collected Analyze the data Develop a plan for improvement
57) Under the Corruption of Foreign Public Officials Act, which of the following is NOT
prohibited? A) Offering gifts B) Offering payments C) Negotiating in good faith D) Offering benefits to foreign officials
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58) Which of the following is NOT a concept related to Managerial Accounting? A) Strategic Cost Management (SCM) B) Balanced Scorecard (BSC) C) Percentage of Completion method for revenue recognition D) Activity Based Budgeting (ABB)
59) Process re-engineering does NOT involve which one of the following? A) Tweaking an existing process B) Focus on simplification C) Elimination of wasted effort D) Elimination of non-value-added activities
60) List four major potential benefits of successfully implementing a just-in-time (JIT) system in
a manufacturing company.
61) List seven key differences between Managerial Accounting and Financial Accounting.
62) Describe factors that have led to an increase in worldwide competitiveness as part of the
globalization on business.
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63) Explain the lean business model and its corresponding management practices and potential
benefits.
64) Explain the importance of ethical responsibility and explain the need for ethical codes of
conduct.
65) List four management practices (programs of continuous improvement) that may be used to
achieve the objectives of the lean business model.
66) Determine if the following is an emphasis of managerial (M) or Financial (F) accounting:
1. Estimating the amount of materials needed for next month's production. 2. Information in reports focuses on objectivity and verifiability. 3. Reports follow GAAP or IFRS. 4. Precise information that is more readily available is included in reports. 5. The focus and reporting emphasize segments of an organization. 6. Organizations may follow their own guidelines for reports generated.
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67) Classify the following activities as planning (P), implementation (I), or control (C).
1. Estimating the number of units that will be sold in the upcoming quarter. 2. Assigning production line workers to stations in the production plant. 3. Choosing between manual labor or purchasing a machine that will automate the production process. 4. Preparing a performance report which compares actual sales to budgeted sales for the last month. 5. Solving a bottleneck issue in the production plant by moving one production line worker from station 2 to station 5 on the production line. 6. Negotiating discounts with suppliers for materials needed in the production process.
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Answer Key Test name: Chapter 1 1) TRUE 2) TRUE 3) FALSE 4) TRUE 5) TRUE 6) TRUE 7) TRUE 8) TRUE 9) TRUE 10) TRUE 11) TRUE 12) FALSE 13) FALSE 14) TRUE 15) TRUE 16) TRUE 17) TRUE 18) TRUE 19) TRUE 20) FALSE 21) FALSE 22) TRUE 23) TRUE 24) TRUE 25) FALSE 26) TRUE 27) FALSE 28) FALSE 29) FALSE 30) TRUE 31) TRUE 32) FALSE 33) TRUE 34) A 35) D 36) A 37) D
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38) D 39) A 40) C 41) A 42) B 43) C 44) B 45) A 46) B 47) Section Break 47.1) A 47.2) C 48) C 49) B 50) A 51) B 52) A 53) A 54) A 55) C 56) B 57) C 58) C 59) A 60) Short Answer 61) Short Answer 62) Short Answer 63) Short Answer 64) Short Answer 65) Short Answer 66) Short Answer 67) Short Answer
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Chapter 2 Student name:__________ 1) All costs incurred in a merchandising firm are period costs. ⊚ true ⊚ false
2) Depreciation is always considered a product cost for external financial reporting purposes in
a manufacturing firm. ⊚ true ⊚ false
3) Advertising costs are considered product costs for external financial reports since they are
incurred in order to promote specific products. ⊚ true ⊚ false
4) Property taxes and insurance premiums paid on a factory building are examples of
manufacturing overhead. ⊚ true ⊚ false
5) Manufacturing overhead combined with direct materials is known as conversion cost. ⊚ true ⊚ false
6) If the ending inventory of finished goods is overstated, net income will be overstated. ⊚ true ⊚ false
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7) If the ending inventory of finished goods is understated, net income will be overstated. ⊚ true ⊚ false
8) In a manufacturing company, goods available for sale equals the sum of the cost of goods
manufactured and the beginning finished goods inventory. ⊚ true ⊚ false
9) Variable costs are costs whose per unit costs vary as the activity level rises and falls. ⊚ true ⊚ false
10) Variable costs are costs whose per unit costs don't vary as the activity level rises and falls. ⊚ true ⊚ false
11) On a per unit basis, a fixed cost varies inversely with the level of activity. ⊚ true ⊚ false
12) All the following would typically be considered indirect costs of manufacturing a Boeing 747
to be delivered to Singapore Airlines: electricity to run production equipment, the factory manager's salary, and the cost of the General Electric jet engines installed on the aircraft. ⊚ true ⊚ false
13) All the following costs should be considered direct costs of providing delivery room services
to a particular mother and her baby: the costs of drugs administered in the operating room, the attending physician's fees, and a portion of the liability insurance carried by the hospital to cover the delivery room. ⊚ true ⊚ false
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14) All the following costs should be considered direct costs of providing delivery room services:
the costs of drugs administered in the operating room, the attending physician's fees, and a portion of the liability insurance carried by the hospital to cover the delivery room. ⊚ true ⊚ false
15) The following costs should be considered by a law firm to be indirect costs of defending a
particular client in court: rent on the law firm's offices, the law firm's receptionist's wages, the costs of heating the law firm's offices, and the depreciation on the personal computer in the office of the attorney who has been assigned the client. ⊚ true ⊚ false
16) A cost that differs from one month to another is known as a differential cost. ⊚ true ⊚ false
17) Opportunity costs are always recorded as expenses in the accounts of an organization. ⊚ true ⊚ false
18) Sunk costs are irrelevant in making decisions. ⊚ true ⊚ false
19) The inventory accounts reported on the balance sheet of a manufacturing company will differ
from those of a merchandising company. ⊚ true ⊚ false
20) Labour costs relating to janitors and supervisors in a manufacturing facility are examples of: A) Direct labour B) Indirect labour
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21) The cost of fire insurance for a manufacturing plant is generally considered to be a: A) product cost. B) period cost. C) variable cost. D) fixed cost.
22) The cost of rent for a manufacturing equipment used in a manufacturing plant is generally
considered to be a: Prime cost
Product cost
a.
No
Yes
b.
No
No
c.
Yes
No
d.
Yes
Yes
A) B) C) D)
choice a. choice b. choice c. choice d.
23) Each of the following would be a conversion cost except: A) Cost of labour physically and conveniently traceable to a product B) Cost of utilities used in a manufacturing plant. C) Depreciation of a machine used in manufacturing. D) Cost of material physically and conveniently traceable to a product
24) For a manufacturing company, which of the following is an example of a period rather than a
product cost? A) Depreciation of factory equipment. B) Wages of salespersons. C) Wages of machine operators. D) Insurance on factory equipment.
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25) Which of the following would be considered a product cost for external financial reporting
purposes? A) Cost of a warehouse used to store finished goods. B) Cost of guided public tours through the company's facilities. C) Cost of travel necessary to sell the manufactured product. D) Cost of sand spread on the factory floor to absorb oil from manufacturing machines.
26) Which of the following would NOT be treated as a product cost for external financial
reporting purposes? A) Depreciation on a factory building. B) Salaries of factory workers. C) Indirect labour in the factory. D) Advertising expenses.
27) Transportation costs incurred by a manufacturing company to ship its raw materials from the
supplier to its manufacturing facility would be classified as which of the following? A) Product cost. B) Manufacturing overhead. C) Period cost. D) Administrative cost.
28) Costs incurred to maintain an app to provide rewards to customers upon purchase would be
classified as which of the following? A) Product cost. B) Manufacturing overhead. C) Period cost. D) Administrative cost.
29) The salary of the president of a manufacturing company would be classified as which of the
following? A) Product cost. B) Period cost. C) Manufacturing overhead. D) Direct labour.
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30) Micro Computer Company has set up a web page for customer inquiries regarding computer
hardware produced by the company. The cost of this web page would be classified as which of the following? A) Product cost. B) Manufacturing overhead. C) Direct labour. D) Period cost.
31) The wages of factory personnel engaged in manufacturing of the products would usually be:
A) B) C) D)
Direct labour
Manufacturing overhead
a.
No
Yes
b.
Yes
No
c.
Yes
Yes
d.
No
No
choice a. choice b. choice c. choice d.
32) Direct materials are a part of:
A) B) C) D)
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Conversion cost
Manufacturing cost
Prime cost
a.
Yes
Yes
No
b.
Yes
Yes
Yes
c.
No
Yes
Yes
d.
No
No
No
choice a. choice b. choice c. choice d.
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33) Manufacturing overhead consists of: A) all manufacturing costs. B) all manufacturing costs, except direct materials and direct labour. C) indirect materials but not indirect labour. D) indirect labour but not indirect materials.
34) Which of the following should NOT be included as part of manufacturing overhead at a
company that makes office furniture? A) Sheet steel in a file cabinet made by the company. B) Manufacturing equipment depreciation. C) Idle time for direct labour. D) Taxes on a factory building.
35) Which of the following should NOT be included as part of manufacturing overhead at a
company that makes office furniture? A) Sheet steel in a file cabinet made by the company. B) Manufacturing equipment depreciation. C) Direct labour. D) Hardware installed on desks
36) Rossiter Company failed to record a credit sale at the end of the year, although the reduction
in finished goods inventories was correctly recorded when the goods were shipped to the customer. Which one of the following statements is correct? A) Accounts receivable was not affected, inventory was not affected, sales were understated, and cost of goods sold was understated. B) Accounts receivable was understated, inventory was overstated, sales were understated, and cost of goods sold was overstated. C) Accounts receivable was not affected, inventory was understated, sales were understated, and cost of goods sold was understated. D) Accounts receivable was understated, inventory was not affected, sales were understated, and cost of goods sold was not affected.
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37) If the cost of goods sold is lower than the cost of goods manufactured, then: A) Work in process inventory has decreased during the period. B) Finished goods inventory has increased during the period. C) Total manufacturing costs must be greater than cost of goods manufactured. D) Finished goods inventory has decreased during the period.
38) Last month, when 10,000 units of a product were manufactured, the cost per unit was $60. At
this level of activity, variable costs are 50% of total unit costs. If 10,500 units are manufactured next month and cost behaviour patterns remain unchanged the? A) total variable cost will remain unchanged. B) fixed costs will increase in total. C) variable cost per unit will increase. D) total cost per unit will decrease.
39) Variable cost: A) increases on a per unit basis as the number of units produced increases. B) remains constant on a per unit basis as the number of units produced increases. C) remains the same in total as production increases. D) decreases on a per unit basis as the number of units produced increases.
40) Within the relevant range, the difference between variable costs and fixed costs is: A) variable costs per unit fluctuate and fixed costs per unit remain constant. B) variable costs per unit are constant and fixed costs per unit fluctuate. C) both total variable costs and total fixed costs are constant. D) both total variable costs and total fixed costs fluctuate.
41) Which of the following statements regarding fixed costs is incorrect? A) Expressing fixed costs on a per unit basis usually is the best approach for decision-
making. B) Fixed costs expressed on a per unit basis will react inversely with changes in activity. C) Assumptions by accountants regarding the behaviour of fixed costs rest heavily on the concept of the relevant range. D) Fixed costs frequently represent long-term investments in property, plant, and equipment.
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42) Last month, when 11,000 units of a product were manufactured, the cost per unit was $ 50.
At this level of activity, variable costs are 40% of total unit costs. If 12,000 units are manufactured next month and cost behaviour patterns remain unchanged, the total cost of goods manufactured will be? A) $ 570,000. B) $600,000. C) $ 770,000. D) $630,000.
43) Which of the following statements is true? A) An indirect cost can be easily traced to an individual cost object. B) An indirect cost is one incurred to support several cost objects. C) A direct cost cannot be easily and economically traced to a cost object. D) The determination of a cost object is nor relevant to the traceability of costs.
44) An opportunity cost is: A) the difference in total costs which results from selecting one alternative instead of
another. B) the potential benefit forgone by selecting one alternative instead of another. C) a cost which may be saved by not adopting an alternative. D) a cost which may be shifted to the future with little or no effect on current operations.
45) The term differential revenue refers to: A) A difference in the revenue between any two alternatives. B) The potential benefit forgone by selecting one alternative instead of another. C) A cost which does not entail any dollar outlay but which is relevant to the decision-
making process. D) A cost which continues to be incurred even though there is no activity.
46) Which of the following costs is often important in decision making, but is omitted from
conventional accounting records? A) Fixed cost. B) Sunk cost. C) Opportunity cost. D) Indirect cost.
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47) When a decision is made among several alternatives, the potential benefit that is lost by
choosing one alternative over another is the: A) realized cost. B) opportunity cost. C) conversion cost. D) accrued cost.
48) Conversion cost consists of which of the following? A) Manufacturing overhead cost. B) Direct materials and direct labour costs. C) Direct labour cost. D) Direct labour and manufacturing overhead costs.
49) Prime cost consists of direct materials combined with: A) direct labour. B) manufacturing overhead. C) indirect materials. D) cost of goods manufactured.
50) Which one of the following costs should NOT be considered a direct cost of serving a
customer who orders a customized personal computer by phone directly from the manufacturer? A) The cost of the hard disk drive installed in the computer. B) The cost of shipping the computer to the customer. C) The cost of leasing a machine on a monthly basis that automatically tests hard disk drives before they are installed in computers. D) The cost of packaging the computer for shipment.
51) The sequence of major activities that every organization carries out to fulfill its mission is
known as: A) the manufacturing process. B) product planning and development. C) the value chain. D) marketing.
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52) Which of the following major activities of a business will result in product costs? A) Marketing. B) Customer support. C) General administrative. D) Manufacturing.
53) Which one of the following costs should NOT be considered an indirect cost of serving a
customer at a Dairy Queen fast food outlet? A) The cost of the hamburger patty in the burger they ordered. B) The wages of the employee who takes the customer's order. C) The cost of heating and lighting the kitchen. D) The salary of the outlet's manager.
54) Sunshine Company’s costs for the month of August were as follows: direct materials, $
30,000; direct labour, $ 35,000; sales salaries, $14,000; indirect labour, $10,000; indirect materials, $15,000; general corporate administrative cost, $12,000; taxes on manufacturing facility, $ 5,000; and rent on factory, $ 20,000. The beginning work in process inventory was $ 15,000 and the ending work in process inventory was $ 10,000. What was the cost of goods manufactured for the month? A) $105,000. B) $ 115,000. C) $ 120,000. D) $ 125,000
55) Brown Company's costs for the month of August were as follows: direct materials, $27,000;
direct labour, $34,000; sales salaries, $14,000; indirect labour, $10,000; indirect materials, $15,000; general corporate administrative cost, $12,000; taxes on manufacturing facility, $2,000; and rent on factory, $17,000. The beginning work in process inventory was $16,000 and the ending work in process inventory was $9,000. What was the total manufacturing costs for the month? A) $105,000. B) $112,000. C) $132,000. D) $138,000.
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56) A manufacturing company prepays its insurance coverage for a four-year period. The
premium for the four years is $ 4,000 and is paid at the beginning of the first year. 70% percent of the premium applies to manufacturing operations and 30% applies to selling and administrative activities. What amounts should be considered product and period costs respectively for the first year of coverage?
A) B) C) D)
Product
Period
a.
$4,000
$0
b.
$2,800
$1,200
c.
$3,000
$1,000
d.
$700
$300
choice a. choice b. choice c. choice d.
57) Using the following data, calculate the beginning work in process inventory. Cost of goods sold
$70
Direct labour
$ 25
Direct materials
$ 10
Cost of goods manufactured
$ 90
Work in process ending
$ 20
Finished goods ending
$ 25
Manufacturing overhead
$30
The beginning work in process inventory is: A) $ 25. B) $ 35. C) $ 45. D) $55.
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58) During the month of May, Bennett Manufacturing Company purchased $43,000 of raw
materials. Total manufacturing overhead was $27,000 and the total manufacturing costs were $106,000. Assuming a beginning inventory of raw materials of $8,000 and an ending inventory of raw materials of $6,000, direct labour was: A) $34,000. B) $36,000. C) $38,000. D) $45,000.
59) Using the following data for January, calculate the cost of goods manufactured: Direct materials
$35,000
Direct labour
$30,000
Manufacturing overhead
$20,000
Beginning work in process inventory
$15,000
Ending work in process inventory
$10,000
The cost of goods manufactured was: A) $78,000. B) $79,000. C) $80,000. D) $90,000.
60) During the month of June, Reardon Company incurred $17,000 of direct labour, $8,500 of
manufacturing overhead and purchased $15,000 of raw materials. Between the beginning and the end of the month, the raw materials inventory increased by $2,000, the finished goods inventory increased by $1,500, and the work in process inventory decreased by $3,000. The cost of goods manufactured would be: A) $38,500. B) $40,500. C) $41,500. D) $43,500.
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61) Moonlight Company reported the following data for the year just ended: Raw materials used in production
900,000
Direct labour
600,000
Total overhead costs
$1,200,0000
Ending work in process inventory
$400,000
Cost of goods manufactured
$2,900,000
The beginning work in process inventory was: A) $100,000. B) $300,000. C) $600,000. D) $1,300,000.
62) Moonlight Company reported the following data for the year just ended: Raw materials used in production
$900,000
Direct labour
$600,000
Total overhead costs
$1,200,000
Beginning work in process inventory Cost of goods manufactured
(Use the beginning WIP calculated in 2-61 $ 2,900,000
The ending work in process inventory was: A) $100,000. B) $300,000. C) $400,000. D) $1,300,000.
63) Williams Company's direct labour cost is 25% of its conversion cost. If the manufacturing
overhead cost for the last period was $45,000 and the direct materials cost was $25,000, the direct labour cost was: A) $15,000. B) $20,000. C) $33,333. D) $60,000.
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64) The Lyons Company's cost of goods manufactured was $120,000 when its sales were
$360,000 and its gross margin was $220,000. If the ending inventory of finished goods was $30,000, the beginning inventory of finished goods must have been: A) $20,000. B) $50,000. C) $110,000. D) $150,000.
65) The gross margin for Cushing Company for the first quarter of last year was $400,000 when
sales were $800,000. The beginning inventory of finished goods was $80,000 and the ending inventory of finished goods was $ 120,000. The cost of goods manufactured for the first quarter would have been: A) $350,000. B) $ 400,000 C) $ 440,000. D) $485,000.
66) Last month a manufacturing company had the following operating results: Beginning finished goods inventory
$74,000
Ending finished goods inventory
$73,000
Sales
$464,000
Gross margin
$52,000
What was the cost of goods manufactured for the month? A) $411,000. B) $412,000. C) $413,000. D) $463,000.
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67) The following information was provided by Wilson Company for the year just ended: Beginning finished goods inventory
$150,750
Ending finished goods inventory
$140,475
Sales
$475,000
Gross margin
$150,000
The cost of goods manufactured for the year was: A) $314,725. B) $325,000. C) $333,275. D) $334,275.
68) The following information was provided by Grand Company for the year just ended: Beginning finished goods inventory
$130,425
Ending finished goods inventory
$125,770
Sales
$500,000
Gross margin
$100,000
The cost of goods manufactured for the year was: A) $95,345. B) $104,655. C) $395,345. D) $404,655.
69) Delta Merchandising, Inc. has provided the following information for the year just ended: Net sales
$150,000
Beginning inventory
$30,000
Purchases
$110,00
Gross margin
$40,000
The ending inventory for the company at year end was: A) $ 20,000 B) $ 25,000 C) $ 30,000 D) $35,000
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70) The beginning balance of the Raw Materials inventory account for May was $27,500. The
ending balance for May was $28,750 and $128,900 of raw materials were used during the month. The materials purchased during the month cost: A) $127,650. B) $130,150. C) $131,300. D) $157,650.
71) Gabel Inc. is a merchandising company. Last month the company's merchandise purchases
totaled $63,000. The company's beginning merchandise inventory was $13,000 and its ending merchandise inventory was $15,000. What was the company's cost of goods sold for the month? A) $61,000. B) $63,000. C) $65,000. D) $91,000.
72) Haack Inc. is a merchandising company. Last month the company's cost of goods sold was
$84,000. The company's beginning merchandise inventory was $20,000 and its ending merchandise inventory was $18,000. What was the total amount of the company's merchandise purchases for the month? A) $82,000. B) $84,000. C) $86,000. D) $122,000.
73) During January, the cost of goods manufactured was $ 90,000. The beginning finished goods
inventory was $ 20,000 and the ending finished goods inventory was $ 30,000. What was the cost of goods sold for the month? A) $ 80,000 B) $ 95,000 C) $ 97,000. D) $ 100,000
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74) An accounting course is taught in two classes per week for one hour and fifty minutes each.
The classes are held in a building with 36 classrooms that are used for a variety of courses. The building has an advanced monitoring system which allows electricity costs to be determined for each classroom and for each course. If the cost object is the accounting course, which of the following is an indirect cost? A) The course Instructor's salary for teaching the course (he only teaches this one course). B) The cost of the preparation of the exam papers for this course. C) The salary of the building's custodian. D) The electricity cost for the course.
75) An accounting course is taught in two classes per week for one hour and fifty minutes each.
The classes are held in a building with 36 classrooms that are used for a variety of courses. There are 15 other courses taught in the Accounting Department at this university. If the cost object is the accounting course, which of the following is a direct cost? A) The course Instructor's salary for teaching the course (he only teaches this one course). B) The property taxes on the land and classroom building. C) The salary of the building's custodian. D) The Accounting Department's secretary salary.
76) The following information was provided by Jimbob Co. for the year just ended: Cost of goods manufactured
$500,000
Ending finished goods inventory
$100,000
Sales
$800,000
Gross margin
$200,000
What was beginning finished goods inventory? A) $100,000. B) $ 250,000 C) $300,000. D) $400,000.
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77) The following account balances has been extracted from Jimbob Co.'s general ledger: Direct materials used in production
$300,000
Depreciation factory building
$20,000
Depreciation factory equipment
$45,000
Depreciation sales department automobiles
$20,000
Direct wages factory employees
$250,000
Sales department salaries and commissions
$160,000
Factory manager’s salary
$55,000
Utility costs factory
$60,000
Utility costs sales office
$15,000
77.1)
What was the total of manufacturing overhead? A) $110,000. B) $180,000 C) $400,000. D) $740,000.
77.2)
What was the total of manufacturing costs? A) $400,000. B) $510,000. C) $560,000. D) $730,000
77.3)
What was the total of nonmanufacturing costs? A) $150,000. B) $160,000. C) $195,00 D) $230,000.
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78) The following data (in thousands of dollars) have been taken from the accounting records of
Karling Corporation for the just completed year. Sales
$990
Raw materials inventory, beginning
$40
Raw materials inventory, ending
$70
Purchases of raw materials
$120
Direct labour
$200
Manufacturing overhead
$230
Administrative expenses
$150
Selling expenses
$140
Work in process inventory, beginning
$70
Work in process inventory, ending
$50
Finished goods inventory, beginning
$120
Finished goods inventory, ending
$160
78.1)
The cost of the raw materials used in production during the year (in thousands of dollars) was: A) $90. B) $150. C) $160. D) $190.
78.2)
The cost of goods manufactured for the year (in thousands of dollars) was: A) $500. B) $540. C) $570. D) $590.
78.3)
The cost of goods sold for the year (in thousands of dollars) was: A) $500. B) $580. C) $660. D) $700.
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78.4)
The net income for the year (in thousands of dollars) was: A) $150. B) $200. C) $250. D) $490.
79) The following data (in thousands of dollars) have been taken from the accounting records of
Karlana Corporation for the just completed year. Sales
$1,000
Raw materials inventory, beginning
$ 90
Raw materials inventory, ending
$ 30
Purchases of raw materials
$ 120
Direct labour
$ 150
Manufacturing overhead
$ 250
Administrative expenses
$160
Selling expenses
$140
Work in process inventory, beginning
$ 50
Work in process inventory, ending
$ 20
Finished goods inventory, beginning
$100
Finished goods inventory, ending
$150
79.1)
The cost of the raw materials used in production during the year (in thousands of dollars) was: A) $40. B) $120. C) $160. D) $180.
79.2)
The cost of goods manufactured for the year (in thousands of dollars) was: A) $460. B) $500. C) $520. D) $610.
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79.3)
The cost of goods sold for the year (in thousands of dollars) was: A) $500. B) $560 C) $650. D) $670.
79.4)
The net income for the year (in thousands of dollars) was: A) 100 B) $ 140 C) $150. D) $170
80) The following data (in thousands of dollars) have been taken from the accounting records of
Karlist Corporation for the just completed year. Sales
$800
Raw materials inventory, beginning
$60
Raw materials inventory, ending
$70
Purchases of raw materials
$180
Direct labour
$100
Manufacturing overhead
$190
Administrative expenses
$110
Selling expenses
$150
Work in process inventory, beginning
$70
Work in process inventory, ending
$80
Finished goods inventory, beginning
$120
Finished goods inventory, ending
$160
80.1)
The cost of the raw materials used in production during the year (in thousands of dollars) was: A) $170. B) $190. C) $240. D) $250.
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80.2)
The cost of goods manufactured, or the year (in thousands of dollars) was: A) $450. B) $470. C) $530. D) $540.
80.3)
The cost of goods sold for the year (in thousands of dollars) was: A) $410. B) $ 490 C) $570. D) $610.
80.4)
The net income for the year (in thousands of dollars) was: A) $70. B) $130. C) $190. D) $390.
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81) The following data pertain to Harriman Company's operations during July: July 1
July 31
Raw materials inventory
0
$5,000
Work in process inventory
?
4,000
Finished goods inventory
$12,000
?
Other data: Cost of goods manufactured
$105,000
Raw materials used
40,000
Manufacturing overhead costs
20,000
Direct labour costs
39,000
Gross profit
100,000
Sales
210,000
81.1)
The beginning work in process inventory was: A) $1,000. B) $4,000. C) $10,000. D) $14,000.
81.2)
The ending finished goods inventory was: A) $2,000. B) $7,000. C) $12,000. D) $17,000.
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82) Bergeron Inc. reported the following data for last year: Work in process inventory, beginning
$90
Work in process inventory, ending
$140
Finished goods inventory, beginning
$200
Finished goods inventory, ending
$180
Direct labour cost
$350
Direct materials cost
$ 550
Manufacturing overhead cost
$ 450
82.1)
The prime cost was: A) $500. B) $700. C) $800. D) $900.
82.2)
The conversion cost was: A) $500. B) $700. C) $800. D) $900.
82.3)
The cost of goods manufactured was: A) $1,150. B) $1,180. C) $1,220. D) $1,300
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83) Geneva Steel Corporation produces large sheets of heavy gauge steel. The company showed
the following amounts relating to its production for the year just completed: Direct materials used in production
$120,000
Direct labour costs for the year
70,000
Work in process, beginning
25,000
Finished goods, beginning
50,000
Cost of goods available for sale
310,000
Cost of goods sold
260,000
Work in process, ending
16,000
83.1)
The balance of the finished goods inventory at the end of the year was: A) $45,000. B) $50,000. C) $95,000. D) $193,000.
83.2)
Manufacturing overhead cost for the year was: A) $ 44,000 B) $61,000 C) $78,000. D) $84,000.
83.3)
Cost of goods manufactured for the year was: A) $160,000. B) $171,000. C) $ 260,000. D) $ 290,0000
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84) Boardman Company reported the following data for the month of January: Inventories:
1/1
1/31
Raw materials
$32,000
$31,000
Work in process
$18,000
$12,000
Finished goods
$30,000
$35,000
Additional information: Sales revenue
$210,000
Direct labour costs
40,000
Manufacturing overhead costs
70,000
Selling expenses
25,000
Administrative expenses
35,000
84.1)
If raw materials costing $35,000 were purchased during January, the total manufacturing costs for the month was? A) $144,000. B) $145,000. C) $146,000. D) $151,000.
84.2)
Assume that cost of goods sold for January was $124,000. The net income for January was: A) $25,000. B) $26,000. C) $51,000. D) $61,000.
84.3)
Boardman Company's total conversion cost for January was: A) $110,000. B) $130,000. C) $135,000. D) $170,000.
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85) Assume that cost of goods sold for Boardman Company for January was $140,000. What was
the cost of goods manufactured for the month? A) $135,000 B) $139,000 C) $140,000 D) $145,000
86) At a sales volume of 30,000 units, CD Company's total fixed costs are $ 80,000 and total
variable costs are $60,000. (Do not round intermediate calculations) If CD Company were to sell 45,000 units, the total expected cost would be? A) $124,000. B) $144,625. C) $146,000. D) $ 170,000
87) At a sales volume of 32,000 units, CD Company's total fixed costs are $64,000 and total
variable costs are $60,000. (Do not round intermediate calculations) If CD Company were to sell 50,000 units, the total expected cost per unit would be (Do not round intermediate calculations. Round the final answer to two decimal places): A) $2.48. B) $3.16. C) $3.20. D) $3.88.
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88) Jim-bob Company has two business alternatives - A & B with different total annual costs as
set out below: Total annual costs:
A
B
Advertising
$32,000
$31,000
Other marketing costs
$18,000
$12,000
Other expenses
$30,000
$35,000
Additionally, if alternative B is chosen the business will have to use some space for its own purposes that are currently being rented to an outside business for $5,000 per year. What are the total differential costs between the two alternatives? A) $2,000. B) $3,000. C) $5,000. D) $7,000.
89) Tech Computer manufactures tablets in its plant located in Toronto and then ships the
computers directly to distributors and retailers. The company's accountant has enlisted you to classify the following company's expenses:
89.1)
Cost of a new advertising campaign on YouTube. A) Fixed product cost. B) Variable product cost. C) Fixed period cost. D) Variable period cost.
89.2)
Straight line depreciation on the factory building. A) Fixed product cost. B) Variable product cost. C) Fixed period cost. D) Variable period cost.
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89.3)
Units of production depreciation on the factory equipment. A) Fixed product cost. B) Variable product cost. C) Fixed period cost. D) Variable period cost.
89.4)
The salary of the Vice President of Sales. A) Fixed product cost. B) Variable product cost. C) Fixed period cost. D) Variable period cost.
89.5)
The delivery charges incurred when shipping the tablet drives to be installed in the tablet. A) Fixed product cost. B) Variable product cost. C) Fixed period cost. D) Variable period cost.
89.6)
The drive installed in each tablet. A) Fixed product cost. B) Variable product cost. C) Fixed period cost. D) Variable period cost.
89.7)
Cost of computer motherboard, which is a part of the finished product. A) Fixed product cost. B) Variable product cost. C) Fixed period cost. D) Variable period cost.
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89.8)
Cost of a warehouse (i.e., rent) used to store finished goods (tablets) prior to selling them to the customer. A) Fixed product cost. B) Variable product cost. C) Fixed period cost. D) Variable period cost.
90) Charlie's Chocolate Factory manufactures chocolate bars and ships them directly to
wholesalers and retailers across the country. The company has two product lines: milk chocolate bars and chocolate covered almonds. Classify the following company's expenses if the cost object is a single product line (either milk chocolate bars or chocolate covered almonds).
90.1)
The cost of cocoa used in the factory. A) Direct product cost. B) Indirect product cost. C) Direct period cost. D) Indirect period cost.
90.2)
Lease expenses on equipment used in the production factory. A) Direct product cost. B) Indirect product cost. C) Direct period cost. D) Indirect period cost.
90.3)
Almonds used in the chocolate covered almonds. A) Direct product cost. B) Indirect product cost. C) Direct period cost. D) Indirect period cost.
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90.4)
Shipping costs to deliver ingredients ordered from the suppliers to the production factory. A) Direct product cost. B) Indirect product cost. C) Direct period cost. D) Indirect period cost.
90.5)
Salaries for milk chocolate bars production line workers A) Direct product cost. B) Indirect product cost. C) Direct period cost. D) Indirect period cost.
90.6)
Advertising campaign for chocolate covered almonds. A) Direct product cost. B) Indirect product cost. C) Direct period cost. D) Indirect period cost.
90.7)
Sales Commissions paid to Business Development Managers. A) Direct product cost. B) Indirect product cost. C) Direct period cost. D) Indirect period cost.
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91) Frosting Corp. has provided the following relating to the most recent month (August 31,
2020) of operations, for their main product, cupcakes Baker's salaries
20,000
Finished goods inventory, beginning
18,000
Finished goods inventory, ending
20,000
General & administrative expenses
20,000
Indirect materials
17,500
Production Supervisor, Salary
21,000
Purchases of raw materials
28,000
Raw materials inventory, ending
19,000
Raw materials inventory, beginning
18,000
Rent on production factory
19,000
Rent, retail store
18,000
Sales
243,000
Utilities on production factory
17,500
Utilities, retail store
17,000
Wages, retail staff
20,000
WIP inventory, beginning
19,500
WIP inventory, ending
21,500
91.1)
What was the amount of raw materials used in production? A) $18,000 B) $27,000 C) $28,000 D) $46,000
91.2)
What was the total manufacturing overhead incurred during the period? A) $40,000 B) $57,500 C) $75,000 D) $92,000
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91.3)
What was the total manufacturing costs for the period? A) $47,000 B) $95,000 C) $102,000 D) $ 122,000
91.4)
What was the total prime costs for the period? A) $20,000 B) $27,000 C) $47,000 D) $95,000
91.5)
What was the cost of goods manufactured for the period? A) $122,000 B) $120,000 C) $124,000 D) $138,000
91.6)
What was the cost of goods sold for the period? A) $118,000 B) $ 120,000 C) $121,000 D) $123,000
91.7)
What was the operating income for the period? A) $50,000 B) $68,000 C) $88,000 D) $125,000
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92) Stony Electronics Corporation manufactures a Wifi speaker designed for mounting on the
wall of the bathroom. The following list represents some of the different types of costs incurred in the manufacture of these Wifi speakers: 1) The plant manager's salary. 2) The cost of heating the plant. 3) The cost of heating executive offices. 4) The cost of printed circuit boards used in the Wifi speakers. 5) Salaries and commissions of company salespersons. 6) Depreciation on office equipment used in the executive offices. 7) Depreciation on production equipment used in the plant. 8) Wages of janitorial personnel who clean the plant. 9) The cost of insurance on the plant building. 10) The cost of electricity to light the plant. 11) The cost of electricity to power plant equipment. 12) The cost of maintaining and repairing equipment in the plant. 13) The cost of printing promotional materials for trade shows. 14) The cost of solder used in assembling the Wifi speakers. 15) The cost of telephone service for the executive offices. Required: Classify each of the items above as product (inventoriable) cost or period (non-inventoriable) costs for the purpose of preparing external financial statements.
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93) Bill Pope has developed a new device that is so exciting he is considering quitting his job in
order to produce and market it on a large-scale basis. Bill will rent a garage for $300 per month for production purposes. Utilities will cost $40 per month. Bill has already taken an industrial design course at the local community college to help prepare for this venture. The course cost $300. Bill will rent production equipment at a monthly cost of $800. He estimates the material cost per unit will be $5, and the labour cost will be $3. He will hire workers and spend his time promoting the product. To do this he will quit his job, which pays $3,000 per month. Advertising and promotion will cost $900 per month. Required: Complete the chart below by placing an "X" under each heading that helps to identify the cost involved. There can be "Xs" placed under more than one heading for a single cost, e.g., a cost might be a sunk cost, an overhead cost and a product cost; there would be an "X" placed under each of these headings opposite the cost. Opportunity Variable Manuf. Cost Sunk Cost Fixed Overhead Cost Cost
Product Selling Differential Cost Cost Cost*
General rent Utilities Cost of the industrial design course Equipment rented Material cost Labour cost Present salary Advertising
* Between the alternatives of going into business to make the device or not going into business to make the device.
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94) Logan Products, a small manufacturer, has submitted the items below concerning last year's
operations. The president's secretary, trying to be helpful, has alphabetized the list. Administrative salaries
$2,400
Advertising expense
1,200
Depreciation—factory building
800
Depreciation—factory equipment
1,600
Depreciation—office equipment
180
Direct labour cost
21,900
Raw materials inventory, beginning
2,100
Raw materials inventory, ending
3,200
Finished goods inventory, beginning
46,980
Finished goods inventory, ending
44,410
General liability insurance expense
240
Indirect labour cost
11,800
Insurance on factory
1,400
Purchases of raw materials
14,600
Repairs and maintenance of factory
900
Sales salaries
2,000
Taxes on factory
450
Travel and entertainment expense
1,410
Work in process inventory, beginning
1,670
Work in process inventory, ending
1,110
Required: a. Prepare a schedule of Cost of Goods Manufactured in good form for the year. b. Determine the Cost of Goods Sold for the year.
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95) Laco Company acquired its factory building about 20 years ago. For several years, the
company has rented out a small, unused part of the building. The renter's lease will expire soon. Rather than renewing the lease, Laco Company is considering using the space itself to manufacture a new product. Under this option, the unused space will continue to be depreciated on a straight-line basis, as in past years. Direct materials and direct labour cost for the new product would be $50 per unit. In order to have a place to store finished units of the new product, the company would have to rent a small warehouse nearby. The rental cost would be $2,000 per month. It would cost the company an additional $4,000 each month to advertise the new product. A new production supervisor would be hired to oversee production of the new product who would be paid $3,000 per month. The company would pay a sales commission of $10 for each unit of product that is sold. Required: Complete the chart below by placing an "X" under each column heading that helps to identify the costs listed to the left. There can be "X's" placed under more than one heading for a single cost. For example, a cost might be a product cost, an opportunity cost, and a sunk cost; there would be an "X" placed under each of these headings on the answer sheet opposite the cost. Opportunity Cost
Sunk Cost
Variable Cost
Fixed Cost
Product Selling Cost & Admin. Cost
Differential Cost*
Rent on unused factory space Depreciation on the factory space Direct material and direct labour Rental cost of the small warehouse Advertising cost Production supervisor's salary Sales commissions
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* Between the alternatives of (1) renting the space out again or (2) using the space to produce the new product.
96) A list of accounts for a manufacturing company for an accounting period is given below.
Find the unknown amounts indicated by question marks. Sales Cost of goods sold
$39,000 ?
Purchases of direct materials
11,000
Direct labour
5,000
Finished goods inventory, beginning
5,000
Work in process, beginning
800
Work in process, ending
3,000
Gross margin
11,700
Finished goods inventory, ending
?
Accounts payable, beginning
4,000
Accounts payable, ending
2,800
Direct materials inventory, beginning
1,000
Direct materials inventory, ending
3,000
Indirect labour
2,000
Indirect materials used
4,000
Utilities expense, factory
3,000
Cost of goods manufactured
?
Depreciation on factory equipment
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97) Use the following information to determine the gross margin for British Columbia
Manufacturing for the year just ended (all amounts are in thousands ($000) of dollars): Sales
$31,800
Purchases of direct materials
7,000
Direct labour
5,000
Work in process inventory, 1/1
800
Work in process inventory, 12/31
3,000
Finished goods inventory, 1/1
4,000
Finished goods inventory, 12/31
5,300
Accounts payable, 1/1
1,700
Accounts payable, 12/31
1,500
Direct materials inventory, 1/1
6,000
Direct materials inventory, 12/31
1,000
Indirect labour
600
Indirect materials used
500
Utilities expense, factory
1,900
Depreciation on factory equipment
3,500
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98) The following information is from Marchant Manufacturing Co. for September: Direct materials used in production
$95,000
Direct labour
67,000
Total manufacturing cost
234,000
Raw materials inventory, Sept. 1
24,000
Work in process inventory, Sept. 1
6,000
Finished goods inventory, Sept. 1
101,000
Purchases of raw materials
102,000
Cost of goods manufactured
233,000
Administrative expense
41,000
Selling expense
56,000
Sales
344,000
Gross margin
127,000
Net income
30,000
Required: a. Compute the Cost of Goods Sold. b. Compute the balance in Finished Goods Inventory at September 30. c. Compute the balance in Work in Process Inventory at September 30. d. Compute the balance in Raw Materials Inventory at September 30. e. Compute the total Manufacturing Overhead. (Hint: The easiest method of solving this problem is to sketch out the income statement and the schedule of cost of goods manufactured, enter the given amounts, and then enter the unknowns as plug figures.)
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99) The following data (in thousands of dollars) have been taken from the accounting records of
Larsen Corporation for the just completed year. Sales
$860
Purchases of raw materials
$150
Direct labour
$110
Manufacturing overhead
$210
Administrative expenses
$130
Selling expenses
$180
Raw materials inventory, beginning
$40
Raw materials inventory, ending
$80
Work in process inventory, beginning
$20
Work in process inventory, ending
$80
Finished goods inventory, beginning
$80
Finished goods inventory, ending
$150
Required: a. Prepare a Schedule of Cost of Goods Manufactured in good form. b. Compute the Cost of Goods Sold. c. Using data from your answers above as needed, prepare an Income Statement in good form.
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100)
The following data (in thousands of dollars) have been taken from the accounting records of Larner Corporation for the just completed year. Sales
$870
Purchases of raw materials
$110
Direct labour
$130
Manufacturing overhead
$200
Administrative expenses
$160
Selling expenses
$140
Raw materials inventory, beginning
$30
Raw materials inventory, ending
$60
Work in process inventory, beginning
$50
Work in process inventory, ending
$10
Finished goods inventory, beginning
$150
Finished goods inventory, ending
$140
Required: a. Prepare a Schedule of Cost of Goods Manufactured in good form. b. Compute the Cost of Goods Sold. c. Using data from your answers above as needed, prepare an Income Statement in good form.
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101)
The following data (in thousands of dollars) have been taken from the accounting records of Larmont Corporation for the just completed year. Sales
$990
Purchases of raw materials
$100
Direct labour
$240
Manufacturing overhead
$210
Administrative expenses
$100
Selling expenses
$140
Raw materials inventory, beginning
$20
Raw materials inventory, ending
$80
Work in process inventory, beginning
$50
Work in process inventory, ending
$30
Finished goods inventory, beginning
$160
Finished goods inventory, ending
$150
Required: a. Prepare a Schedule of Cost of Goods Manufactured in good form. b. Compute the Cost of Goods Sold. c. Using data from your answers above as needed, prepare an Income Statement in good form.
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102)
The following costs relate to one month's activity in Martin Company:
Indirect materials
$350
Rent on factory building
450
Maintenance of equipment
100
Direct material used
1,000
Utilities on factory
300
Direct labour
1,600
Selling expense
500
Administrative expense
300
Work in process inventory, beginning
500
Work in process inventory, ending
900
Finished goods inventory, beginning
400
Finished goods inventory, ending
200
Required: a. Prepare a Schedule of Cost of Goods Manufactured in good form. b. Determine the Cost of Goods Sold.
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103)
Simply Sweets has provided the following relating to the most recent month (August 31, 2020) of operations, for their main product, cookies. Baker's salary
3,000
Finished goods inventory, beginning
1,000
Finished goods inventory, ending
3,000
General & administrative expenses
3,500
Indirect materials
500
Production Supervisor, Salary
4,000
Purchases of raw materials
11,000
Raw materials inventory, ending
2,000
Raw materials inventory, beginning
1,000
Rent on production factory
2,000
Rent, retail store
1,000
Sales
40,000
Utilities on production factory
500
Utilities, retail store
500
Wages, retail staff
3,000
WIP inventory, beginning
2,500
WIP inventory, ending
4,500
Required: a. Prepare a schedule of cost of goods manufactured in good format. b. Prepare the cost of goods sold section of the income statement. c. Prepare an income statement in good format.
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104)
Sprinkles Inc. has provided the following relating to the most recent month (October 31, 2020) of operations, for their main product, cupcakes. Baker's salary
7,000
General & administrative expenses
4,500
Indirect materials
2,500
Production Supervisor, Salary
4,000
Raw material purchases
12,000
Rent on production factory
3,000
Rent, retail store
2,000
Sales
45,000
Utilities on production factory
1,000
Utilities, retail store
1,500
Wages, retail staff
4,000
Inventory Balances:
Beginning
Ending
Raw Materials
2,000
5,000
Work in Process
3,000
6,000
Finished Goods
2,000
4,000
a. Prepare a schedule of cost of goods manufactured in good format. b. Prepare the cost of goods sold section of the income statement. c. Prepare an income statement in good format.
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105)
Snickerdoodle Inc. has provided the following relating to the most recent month (September 30, 2020) of operations, for their main product, cookies. Baker's salary
13,000
General & administrative expenses
13,500
Indirect materials
10,500
Production Supervisor, Salary
14,000
Raw material purchases
21,000
Rent on production factory
12,000
Rent, retail store
11,000
Sales
140,000
Utilities on production factory
10,500
Utilities, retail store
10,500
Wages, retail staff
13,000
Inventory Balances:
Beginning
Ending
Raw Materials
11,000
12,000
Work in Process
12,500
14,500
Finished Goods
11,000
13,000
Required: 1. Prepare a schedule of cost of goods manufactured in good format. 2. Prepare the cost of goods sold section of the income statement. 3. Prepare an income statement in good format.
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106)
Snickerdoodle Inc. has provided the following relating to the most recent month (September 30, 2020) of operations, for their main product, cookies. Baker's salary
13,000
General & administrative expenses
13,500
Indirect materials
10,500
Production Supervisor, Salary
14,000
Raw material purchases
21,000
Rent on production factory
12,000
Rent, retail store
11,000
Sales
140,000
Utilities on production factory
10,500
Utilities, retail store
10,500
Wages, retail staff
13,000
Inventory Balances:
Beginning
Ending
Raw Materials
11,000
12,000
Work in Process
12,500
14,500
Finished Goods
11,000
13,000
Required: Calculate the following: 1. Raw materials used in production 2. Total manufacturing overhead 3. Total manufacturing costs 4. Cost of Goods Manufactured 5. Cost of Goods Sold 6. Gross Margin 7. Operating Income (Loss) 8. Prime Costs 9. Conversion Costs
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107)
Frosting Corp. has provided the following relating to the most recent month (August 31, 2020) of operations, for their main product, cupcakes. Baker's salaries
25,000
Finished goods inventory, beginning
18,000
Finished goods inventory, ending
20,000
General & administrative expenses
17,000
Indirect materials
20,000
Production Supervisor, Salary
23,000
Purchases of raw materials
35,000
Raw materials inventory, ending
15,000
Raw materials inventory, beginning
25,000
Rent on production factory
24,000
Rent, retail store
22,000
Sales
300,000
Utilities on production factory
15,000
Utilities, retail store
15,000
Wages, retail staff
15,000
WIP inventory, beginning
16,000
WIP inventory, ending
8,000
Required: 1. Prepare a schedule of cost of goods manufactured in good format. 2. Prepare the cost of goods sold section of the income statement. 3. Prepare an income statement in good format.
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Answer Key Test name: Chapter 2(1) 1) FALSE 2) FALSE 3) FALSE 4) TRUE 5) FALSE 6) TRUE 7) FALSE 8) TRUE 9) FALSE 10) TRUE 11) TRUE 12) FALSE 13) FALSE 14) TRUE 15) TRUE 16) FALSE 17) FALSE 18) TRUE 19) TRUE 20) B 21) A 22) A 23) C 24) B 25) D 26) D 27) A 28) C 29) B 30) D 31) B 32) C 33) B 34) A 35) C 36) D 37) B
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38) D 39) B 40) B 41) A 42) A 43) B 44) B 45) A 46) C 47) B 48) D 49) A 50) C 51) C 52) D 53) A 54) C 55) A 56) D 57) C 58) A 59) D 60) C 61) C 62) C 63) A 64) B 65) C 66) A 67) A 68) C 69) C 70) B 71) A 72) A 73) A 74) C 75) A 76) B 77) Section Break
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77.1) B 77.2) D 77.3) C 78) Section Break 78.1) A 78.2) B 78.3) A 78.4) B 79) Section Break 79.1) D 79.2) D 79.3) B 79.4) B 80) Section Break 80.1) A 80.2) A 80.3) A 80.4) B 81) Section Break 81.1) C 81.2) B 82) Section Break 82.1) D 82.2) C 82.3) D 83) Section Break 83.1) B 83.2) B 83.3) C 84) Section Break 84.1) C 84.2) B 84.3) A 85) A 86) D 87) B 88) B 89) Section Break 89.1) C 89.2) A
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89.3) B 89.4) C 89.5) B 89.6) B 89.7) B 89.8) C 90) Section Break 90.1) A 90.2) B 90.3) A 90.4) A 90.5) A 90.6) C 90.7) D 91) Section Break 91.1) B 91.2) C 91.3) D 91.4) C 91.5) B 91.6) A 91.7) A 92) Short Answer 93) Short Answer 94) Short Answer 95) Short Answer 96) Short Answer 97) Short Answer 98) Short Answer 99) Short Answer 100) Short Answer 101) Short Answer 102) Short Answer 103) Short Answer 104) Short Answer 105) Short Answer 106) Short Answer 107) Short Answer
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Student name:__________ 1) The following costs were incurred in May: Direct materials Direct labour Manufacturing overhead Selling expenses Administrative expenses
$44,800 $29,000 $29,300 $26,800 $37,100
Conversion costs during the month totaled: A) $58,300 B) $74,100 C) $167,000 D) $73,800
2) Abburi Company's manufacturing overhead is 40% of its total conversion costs. If direct
labour is $93,000 and if direct materials are $23,000, the manufacturing overhead is: A) $62,000 B) $139,500 C) $15,333 D) $77,333
3) During the month of May, direct labour cost totaled $18,645 and direct labour cost was 55%
of prime cost. If total manufacturing costs during May were $80,200, the manufacturing overhead was: A) $15,255 B) $33,900 C) $61,555 D) $46,300
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4) In May direct labour was 35% of conversion cost. If the manufacturing overhead for the
month was $102,050 and the direct materials cost was $23,800, the direct labour cost was: A) $189,521 B) $54,950 C) $44,200 D) $12,815
5) The following costs were incurred in May: Direct materials Direct labour Manufacturing overhead Selling expenses Administrative expenses
$45,500 $28,300 $19,800 $22,700 $32,300
Prime costs during the month totaled: A) $93,600 B) $148,600 C) $73,800 D) $48,100
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6) Perteet Corporation's relevant range of activity is 8,700 units to 16,500 units. When it
produces and sells 12,600 units, its average costs per unit are as follows:
Direct materials Direct labour Variable manufacturing overhead Fixed manufacturing overhead Fixed selling expense Fixed administrative expense Sales commissions Variable administrative expense
Average Cost per Unit $7.90 $4.05 $1.90 $3.80 $0.75 $0.45 $0.55 $0.60
If 10,200 units are produced, the total amount of manufacturing overhead cost is closest to: A) $44,460 B) $79,470 C) $67,260 D) $35,490
7) A manufacturing company prepays its insurance coverage for a three-year period. The
premium for the three years is $4,680 and is paid at the beginning of the first year. Eighty percent of the premium applies to manufacturing operations and twenty percent applies to selling and administrative activities. What amounts should be considered product and period costs respectively for the first year of coverage? Product A) B) C) D) A) B) C) D)
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Period $ 1,248 $ 0 $ 1,560 $ 312
Choice A Choice B Choice C Choice D
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8) At an activity level of 8,500 machine-hours in a month, Falks Corporation’s total variable
production engineering cost is $708,900 and its total fixed production engineering cost is $168,210. What would be the total production engineering cost per machine-hour, both fixed and variable, at an activity level of 8,900 machine-hours in a month? Assume that this level of activity is within the relevant range. (Round intermediate calculations to 2 decimal places.) A) $98.55 B) $103.19 C) $102.30 D) $98.86
9) Schonhardt Corporation's relevant range of activity is 4,000 units to 8,000 units. When it
produces and sells 6,000 units, its average costs per unit are as follows: Average Cost per Unit Direct materials Direct labour Variable manufacturing overhead Fixed manufacturing overhead Fixed selling expense Fixed administrative expense Sales commissions Variable administrative expense
$ 7.85 $ 3.40 $ 1.90 $ 3.20 $ 1.20 $ 0.90 $ 1.00 $ 0.90
If 7,000 units are produced, the total amount of fixed manufacturing cost incurred is closest to: A) $31,200 B) $26,400 C) $21,600 D) $19,200
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10) Bellucci Corporation has provided the following information: Cost per Unit Direct materials
$ 7.45
Direct labour
$ 3.75
Variable manufacturing overhead
$ 1.50
Fixed manufacturing overhead
$ 125,400
Sales commissions
$ 1.00
Variable administrative expense
$ 0.80
Fixed selling and administrative expense
Cost per Period
$ 47,025
The incremental manufacturing cost that the company will incur if it increases production from 9,500 to 9,501 units is closest to (assume that the increase is within the relevant range): A) $28.20 B) $12.70 C) $32.65 D) $25.90
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11) Fiori Corporation's relevant range of activity is 4,700 units to 11,500 units. When it produces
and sells 8,100 units, its average costs per unit are as follows:
Direct materials Direct labour Variable manufacturing overhead Fixed manufacturing overhead Fixed selling expense Fixed administrative expense Sales commissions Variable administrative expense
Average Cost per Unit $ 6.50 $ 3.90 $ 2.20 $ 2.50 $ 0.95 $ 0.85 $ 1.35 $ 0.85
The incremental manufacturing cost that the company will incur if it increases production from 10,500 to 10,501 units is closest to: A) $19.10 B) $12.60 C) $15.10 D) $16.05
12) Haack Incorporated is a merchandising company. Last month the company's cost of goods
sold was $61,900. The company's beginning merchandise inventory was $17,600 and its ending merchandise inventory was $26,200. What was the total amount of the company's merchandise purchases for the month? A) $61,900 B) $53,300 C) $70,500 D) $105,700
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13) The following cost data pertain to the operations of Quinonez Department Stores,
Incorporated, for the month of September. Corporate headquarters building lease Cosmetics Department sales commissions-Northridge Store Corporate legal office salaries Store manager's salary-Northridge Store Heating-Northridge Store Cosmetics Department cost of sales-Northridge Store Central warehouse lease cost Store security-Northridge Store Cosmetics Department manager's salary-Northridge Store
$ 79,700 $ 5,180 $ 61,600 $ 16,900 $ 16,800 $ 33,500 $ 7,400 $ 14,200 $ 4,080
The Northridge Store is just one of many stores owned and operated by the company. The Cosmetics Department is one of many departments at the Northridge Store. The central warehouse serves all of the company's stores. What is the total amount of the costs listed above that are direct costs of the Cosmetics Department? A) $90,660 B) $42,760 C) $38,680 D) $33,500
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14) The following cost data pertain to the operations of Quinonez Department Stores,
Incorporated, for the month of September. Corporate headquarters building lease Cosmetics Department sales commissions-Northridge Store Corporate legal office salaries Store manager's salary-Northridge Store Heating-Northridge Store Cosmetics Department cost of sales-Northridge Store Central warehouse lease cost Store security-Northridge Store Cosmetics Department manager's salary-Northridge Store
$ 86,800 $ 5,430 $ 59,100 $ 15,400 $ 19,900 $ 33,300 $ 9,800 $ 21,500 $ 4,670
The Northridge Store is just one of many stores owned and operated by the company. The Cosmetics Department is one of many departments at the Northridge Store. The central warehouse serves all of the company's stores. What is the total amount of the costs listed above that are NOT direct costs of the Northridge Store? A) $155,700 B) $56,800 C) $43,400 D) $86,800
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15) Dake Corporation's relevant range of activity is 2,900 units to 7,500 units. When it produces
and sells 5,200 units, its average costs per unit are as follows:
Direct materials Direct labour Variable manufacturing overhead Fixed manufacturing overhead Fixed selling expense Fixed administrative expense Sales commissions Variable administrative expense
Average Cost per Unit $ 6.50 $ 3.40 $ 1.25 $ 3.50 $ 0.85 $ 0.55 $ 0.65 $ 0.55
For financial reporting purposes, the total amount of product costs incurred to make 5,200 units is closest to: A) $76,180 B) $57,980 C) $81,380 D) $18,200
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16) Dake Corporation's relevant range of activity is 3,200 units to 8,000 units. When it produces
and sells 5,600 units, its average costs per unit are as follows:
Direct materials Direct labour Variable manufacturing overhead Fixed manufacturing overhead Fixed selling expense Fixed administrative expense Sales commissions Variable administrative expense
Average Cost per Unit $ 6.55 $ 3.50 $ 1.30 $ 3.00 $ 0.90 $ 0.60 $ 0.70 $ 0.60
If 4,600 units are produced, the total amount of direct manufacturing cost incurred is closest to: A) $46,230 B) $52,210 C) $66,010 D) $56,350
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