Accounting chapters 18 & 19

Which of the following is an objective of managerial​ accounting?

to provide information to business managers to assist them in controlling their business

Managerial accounting information for a company is primarily used by​ ________.

its employees to plan and control operations

Which of the following is the primary objective of managerial​ accounting?

providing information that managers need to make operational decisions

Managerial accounting includes the planning function. Which of the following items would be part of the planning function of a​ business’s managerial​ accounting?

creating detailed budgets

Which of the following is the primary focus of financial​ accounting?

providing summarized information on operational results to investors and creditors

Management’s accountability to its suppliers and vendors is to​ ________.

make timely payments and comply with contract terms

________ is a philosophy of continuous improvement of products and processes.

Total Quality Management​ (TQM)

What is Total Quality Management​ (TQM)?

a philosophy of supplying customers with superior products and services

Which of the following is a philosophy designed to integrate all organizational areas in order to provide customers with superior products and​ services, while meeting organizational goals throughout the value​ chain?

Total Quality Management​ (TQM)

Which of the following describes a system in which suppliers deliver materials at the time they are needed and finished units are completed when customer orders need to be​ filled?

Just-in-Time (JIT) Management

An Enterprise Resource Planning system​ (ERP) ________.

integrates all worldwide​ functions, departments, and data of a company into a single system

Which of the following is one of the key standards of ethical practice published by the Institute of Management Accountants​ (IMA)?

confidentiality

Seria, Inc. has received a bulk order from an overseas client. As a​ result, the reported earnings of this year are expected to be significantly higher than the estimates of financial analysts.​ Joshua, an accountant at​ Seria, tells this to one of his friends. Which of the IMA standards has Joshua​ violated?

confidentiality

You did not understand what the term accrual meant and failed to accrue the interest due at the end of the year on the​ company’s bonds. Which of the IMA standards appears to have been violated​ here?

competence

The income statement of a service company will most likely include​ ________.

salaries expense

Which of the following is true of service​ companies?

Service companies carry no inventories of products for sale.

Which of the following is most likely a service​ company?

a law firm

One of the primary activities of​ Rex, Inc. is to purchase hats from​ Viva, Inc. in Texas and sell them to its customers in Washington for a profit. It is likely that Rex is a​ ________.

merchandising company

Product costs are expensed​ ________.

when the products are consumed or sold

Which of the following is a product cost for a manufacturing​ company?

wages paid to factory janitor

Which of the following would be considered a product cost for a manufacturing​ business?

property taxes on the factory

Which of the following would be considered a product cost for a manufacturing​ company?

salary of the production manager

Which of the following would be considered a product cost for a manufacturing​ company?

depreciation on manufacturing equipment

For​ decision-making purposes,​ ________ costs are often divided into prime costs and conversion costs.

product costs

Which of the following is true of product​ costs?

They are first recorded in an inventory account.

A company that uses​ labor, equipment,​ supplies, and facilities to convert raw materials into finished products is a​ ________.

manufacturing company

The balance sheet of a​ ________ company will include​ Work-in-Process Inventory as a line item.

manufacturing

Goods that have been started in the manufacturing process but are not yet complete are included in the​ ________.

​Work-in-Process Inventory account

Which of the following would appear as a line item on the income statements of both a merchandiser and a​ manufacturer?

Cost of Goods Sold

Partial income statements of Company A and Company B are provided​ below:
Company A
Revenue
​$80,000
Expenses:
Utilities Expense
​$5,000
Salaries Expense
​15,000
Rent Expense
​3,2000
Total Expenses
​23,700
Operating Income
​$56,300
Company B
Revenue
​$50,000

Company A is a service company.

The​ Work-in-Process Inventory account includes the​ ________.

goods that are partially completed

Which of the following formulas represents cost of goods sold for a merchandising​ business?

Beginning Merchandise Inventory​ + Purchases and Freight In minus− Ending Merchandise Inventory​ = Cost of Goods Sold

Anything for which managers want a separate measurement of cost is called a​ ________.

cost object

Period costs are the​ ________.

costs that are incurred and expensed during the same accounting period

Which of the following is an example of a period cost for a manufacturing​ company?

advertising expense

For a manufacturing​ company, which of the following is a period​ cost?

office rent

Which of the following would be considered a period cost for a manufacturing​ company?

sales salaries

Which of the following is a part of manufacturing​ overhead?

factory insurance

Which of the following is an example of direct labor cost in a​ factory?

wages of assembly line personnel

Kyanite​ Corporation, a​ manufacturer, reports costs for the year as​ follows:
Direct Materials Used
$ 535 comma 000$535,000
Wages to Line Workers
385 comma 000385,000
Office Rent
12 comma 50012,500
Indirect Materials Used
755 comma 000755,000
How much is the total period costs for​ Kyanite?

$12,500

The following information was obtained from​ Fizz, Inc. How much were​ Fizz’s period​ costs?

$654,650

Daryl Corporation reports costs for the year as​ follows:How much is the total product costs for the​ year?

$1,760,000

The following information was obtained from MCB​ Manufacturing, Inc. Calculate MCB​ Manufacturing’s total product costs.

$140,720

Which of the following would be considered a direct labor cost for a manufacturing​ company?

wages of the assembly line staff

Which of the following would be included as indirect manufacturing costs for a manufacturing​ company?

wages of the factory manager

Which of the following would be included as manufacturing overhead for a manufacturing​ company?

indirect materials cost

Which of the following is a prime cost and a conversion​ cost?

direct labor

Which of the following represents the combined sum of direct labor and manufacturing​ overhead?

conversion costs

Which of the following represents the combined sum of direct materials and direct​ labor?

prime costs

Which of the following will be classified as a conversion​ cost?

depreciation on factory equipment

Which of the following would be classified as a prime​ cost?

cost of direct materials used

Viva, Inc. has provided the following information for the​ year:How much is the cost of goods​ sold?

$1,279,000

Goods that are produced by a manufacturing company and are ready to sell are recorded in the​ _______ account.

Finished Goods Inventory

Barricades Corporation provided the following information for the year. What was the amount of direct materials used in production during the​ year?

$387,000

KRD Supplies Corporation provided the following information for the year. What was the amount of the manufacturing overhead​ costs?

$313,000

Amoeba​ Manufacturing, Inc. provided the following information for the​ year:
What is the ending balance in the Raw Materials Inventory​ account?

$24,640

Evanston​ Manufacturing, Inc. reported the following information for the year. What was the unit product​ cost? (Round your answer to the nearest​ cent.)

$1.77

Star​ Health, Inc. is a fitness center in Oklahoma City. In​ October, the company earned
$ 557 comma 000$557,000
in revenues and incurred the following operating costs from
400400
​customers:

$104.13

Five Seasons is a merchandiser of packed foods. The company provides the following information for the​ year:
How much was the unit cost per item of product​ sold? (Round your answer to the nearest​ cent.)

$3.15

Which of the following would use a process costing system rather than a job order costing​ system?

a paint manufacturer

Which of the following businesses is most likely to use a process costing​ system?

a candy manufacturer

The entry to record the purchase of direct materials on account would include a​ ________.

debit to the Raw Materials Inventory account

Which of the following accounts would be debited in the journal entry to record the issuance of direct​ materials?

​Work-in-Process Inventory

Manufacturing Overhead is a temporary account used to​ ________ indirect production costs during the accounting period.

accumulate

The journal entry to issue indirect materials to production should include a debit to the​ ________.

Manufacturing Overhead account

Uniq Works purchased raw materials amounting to
$ 129 comma 000$129,000
on account and
$ 19 comma 000$19,000
for cash. The materials will be used to manufacture upholstery for furniture manufacturers on a contract basis. Which of the following journal entries correctly records this​ transaction?

Raw Materials Inventory 148 comma 000148,000 Cash 19 comma 00019,000 Accounts Payable 129 comma 000129,000

The accounts of Delphinia​ Dreams, Inc. showed the following balances at the beginning of​ October:During the​ month, direct materials amounting to
$ 20 comma 000$20,000
and indirect materials amounting to
$ 5 comma 000$5,000
were issued to production. What is the ending balance in the
Workminus−inminus−Process
Inventory account following these two​ transactions?

$60,000

On June​ 1, Dalton Productions had beginning balances as shown in the
Tminus−accounts
belowDuring​ June, the following transactions took​ place:

June​ 2: Issued
$ 2 comma 900$2,900
of direct materials and
$ 400$400
of indirect materials to production.

What was the balance in the Manufacturing Overhead account following this​ transaction?

$41,400

The journal entry to record indirect labor costs incurred involves a debit to the​ ________.

Manufacturing Overhead account

Which of the following will be categorized as a manufacturing overhead​ cost?

depreciation on factory plant and equipment

Which of the following will be debited to the Manufacturing Overhead account of a watch​ manufacturer?

factory electricity costs

Which of the following describes the allocation base for allocating manufacturing overhead​ costs?

the primary cost driver of indirect manufacturing costs

When a job order costing system is​ used, actual manufacturing overhead costs are debited to​ ________.

the Manufacturing Overhead account

Which of the following correctly describes the term cost​ driver?

the primary factor that causes a cost to be incurred

The predetermined overhead allocation rate is the rate used to​ ________.

allocate estimated manufacturing overhead costs to jobs

The predetermined overhead allocation rate is calculated by dividing​ ________.

the estimated overhead costs by total estimated quantity of the overhead allocation base

The predetermined overhead allocation rate for a given production year is calculated​ ________.

before the accounting period begins

Aaron, Inc. estimates direct labor costs and manufacturing overhead costs for the coming year to be
$ 770 comma 000$770,000
and
$ 530 comma 000$530,000​,
respectively. Aaron allocates overhead costs based on machine hours. The estimated total labor hours and machine hours for the coming year are
16 comma 00016,000
hours and
9 comma 0009,000
​hours, respectively. What is the predetermined overhead allocation​ rate? (Round your answer to the nearest​ cent.)

$58.89 per machine hour

Zephyros Corporation had estimated manufacturing overhead costs for the coming year to be
$ 301 comma 000$301,000.
The total estimated direct labor hours and machine hours for the coming year are
7 comma 0007,000
and
12 comma 00012,000​,
respectively. Manufacturing overhead costs are allocated based on direct labor hours. What is the predetermined overhead allocation​ rate? (Round your answer to the nearest​ cent.)

$43.00 per direct labor hour

The Equinox Fabrication Plant suffered a fire incident in​ August, and most of the records for the year were destroyed. The following accounting data for the year were​ recovered:

$33.66

Archangel Manufacturing calculated a predetermined overhead allocation rate at the beginning of the year based on a percentage of direct labor costs. The production details for the year are given​ below:

40%

Sybil, Inc. uses a predetermined overhead allocation rate to allocate manufacturing overhead costs to jobs. The company recently completed Job 300X. This job used
1111
machine hours and
33
direct labor hours. The predetermined overhead allocation rate is calculated to be
$ 41$41
per machine hour. What is the amount of manufacturing overhead allocated to Job 300X using machine hours as the allocation​ base?

$559

Caltran, Inc. completed manufacturing Job 445. It included
$ 320$320
of direct materials​ cost,
$ 1 comma 240$1,240
of direct labor​ cost, and
$ 540$540
of allocated manufacturing overhead. Which of the following is the correct journal entry needed to record the completed​ job?

Finished Goods Inventory 2 comma 1002,100 Workminus−inminus−Process Inventory 2 comma 1002,100

On June​ 30, Caroline, Inc. finished Job 750 with total job costs of
$ 4 comma 700$4,700
and transferred the costs to Finished Goods Inventory. On July​ 6, Caroline completed the sale of the goods from Job 750 to a customer for
$ 6 comma 000$6,000
cash. Which of the following is the correct entry needed to record the revenue​ earned?

debit Cash $ 6 comma 000$6,000 and credit Sales Revenue $ 6 comma 000$6,000

On June​ 30, Coral, Inc. finished Job 750 with total job costs of
$ 4 comma 200$4,200​,
and transferred the costs to Finished Goods Inventory. On July​ 6, it completed the sale of the goods to a customer for
$ 5 comma 900$5,900
cash. Which of the following is the correct journal entry to record the cost of goods​ sold?

debit Cost of Goods Sold $ 4 comma 200$4,200 and credit Finished Goods Inventory $ 4 comma 200$4,200

On January​ 1, Feldstein Manufacturing had a beginning balance in
Workminus−inminus−Process
Inventory of
$ 80 comma 800$80,800
and a beginning balance in Finished Goods Inventory of
$ 20 comma 000$20,000.
During the​ year, Feldstein incurred manufacturing costs of
$ 352 comma 500$352,500.

$81,000 debit balance

At the end of the​ year, Beta, Inc. has an unadjusted debit balance in the Manufacturing Overhead account of
$ 3 comma 990$3,990.
The adjusting journal entry needed to adjust the balance to zero will include a​ ________.

debit to Cost of Goods Sold $ 3 comma 990$3,990 and credit to Manufacturing Overhead $ 3 comma 990$3,990

At the end of the​ year, Metro, Inc. has an unadjusted credit balance in the Manufacturing Overhead account of
$ 910$910.
Which of the following is the
yearminus−end
adjusting entry needed to adjust the​ account?

A debit to Manufacturing Overhead of $ 910$910 and a credit to Cost of Goods Sold of $ 910$910

On January 1 Primary Manufacturing had a beginning balance in
Workminus−inminus−Process
Inventory of
$ 81 comma 100$81,100
and a beginning balance in Finished Goods Inventory of
$ 20 comma 000$20,000.
During the​ year, Primary incurred manufacturing costs of
$ 350 comma 000$350,000.

$321,000 debit balance

On January​ 1, Frederic Manufacturing had a beginning balance in
Workminus−inminus−Process
Inventory of
$ 161 comma 000$161,000
and a beginning balance in Finished Goods Inventory of
$ 24 comma 000$24,000.
During the​ year, Frederic incurred manufacturing costs of
$ 203 comma 000$203,000.

$300,000 debit balance

Highland, Inc., an engineering​ firm, uses a job order costing system to accumulate
clientminus−related
costs. The predetermined overhead allocation rate is
6060​%
of staff labor cost. The work by engineers is charged to jobs at a rate of
$ 30$30
per staff labor hour. A recent job for a client used
6060
staff labor hours. How much was the total job​ cost?

$2,880

Bass Accounting Services expects its accountants to work a total of
24 comma 00024,000
direct labor hours per year. The​ company’s estimated total indirect costs are
$ 288 comma 000$288,000.
The company uses direct labor hours as the allocation base for indirect costs. What is the indirect cost allocation​ rate? (Round your answer to the nearest​ cent.)

$12.00 per hour

Bacon Financial Advisors provides accounting and finance assistance to customers in the retail business. Bacon has four professionals on staff and an office with six clerical staff. Total​ compensation, including​ benefits, for the professional staff runs about
$ 571 comma 000$571,000
per​ year, and normal billable hours are
8 comma 3008,300
hours per year. The professional staff keep detailed time sheets organized by client number. The total office and administrative costs for the year are
$ 754 comma 000$754,000.
What is the direct labor rate for the professional​ staff? (Round your answer to the nearest​ cent.)

$68.80 per hour

Seal Financial Advisors provides accounting and finance assistance to customers in the retail business. Seal has four professionals on staff and an office with six clerical staff. Total​ compensation, including​ benefits, for the professional staff runs about
$ 573 comma 000$573,000
per​ year, and normal billable hours are
8 comma 2008,200
hours per year. The professional staff keep detailed time sheets organized by client number. The total office and administrative costs for the year are
$ 756 comma 000$756,000.
Seal allocates office and administrative costs to clients​ monthly, using a predetermined overhead allocation rate based on billable hours. What is the predetermined overhead allocation rate that Seal will use for office and administrative​ costs? (Round your answer to the nearest​ cent.)

$92.20 per hour

Fogelin Promotional Services uses a job order system for costing and billing promotional services for dance and ballet performances. Fogelin has four public relations specialists and office staff. At the beginning of the​ year, Fogelin estimated the total cost of salaries and benefits for the public relations specialists at
$ 403 comma 800$403,800
and a total of
7 comma 1007,100
billable hours for the year. The office and administrative costs were estimated at
$ 673 comma 000$673,000.
What direct labor rate would Fogelin use for the cost of its​ specialists? (Round your answer to the nearest​ cent.)

$56.87