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Exam 16: Management Accounting: a Business Partner

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Question 1

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Flow of manufacturing costs The "flow" of manufacturing costs through the ledger of Wolpe Mfg. Co. during the month of October is summarized in the following T accounts. Certain amounts have been omitted and are represented by question marks. From the data supplied above, determine each of the following amounts. Some of the required amounts already appear in the T accounts; others require a short computation. (a) The amount of direct materials used during the month: $____________ (b) The amount paid to direct labor workers during the month: $____________ (c) The amount of accrued wages payable to direct labor workers at October 31: $____________ (d) Total manufacturing costs charged (debited) to the Work in Process Inventory account during the month: $____________ (e) The cost of finished goods manufactured during the month: $____________

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(a) 44,000
(b) 29,00...

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Question 2

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Management accounting systems are designed to assist organizations in the performance of all of the following functions except:

A) The assignment of decision-making authority over company assets.
B) Planning and decision-making.
C) Monitoring, evaluating, and rewarding performance.
D) The preparation of income tax returns.

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

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Question 3

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Product cost vs. period cost Briefly define the terms product cost and period cost. Explain why the distinction between these two types of costs is important.

Which of the following is not a product cost?

As units are completed, their cost is transferred from the Work in Process Inventory account to the Finished Goods Inventory account.

In comparison with a financial statement prepared in conformity with generally accepted accounting principles, a managerial accounting report is less likely to:

Management accounting encompasses the design and use of accounting information systems inside the company to achieve the company's objectives.

If the end of the fiscal year is not a payroll date, the Direct Labor account normally has:

Which of the following is not a characteristic of managerial accounting?

Product costs are charged directly to expense accounts.

Prime costs include direct materials and direct labor used in the production of goods and services.

A value chain is a linked set of activities and resources necessary to deliver a product of low cost but high value to the retailer.

Classification of costs Using the code letters below, indicate in the space provided how each of the following costs should be classified in the indicated pen manufacturing company: $\begin{array}{|l|l|}\hline \text { Code Letters } & \\\hline \mathrm{DM}=\text { Direct materials } & \mathrm{WP}=\text { Work in process } \\\hline \mathrm{DL}=\text { Direct labor } & \mathrm{FG}=\text { Finished goods } \\\hline \mathrm{MO}=\text { Manufacturing overhead } & \mathrm{PC}=\text { Period cost } \\\hline\end{array}$ Costs ______ (a) Property tax on the factory building. ______ (b) The chief financial officer's salary. ______ (c) Plastic used to manufacture pens. ______ (d) Janitors at the factory. ______ (e) Manufactured pens waiting to be sold to customers. ______ (f) Advertising logos. ______ (g) Partially completed pens.

Which of the following costs would not be considered part of the manufacturing overhead of a chemical plant?

The amount of wages paid to direct workers during April amounted to:

The Alton Company produces metal belts. During the current month, the company incurred the following product costs: Raw materials $100,000 Direct labor $75,000 Electricity used in the Factory $25,000 Factory foreperson salary $3,750 Maintenance of factory machinery $2,000 Alton Company's total product costs totaled:

Generally Accepted Accounting Principles The accounting department of Burke Manufacturing prepares numerous reports at the request of, and for exclusive use by, the management of the company. Is it necessary that these managerial accounting reports be developed in accordance with generally accepted accounting principles (GAAP)?

During its first year of operations, the Brown Company incurred the following product costs: Direct materials used in production $200,000 Direct labor $175,000 Manufacturing overhead $145,500 The Brown Company's ending Work in Process Inventory amounted to $35,000 at the end of the year. What is the company's cost of finished goods manufactured for the year?

When a manufacturing company purchases raw materials or component parts to be used in manufacturing finished goods, these costs are initially debited to:

The three basic types of manufacturing costs are direct materials, direct labor and manufacturing overhead.