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Exam 10: An Introduction to Management Accounting

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Question 41

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A systematic problem-solving philosophy that encourages front line workers to achieve zero defects is known as:

A) just-in-time (JIT) .
B) total quality management (TQM) .
C) activity based management (ABM) .
D) None of these.

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

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Question 42

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Discuss the regulation of financial accounting, and compare to the level of regulation of managerial accounting information.

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The financial accounting information pre...

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Question 43

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Does the term "cost" mean the same thing as the term "expense?" Explain your answer.

Costs that are not classified as product costs are normally expensed in the period incurred.

A company that uses a just in time inventory system:

During its first year of operations, Silverman Company paid $14,000 for direct materials and $19,000 for production workers' wages. Lease payments and utilities on the production facilities amounted to $17,000 while general, selling, and administrative expenses totaled $8,000. The company produced 5,000 units and sold 3,000 units at a price of $15.00 a unit. What is Silverman's cost of goods sold for the year?

Levenworth Company incurs unnecessary costs each period because of the excess quantities of inventory maintained to meet unexpected customer demand. The costs of inventory financing, storage, supervision, and obsolescence could most likely be reduced by which of the following practices?

Which of the following statements concerning manufacturing costs is incorrect?

How does the level of aggregation differ between financial accounting information and managerial accounting information?

The following information relates to Marshall Manufacturing's 2013 accounting period: $\begin{array}{lr}\text { Raw materials used } & \$ 34,000 \\ \text { Direct labor wages } & 66,000 \\\text { Sales salaries and commissions } & 50,000 \\\text { Depreciation on production equipment } & 6,000 \\ \text { Rent on manufacturing facilities } & 4,000 \\ \text { Administrative supplies and utilities } & 10,000 \\\text { Sales revenue } & 210,000 \\ \text { Units produced } & 10,000 \\ \text { Units sold } & 10,000\end{array}$ Based on this information, what is the company's net income for 2013?

Costs such as transportation-out, sales commissions, uncollectible accounts receivable, and advertising costs are sometimes called:

Randall Company manufactures chocolate bars. The following were among Randall's 2013 manufacturing costs: Wages Machine operators $\quad \$ 300,000$ Selling and administrative personnel $\quad \$ 75,000$ Materials used Lubricant for oiling machinery $\quad \$ 25,000$ Cocoa, sugar, and other raw materials $\quad \$ 225.000$ Packaging materials $\quad \quad \quad \$ 190,000$ Randall's 2013 direct labor costs amounted to:

The Carson Company was started at the beginning of the current year when it acquired $20,000 by issuing common stock to its owners. During the year, the company incurred the following cash costs: $\begin{array} { |l | r| } \hline\text { Direct material costs } & \$ 10,000 \\\hline \text { Direct labor costs } & 8,000 \\\hline \text { Overhead costs } & 4,000 \\\hline \text { Selling and administrative costs } & 2,000\\\hline\end{array}$ The company produced 5,000 units of product and sold 4,500 units. The average selling price was $7.00 per unit. The accountant who prepared the firm's financial statements misclassified the selling and administrative costs as product costs. Required: Demonstrate the impact of the error on the company's financial statements by completing the following schedule. $\begin{array} { | l | l | l | } \hline & \text { Seenario 1: With the error } & \text { Seenario 2: Without the error } \\\hline \text { Income stabement: } & & \\\hline \text { Revenuo } & & \\\hline \text { Less: Cest of goods sold } & \\\hline \text { Gross margin } & \\\hline \begin{array} { l } \text { Less: Selling general, and } \\\text { administrative expenses }\end{array} & \\\hline \text { Net income } & & \\\hline & & \\\hline \text { Balance sheet: } & & \\\hline \text { Assets } & & \\\hline \text { Cash } & & \\\hline \text { Inventory } & & \\\hline \text { Total assets } & & \\\hline \text { Equity } & \\\hline \text { Common stock } & \\\hline \text { Retained earnings } & \\\hline \text { Total equity } & \\\hline\end{array}$

Randall Company manufactures chocolate bars. The following were among Randall's 2013 manufacturing costs: Wages Machine operators $\quad \$ 300,000$ Selling and administrative personnel $\quad \$ 75,000$ Materials used Lubricant for oiling machinery $\quad \$ 25,000$ Cocoa, sugar, and other raw materials $\quad \$ 225.000$ Packaging materials $\quad \quad \quad \$ 190,000$ Randall's 2013 direct materials amounted to:

All costs incurred prior to delivery of the product to the customer are referred to as upstream costs.

Howard Lumber Company mistakenly classified a product cost as an expense that totaled $20,000. The company produced 2,000 units of product and sold 1,000 of them during the year. Management is paid a bonus equal to 2% of net income. In the year in which the mistake was made:

Which of the following practices is not considered an effective means of reengineering business systems?

Managerial accounting systems consider economic and non-financial data as well as financial statement data.

Which of the following is a product cost for a construction company?

Why do accountants normally calculate cost per unit as an average?