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Exam 14: Managerial Accounting Concepts and Principles

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Question 31

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A manufacturing firm's cost of goods manufactured is equivalent to a merchandising firm's:

A) Cost of goods sold.
B) Cost of goods purchased.
C) Cost of goods available.
D) Beginning merchandise inventory.
E) Ending merchandise inventory.

F) A) and D)
G) A) and E)

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Question 32

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Information for Reedy Manufacturing follows: $\begin{array} { l r } \text { Beginning raw materials inventory } & \$ 46,800 \\\text { Beginning goods in process inventory } & 21,200 \\\text { Direct labor } & 81,000 \\\text { Beginning finished goods inventory } & 64,000 \\\text { Total factory overhead } & 106,000 \\\text { Raw materials purchased } & 21,500 \\\text { Ending raw materials inventory } & 40,000 \\\text { Ending goods in process inventory } & 20,000 \\\text { Ending finished goods inventory } & 46,000\end{array}$ Calculate both the cost of goods manufactured and the cost of goods sold for Reedy Manufacturing.

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Question 33

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A variable cost changes in proportion to changes in the volume in activity.

Direct materials are not usually easily traced to a product.

Managerial accounting is different from financial accounting in that:

For each item shown below, indicate whether it is a product cost or a period cost, by placing an X in the appropriate column. For each item that is a product cost, also indicate whether it is a direct cost or an indirect cost with respect to a unit of finished product.

The following costs are included in a recent summary of data for a company: advertising expense $85,000; depreciation expense - factory building $133,000; direct labor $250,000; direct material used $300,000; factory utilities $105,000; and sales salaries expense $150,000. Determine the dollar amount of overhead costs.

What is managerial accounting and how is it used to aid decision makers?

Value-added time divided by cycle time is the ____________________.

Raw materials that become part of a product and are identified with specific units or batches of a product are called direct materials.

Indirect materials are accounted for as factory overhead because they are not easily traced to specific units or batches of production.

A manufacturer's inventory that is not completely finished is called __________________.

The manufacturing statement is also known as the schedule of manufacturing activities or the schedule of cost of goods manufactured.

A _________________ cost contains a combination of fixed and variable costs.

There are many differences between financial and managerial accounting. Identify and explain at least three of these differences.

Newly completed units are combined with beginning finished goods inventory to make up total ending goods in process inventory.

The cost of labor that is not clearly associated with specific units or batches of product is called:

Financial accounting relies on accepted principles that are enforced through an extensive set of rules and guidelines; on the other hand, managerial accounting systems are flexible.

Another title for goods in process inventory is:

Whitman Products and Rockland Industries report the following information at December 31: Required: (a) Which company is a manufacturer? Explain. (b) Prepare the Current Asset Section of the Balance Sheet for the manufacturer.