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Exam 10: An Introduction to Management Accounting

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Question 21

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

A) True
B) False

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Question 22

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

A) Cost of transporting raw materials to the job site
B) Wages paid to the company's payroll clerk
C) Rent of the company's main office
D) All of these

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

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Question 23

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Karen is a Certified Management Accountant and is bound by the IMA's Standards of Ethical Conduct. Her superior has asked her to try to influence the firm's outside auditors with expensive gifts and favors. If Karen complies, she will violate the competence standard.

During its first year of operations, Connor Company paid $50,000 for direct materials and $36,000 in wages for production workers. Lease payments and utilities on the production facilities amounted to $14,000. General, selling, and administrative expenses were $16,000. The company produced 5,000 units and sold 4,000 units for $30.00 a unit. The average cost to produce one unit is which of the following amounts?

Opportunity, pressure and rationalization are the three elements of the fraud triangle.

Ashley Bradshaw is the manager of one department in a large store. In this capacity, which of the following kinds of information would she be interested in?

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

The Juarez Corporation incurred the following transactions during its first year of operations. (Assume all transactions involve cash) . 1) Acquired $1,000 of capital from the owners. 2) Purchased $400 of direct raw materials. 3) Used $300 of these direct raw materials in the production process. 4) Paid production workers $400 cash. 5) Paid $200 for manufacturing overhead. 6) Started and completed 200 units of inventory. 7) Sold 50 units at a price of $6 each. "8) Paid $40 for selling and administrative expenses. The amount of cost of goods manufactured would be:"

A merchandising business paid $2,500 to purchase inventory and $50 to have the inventory delivered to its customers. Its product costs were $2,550.

A manufacturing business paid $3,000 to purchase inventory. As a result, assets would increase by $3,000.

The primary difference between manufacturing companies and service companies is that the products provided by service companies are consumed immediately.

Which of the following correctly computes cost of goods manufactured?

The biggest challenge in computing the total cost per unit of a product is determining the amount of overhead cost that should be assigned to each unit.

Fortune Company had beginning raw materials inventory of $16,000. During the period, the company purchased $92,000 of raw materials on account. If the ending balance in raw materials was $10,000, the amount of raw materials transferred to work in process is:

Which of the following statements concerning product costs versus general, selling, and administrative costs is false?

Most internal users of accounting information need primarily global information that reflects the performance of the company as a whole.

All of the following are features of managerial accounting except:

A just-in-time system can lower inventory holding costs and increase customer satisfaction.

Unlike direct material and direct labor costs, overhead costs must be allocated to products.

A company uses sandpaper to prepare its product for finishing. Most manufacturers would classify the sandpaper as direct material because it is physically consumed in the production process.