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Exam 18: Managerial Accounting Concepts and Principles

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Question 91

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One of the main differences between the calculation of cost of goods sold for a merchandiser and that of a manufacturer is that the calculation includes cost of goods purchased for the merchandiser, but the manufacturer replaces that with ________.

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Question 92

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Which of the following is not part of the production activity in the flow of manufacturing activities?

A) Beginning Work in Process Inventory.
B) Total finished goods available for sale.
C) Cost of goods manufactured.
D) Factory overhead.
E) Direct labor.

F) B) and D)
G) B) and C)

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Question 93

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Calculate Cost of Goods Sold for the following two companies: $\begin{array} { l | l | l } & \text { LEWIS, INC. } & \text { MERCER CO } \\\hline \text { Beginning Inventory. } & & \\\hline \text { Merchandise } & \$ 250,000 & \\\hline \text { Finithed Goods } & & \$ 550,000\\\hline \text { Cost of Goods Purchased } & 460,000 & \\\hline \text { Cost of Goods Manufactured } & & 688,000\\\hline \text { Ending Inventory. } & & \\\hline \text { Merchandise } & 128,000 & \\ \hline \text { Finithed Goods } & &350,000\\\hline\end{array}$

Product costs:

________ rejects the notions of "good enough" or "acceptable" and challenges employees and managers to continuously experiment with new and improved business practices.

Which of the following statements is correct concerning the Days' sales in raw materials inventory?

Direct costs are incurred for the benefit of more than one cost object.

The Richards Company manufactures a single product. All raw materials used are traceable to specific units of product. Current information for the Richards Company follows: $\begin{array} { l r } \text { Beginging raw materials inventory } & \$ 10,000 \\\text { Ending raw materials inventory } & 12,000 \\\text { Raw material purchases } & 90,000 \\\text { Beginging work in process inventory } & 40,000 \\\text { Ending work in process inventory } & 25,000\end{array}$ $\begin{array} { l r } \text { Direct labor } & 130,000 \\\text { Total factory overhead } & 60,000 \\\text { Begining finithed goods inventory } & 55,000 \\\text { Ending finished goods inventory } & 45,000\end{array}$ The company's cost of raw materials used, cost of goods manufactured and cost of goods sold is:

Current information for the Stellar Corporation follows: $\begin{array} { l | r } \text { Beginning work in process inventory } & \$ 17,900 \\\hline \text { Ending work in process inventory } & 19,300 \\\hline \text { Direct materials } & 147,000 \\\hline \text { Direct labor } & 85,000\end{array}$ $\begin{array} { l | r } \text { Beginning work in process inventory } & \$ 17,900 \\\hline \text { Ending work in procests inventory } & 19,300 \\\hline \text { Direct materials } & 147,000 \\\hline \text { Direct labor } & \mathbf { 8 5 , 0 0 0 } \\\hline\end{array}$ Stellar Corporation's Cost of Goods Manufactured for the year is:

Expenditures that flow directly to the current income statement and are not reported as assets are________ costs.

Period costs are incurred by purchasing merchandise or manufacturing finished goods.

Total variable costs change in proportion to changes in the volume of activity.

The raw materials inventory turnover is raw materials purchased divided by the average raw materials inventory.

Adopting a lean business model should have no effect on cost in a modern manufacturing environment.

Which of the following items is not a management concept that was created to improve companies' performances?

________ reveals how many times a company uses its raw materials inventory in production during a period.

Classifying costs by behavior with changes in volume of activity involves:

Using the information below, calculate gross profit for the period: $\begin{array}{lc}\text { Beginning Raw Materials Inventory } & \$ 25,000 \\\text { Ending Raw Materials Inventory } & 30,000 \\\text { Beginning Work in Process Inventory } & 55,000 \\\text { Ending Work in Process Inventory } & 64,000 \\\text { Beginning Finished Goods Inventory } & 80,000 \\\text { Ending Finished Goods Inventory } & 67,000 \\\text { Cost of Goods Sold for the period } & 540,000 \\\text { Sales revenues for the period } & 1,254,000\\\\\text { Operating expenses for the period}&232,000\end{array}$

Direct materials are not easily traced to a product.

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