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Exam 10: An Introduction to Management Accounting

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Question 41

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On December 31, Year 1, Zeus Manufacturing reported the following balances in its inventory accounts: $\begin{array}{llr} \text { Account}&\text { Balance}\\ \text { Raw materials inventory} &\$21,000\\ \text { Work in process inventory } &32,500\\ \text { Finished goods inventory } &36,500\end{array}$ The following events occurred during Year 2:purchased raw materials for cash, $375,000raw materials used to make products, $359,500direct labor costs of $204,000 were paid in cashpaid cash for actual overhead costs, $180,500completed products that cost $704,500sold goods that had cost $696,000 for $985,000 cashpaid cash for selling and administrative expenses, $206,000Required:Prepare Zeus' schedule of cost of goods manufactured and sold for Year 2.Prepare the income statement for Year 2.Calculate the balances in the Raw Materials, Work in Process, and Finished Goods Inventory accounts as of December 31, Year 2.

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Question 42

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The following information relates to the operations of Cruz Manufacturing during the current year: $\begin{array}{llr} \text { Raw materials used } &\$20,000\\ \text { Direct labor wages } &60,000\\ \text { Sales salaries and commissions } &50,000\\ \text { Depreciation on production equipment } &4,000\\ \text { Rent on manufacturing facilities } &30,000\\ \text {Packaging and shipping supplies } &6,000\\ \text { Sales revenue } &190,000\\ \text {Units produced and sold } &10,000\\ \text { Selling price per unit } &\$20.00\\\end{array}$ Based on this information, what is the company's cost of goods sold?

A) $86,000
B) $120,000
C) $114,000
D) $170,000

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

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Question 43

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A company that uses a just-in-time inventory system:

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.

All of the following are features of managerial accounting except:

Karen is a Certified Management Accountant and is bound by the IMA's Standards of Ethical Conduct. Karen works as an accountant for Sam Pharmaceuticals. Karen's friend is the CEO of another pharmaceutical company and has asked Karen to share private accounting information. If Karen agrees to help her friend, she will violate the confidentiality standard.

Unlike manufacturers, service companies do not have an inventory of products.

As a Certified Management Accountant, Grace is bound by the standards of ethical conduct issued by the Institute of Management Accountants. If she accepts an expensive gift from a vendor trying to win a contract with her firm, which of the following standards will she violate?

What is the effect on the balance sheet of recording a $200 cash purchase of raw materials?

Distinguishing between product and period costs is sometimes guided by the value-added principle

Period costs are initially recorded in asset accounts and are later expensed in the period when the related units are sold.

Product costs flow from the balance sheet to the income statement.

Cost of goods sold must be determined prior to computing cost of goods manufactured.

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.

Steuben Company produces dog houses. During the current year, Steuben Company incurred the following costs: $\begin{array}{llr} \text { Rent on manufacturing facility} &\$250,000\\ \text {office manager's salary } &150,000\\ \text { Wages of factory machine operators} &110,000\\ \text {Depreciation on manufacturing equipment } &50,000\\ \text {Insurance and taxes on selling and administrative } &30,000\\ \text { offices } &\\ \text { Direct materials murchased and used } &170,000\end{array}$ Based on the above information, which of the following would not be treated as a product cost:

Managerial accounting focuses primarily on the performance of the company as a whole.

Information about all three manufacturing inventory accounts is required to prepare the cost of goods manufactured and sold schedule.

For a manufacturing company, both direct labor costs and indirect labor costs are classified as product costs.

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?

Managerial accounting information is limited or restricted by which of the following authorities or principles?