69 Free Test Bank for Managerial Accounting 10th Edition by Crosson

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The beginning finished goods inventory of Ronald Co. was $480,125. Goods completed during the year cost $963,250. The ending finished goods inventory was dangerously low, having been reduced to $135,850. The cost of goods sold for the year for Ronald Co. was

•  $618,975.
•  $1,307,525.
•  $1,579,225.
•  $1,171,675.

In a manufacturing environment, costs of materials initially flow

•  into the Work in Process Inventory account.
•  into the Materials Inventory account.
•  into the Cost of Goods Sold account.
•  into the Finished Goods Inventory account.

If the report is urgently needed, it is sometimes necessary to sacrifice accuracy in the interest of

•  timeliness
•  personal feelings.
•  profits.
•  expectations.

Materials and supplies that cannot be traced conveniently to specific products are called

•  indirect materials.
•  raw materials.
•  waste materials.
•  direct materials.

In a manufacturing environment, direct labor costs initially flow

•  into the Materials Inventory account.
•  into the Cost of Goods Sold account.
•  into the Work in Process Inventory account.
•  into the Finished Goods Inventory account.

Management accounting reports

•  are primarily used by parties inside the organization.
•  must be prepared on a periodic basis.
•  are generally publicly available.
•  are based on generally accepted accounting principles.

Prime costs is the sum of

•  the direct labor costs and indirect labor costs.
•  the direct material costs, direct labor costs, and overhead costs.
•  the direct labor costs and overhead costs.
•  the direct materials costs and direct labor costs.

Period costs are

•  charged against the revenue of the current period.
•  initially recognized on the balance sheet as inventory.
•  charged to the period in which the product generates revenue.
•  further classified as direct costs and indirect costs.

Management accounting activities

•  are synonymous with financial accounting activities.
•  are substitute for the management process.
•  complement the management process.
•  have nothing to do with the management process.

The income statement for a manufacturing company usually contains a detailed computation of the

•  total manufacturing cost.
•  cost of goods sold.
•  total cost of materials used.
•  total overhead.

The three elements of product costs are

•  direct materials, work in process, and overhead.
•  direct materials, work in process, and finished goods.
•  direct materials, direct labor, and overhead.
•  direct materials, direct labor, and period costs.

Suppose a management accountant becomes aware that a poor judgment he or she made has resulted in the loss of one of the company's clients. Is the accountant bound to share this information with the company? (The accountant doubts that the company will ever find out about it directly.)

•  The management accountant is bound to respond honestly to inquiries regarding the adequacy of professional judgments but is not bound to communicate them if not directly asked.
•  The management accountant is bound to communicate this error in judgment only if another client cannot be found.
•  The management accountant is not bound to communicate this error.
•  The management accountant is bound to communicate unfavorable and favorable judgments made, even if not directly asked.

To calculate the total cost of goods manufactured from total manufacturing costs

•  subtract all period costs from total manufacturing costs.
•  add beginning and subtract ending finished goods inventory to total manufacturing costs.
•  you must know how many goods were sold during the period.
•  add beginning and subtract ending work in process inventory to total manufacturing costs.

Cost of goods manufactured is equal to

•  Direct Materials + Direct Labor + Overhead.
•  Beginning Work in Process Inventory + Total Manufacturing Costs – Ending Work in Process Inventory.
•  Beginning Work in Process Inventory + Period Costs – Ending Work in Process Inventory.
•  Beginning Work in Process Inventory + Product Costs.

Velocity Ltd. is a sports car manufacturer. Which of the following is a value-adding cost for Velocity?

•  Salary of the payroll department
•  Cost of tires used in cars
•  Cost of office supplies
•  Salary of operations manager

All manufacturing costs that are assigned to completed (but unsold) products should be classified as

•  materials inventory costs.
•  cost of goods sold.
•  work in process inventory costs.
•  finished goods inventory costs.

Period cost is also called

•  variable cost.
•  direct cost.
•  value-adding cost.
•  noninventoriable cost.

If a management accountant confides to a relative that his or her company has a confidential plan to merge with another company in the near future, the accountant has

•  not violated ethical standards.
•  violated ethical standards only if the relative owns stock in the company.
•  violated ethical standards because the relative could stand to gain personally from that information.
•  not violated ethical standards because the information was relayed to a family member only.

The Finished Goods Inventory and the Cost of Goods Sold for a manufacturing company for the year 2014 are as follows: May 1 Finished Goods Inventory, $470,500; May 31 Finished Goods Inventory, $125,000; Cost of Goods Sold for the year, $1,110,000. The cost of goods manufactured for the month was

•  $1,455,500.
•  $595,500.
•  $985,000.
•  $764,500.

All manufacturing costs incurred and assigned to products that are being produced are classified as

•  variable costs.
•  allocated costs.
•  product costs.
•  overhead costs.

Steve, the management accountant of a company, is not familiar with the concept of prudence in financial reporting. Which of the following IMA standards is Steve violating?

•  Confidentiality
•  Materiality
•  Disclosure
•  Competence

The factory personnel whose wages are traceable directly to a product include

•  maintenance personnel.
•  support personnel.
•  factory supervisors.
•  employees who help to shape the product.