Chapter 16(1): Managerial Accounting Concepts and Principles
69.
What is the primary criterion for the preparation of managerial accounting reports?
a.
relevance of the reports
b.
manager needs
c.
timing of the reports
d.
cost of the reports
70.
Which of the following is most associated with managerial accounting?
a.
must follow GAAP
b.
may rely on estimates and forecasts
c.
is prepared for users outside the organization.
d.
always reports on the entire entity
71.
Which of the following is most associated with financial accounting?
a.
can have both objective and subjective information
b.
can be prepared periodically, or as needed
c.
prepared in accordance with GAAP
d.
can be prepared for the entity or segment
72.
Which of the following statements is false?
a.
There is no overlap between financial and managerial accounting.
b.
Managerial accounting sometimes relies on past information.
c.
Managerial accounting does not need to conform to GAAP.
d.
Financial accounting must conform to GAAP.
73.
In most business organizations, the chief management accountant is called the
a.
chief accounting officer
b.
controller
c.
chairman of the board
d.
chief executive officer
74.
All of the following employees hold line positions in Facebook except
a.
vice president of production
b.
vice president of finance
c.
manager of the web design
d.
vice president of sales
75.
The controller’s staff often consists of several management accountants. All of the following would most likely
be
on the controller’s staff except
a.
general accountants
b.
budgets and budget analysts
c.
investments and shareholder relations managers
d.
cost accountants
76.
Managerial accounting reports are
a.
prepared according to GAAP
b.
prepared according to management needs
c.
prepared periodically only
d.
related to the entire business entity only
77.
Who are the individuals charged with the responsibility for directing the day-to-day operations of a business?
a.
investors
b.
managers
c.
shareholders
d.
customers
78.
Which of the following are basic phases of the management process?
a.
supervising and directing
b.
decision making and supervising
c.
organizing and directing
d.
planning and controlling
79.
What term is used to describe the process of monitoring operating results and comparing actual results with
the
expected results?
a.
improving
b.
controlling
c.
directing
d.
planning
80.
Accounting designed to meet the needs of decision makers inside the business is
a.
general accounting
b.
financial accounting
c.
managerial accounting
d.
external accounting
81.
What term is used to describe the process of developing the organization’s objectives and translating those into
courses of action?
a.
supervising
b.
planning
c.
improving
d.
decision making
82.
Which of the following is the principle reason for preparing managerial accounting reports?
a.
usefulness to management
b.
cost of preparation
c.
clarity
d.
GAAP
83.
The primary goal of managerial accounting is to provide information to
a.
investors
b.
creditors
c.
management
d.
external auditors
84.
Which of the following is not a characteristic of useful managerial accounting reports?
a.
accurate
b.
GAAP—adhering
c.
historical and estimated data
d.
prepared as needed
85.
Compute conversion costs given the following data: Direct Materials, $347,500; Direct Labor, $196,300;
Factory
Overhead, $187,900; and Selling Expenses, $45,290.
a. $543,800
b. $187,900
c. $731,700
d. $384,200
86.
Which of the following is not true in regards to direct materials for a bakery?
a.
Flour and sugar would probably be direct materials.
b.
Eggs would probably be a direct material
c.
Oil to lubricate factory machines would not be a direct material.
d.
Paper cupcake liners, that become part of the product, must be accounted for as direct materials.
87.
The cost of a manufactured product generally consists of which of the following costs?
a.
direct materials cost and factory overhead cost only
b.
direct labor cost and factory overhead cost only
c.
direct labor cost, direct materials cost, and factory overhead cost
d.
direct materials cost and direct labor cost only
88.
Materials must have which two qualities in order to be classified as direct materials?
a.
They must be classified as both prime costs and conversion costs.
b.
They must be introduced into the process in both work-in-process inventories and finished goods inventories.
c.
They must be an integral part of the finished product, but can be an insignificant portion of the total
product
cost.
d.
They must be an integral part of the finished product and be a significant portion of the total product cost.
89.
Which of the following is an example of direct materials cost for an automobile manufacturer?
a.
cost of oil lubricants for factory machinery
b.
cost of wages of assembly worker
c.
salary of production supervisor
d.
cost of interior upholstery
90.
A plant manager’s salary is
a.
a direct cost and an indirect cost
b.
a direct cost
c.
an indirect cost
d.
a period cost
91.
If the cost of a direct material is a small portion of total production cost, it may be classified as part of
a.
direct labor cost
b.
selling and administrative costs
c.
miscellaneous costs
d.
factory overhead cost
92.
The cost of wages paid to employees directly involved in the manufacturing process in converting materials
into
finished products is classified as
a.
factory overhead cost
b.
direct labor cost
c.
miscellaneous costs
d.
direct materials cost
93.
Which of the following is an example of direct labor cost for a cell phone manufacturer?
a.
cost of oil lubricants for factory machinery
b.
cost of wages of assembly worker
c.
salary of plant supervisor
d.
cost of phone components
94.
Costs other than direct materials cost and direct labor cost incurred in the manufacturing process are classified as
a.
factory overhead cost
b.
miscellaneous expense
c.
product costs
d.
period cost
95.
Which of the following is an example of a factory overhead cost?
a.
repair and maintenance cost on the administrative building
b.
factory heating and lighting cost
c.
insurance premiums on salespersons’ automobiles
d.
president’s salary
96.
Period costs include
a.
current assets on the balance sheet
b.
current liabilities on the balance sheet
c.
operating costs that are shown on the income statement when products are sold
d.
operating costs that are shown on the income statement in the period in which they are incurred
97.
Another term for factory overhead is
a.
surplus
b.
period cost
c.
supervisory cost
d.
factory burden
98.
Which of the following costs are conversion costs?
a.
direct labor cost and factory overhead cost
b.
direct materials cost and direct labor cost
c.
factory overhead cost
d.
direct materials cost and factory overhead cost
99.
Goods that are partially completed by a manufacturer are
a.
merchandise inventory
b.
work in process inventory
c.
finished goods inventory
d.
materials inventory
100.
What term refers to the cost of changing direct materials into a finished manufactured product?
a.
factory overhead cost
b.
period cost
c.
conversion cost
d.
direct labor cost
101.
Which of the following items would not be classified as part of factory overhead?
a.
direct labor used
b.
amortization of manufacturing patents
c.
production supervisors’ salaries
d.
factory supplies used
102.
Which of the following is part of factory overhead cost?
a.
sales commissions
b.
depreciation of factory equipment and machines
c.
depreciation of sales person’s vehicle
d.
direct materials used
103.
Which of the following manufacturing costs is an indirect cost of producing a product?
a.
oil lubricants used for factory machinery
b.
commissions for sales personnel
c.
hourly wages of an assembly worker
d.
memory chips for a microcomputer manufacturer
104.
All of the following could be considered a direct material except
a.
steel
b.
fabric
c.
glue
d.
lumber
105.
Prime costs are
a.
direct materials and factory overhead
b.
direct materials and direct labor
c.
direct labor and factory overhead
d.
period costs and factory overhead
106.
A product cost is
a.
expensed in the period in which it is manufactured
b.
shown with current liabilities on the balance sheet
c.
shown with operating expenses on the income statement
d.
expensed in the period the product is sold
107.
Conversion costs are
a.
direct materials and direct labor
b.
direct materials and factory overhead
c.
factory overhead and direct labor
d.
direct materials and indirect labor
108.
Which of the following is not a prime cost?
a.
plant janitor’s wages
b.
direct labor wages
c.
machine operator wages
d.
assembly line wages
109.
The Darwin Company reports the following information:
Sales
$76,500
Direct materials used
7,300
Depreciation on factory equipment
4,700
Indirect labor
5,900
Direct labor
10,500
Factory rent
4,200
Factory utilities
1,200
Sales salaries expense
15,600
Office salaries expense
8,900
Indirect materials
1,200
Product costs are
a. $24,500
b. $30,300
c. $29,200
d. $35,000
110.
Product costs
a.
appear only on the balance sheet
b.
appear only on the income statement
c.
are expensed as costs are incurred for direct labor, direct material, and factory overhead
d.
appear on both the income statement and balance sheet
111.
The following are all product costs except
a.
direct materials
b.
sales and administrative expenses
c.
direct labor
d.
factory overhead
112.
Indirect labor and indirect materials are classified as
a.
factory overhead and product costs
b.
factory overhead and period costs
c.
operating costs and period costs
d.
operating costs and product costs
113.
An example of a period cost is
a.
advertising expense
b.
indirect materials
c.
depreciation on factory equipment
d.
property taxes on plant facilities
114.
Direct labor and direct materials are
a.
product costs and expensed when the goods are sold
b.
product costs and expensed when incurred
c.
period costs and expensed when incurred
d.
period costs and expensed when the goods are sold
115.
Indirect costs incurred in a manufacturing environment that cannot be traced directly to a product are treated as
a.
period costs and expensed when incurred
b.
product costs and expensed when the goods are sold
c.
product costs and expensed when incurred
d.
period costs and expensed when the goods are sold
116.
Rent expense on a factory building would be treated as a(n)
a.
period cost
b.
product cost
c.
indirect cost
d.
direct material cost
117.
Insurance expense incurred on a factory building would be treated as a
a.
direct cost
b.
period cost
c.
product cost
d.
selling cost
Jensen Company reports the following:
Direct materials used
Direct labor incurred
Factory overhead incurred
Operating expenses
118.
Jensen Company’s period costs are
a. $345,000
b. $250,000
c. $400,000
d. $175,000
119.
Which of the following is not a factory overhead cost?
a.
materials used directly in the manufacturing process of the product
b.
insurance on factory equipment
c.
salaries of production supervisors
d.
property tax on factory building
120.
Factory overhead includes
a.
factory rent and direct labor
b.
direct materials and direct labor
c.
indirect materials and direct materials
d.
indirect labor and indirect materials
121.
The Darwin Company reports the following information:
Sales
$76,500
Direct materials used
7,300
Depreciation on factory equipment
4,700
Indirect labor
5,900
Direct labor
10,500
Factory rent
4,200
Factory utilities
1,200
Sales salaries expense
15,600
Office salaries expense
8,900
Indirect materials
1,200
Period costs are
a. $24,500
b. $30,300
c. $29,200
d. $35,000
Jensen Company reports the following:
Direct materials used
Direct labor incurred
Factory overhead incurred
Operating expenses
122.
Jensen Company’s product costs are
a. $995,000
b. $920,000
c. $825,000
d. $770,000
123.
All of the following are examples of indirect labor except
a.
maintenance personnel
b.
janitorial personnel
c.
machine operators
d.
plant managers
124.
Which of the following accounts will be found on the income statement?
a.
Inventory
b.
Work in Process
c.
Finished Goods
d.
Cost of Goods Sold