Multiple choice (each question is worth 5 points)
1. When preparing an income statement, which of the following is the proper order for income statement components? a.Comprehensive income, Other comprehensive income items, irregular items, Net income b.Net income, irregular items, Comprehensive income, Other comprehensive income items c.Irregular items, Net income, Other comprehensive income items, Comprehensive income d.Irregular items, Net income, Comprehensive income, Other comprehensive income items
2. All of the following statements regarding changes in accounting principles are true except which of the following? a.
Most changes in accounting principles are only reported in current periods when the principle change takes place. b.Changes in accounting principles are allowed when new principles are preferable to old ones. c.Most changes in accounting principles are retroactively reported. d.Consistency is one of the biggest concerns when a change in accounting principle is undertaken.
3. Management accountants would not
a.assist in budget planning.
b.prepare reports primarily for external users.
c.determine cost behavior.
d.be concerned with the impact of cost and volume on profits.
4. Which of the following statements about internal reports is not true? a.The content of internal reports may extend beyond the double-entry accounting system. b.Internal reports may show all amounts at market values.
c.Internal reports may discuss prospective events.
d.Most internal reports are summarized rather than detailed.
5. The flow of costs in a job order cost system
a.involves accumulating manufacturing costs incurred and assigning the accumulated costs to work done. b.cannot be measured until all jobs are complete.
c.measures product costs for a set time period.
d.generally follows a LIFO cost flow assumption.
6. Which one of the following best describes a job cost sheet? a.It is a form used to record the costs chargeable to a specific job and to determine the total and unit costs of the completed job. b.It is used to track manufacturing overhead costs to specific jobs. c.It is used by management to understand how direct costs affect profitability. d.It is a daily form that management uses for tracking worker productivity on which employee raises are based.
7. In a process cost system,
a.a Work in Process account is maintained for each product. b.a materials requisition must identify the job on which the materials will be used. c.a Work in Process account is maintained for each process. d.one Work in Process account is maintained for all the processes, similar to a job order cost system.
8. A process cost accounting system is most appropriate when a.a variety of different products are produced, each one requiring different types of materials, labor, and overhead. b.the focus of attention is on a particular job or order.
c.similar products are mass-produced.
d.individual products are custom made to the specification of customers.
9. Activity-based costing
a.allocates overhead to activity cost pools, and it then assigns the activity cost pools to products and services by means of cost drivers. b.accumulates overhead in one cost pool, then assigns the overhead to products and services by means of a cost driver. c.assigns activity cost pools to products and services, then allocates overhead back to the activity cost pools. d.allocates overhead directly to products and services based on activity levels.
10. A well-designed activity-based costing system starts with a.identifying the activity-cost pools.
b.computing the activity-based overhead rate.
c.assigning overhead costs to products.
d.analyzing the activities performed to manufacture a product.
Problems (each problem is worth 30 points)
Norton Brooks, PSC is an architectural firm that uses activity-based costing. The three activity cost pools used by Norton Brooks are: Salaries and Wages, Travel Expense, and Plan Reproduction Expense. The firm has provided the following information concerning activity and costs:
Salaries and wages$390,000
Plan reproduction expense 120,000
Activity Cost Pools
Salaries and wages60%30%10%
Plan reproduction expense35%40%25%
Calculate the total cost to be allocated to the (a) Project Assignment, (b) Business Development, and (c) Other activity cost pools.
Seasonal Delights manufactures a wide variety of holiday and seasonal decorative items. Seasonal’s activity-based costing overhead rates are:
Purchasing$380 per order
Storing$2 per square foot/days
Machining$100 per machine hour
Supervision$5 per direct labor hour
The Snow Man project involved three purchase orders, 4,000 square feet/days, 60 machine hours, and 40 direct labor hours. The cost of direct materials on the job was $19,000 and the direct labor rate is $30 per hour.
Determine the total cost of the Snow Man project.
At Crenshaw Company, materials are entered at the beginning of each process. Work in process inventories, with the percentage of work done on conversion, and production data for its Painting Department in selected months are as follows:
Beginning Work In ProcessEnding Work In Process
MonthUnitsCompletedand Transferred OutUnitsCompleted
(a)Compute the physical units for July.
(b)Compute the equivalent units of production for materials and conversion costs for September.
The Assembly Department of Nitz Company has the following production and cost data at the end of May, 2013. Production:25,000 units started into production; 20,000 units transferred out and 5,000 units 100% completed as to materials and 40% completed as to conversion costs.
Manufacturing Costs:Materials added at beginning of process, $90,000; labor, $72,000; overhead $60,000.
Prepare a production cost report for the month of May.
Garner Company begins operations on July 1, 2013. Information from job cost sheets shows the following: Manufacturing Costs Assigned
Job No. JulyAugustSeptember
Job 102 was completed in July. Job 100 was completed in August, and Jobs 101 and 103 were completed in September. Each job was sold for 80% above its cost in the month following completion. Instructions
(a)Compute the balance in Work in Process Inventory at the end of July. (b)Compute the balance in Finished Goods Inventory at the end of September. (c)Compute the gross profit for August.
Cite this Managerial Accounting
Managerial Accounting. (2016, Jul 27). Retrieved from https://graduateway.com/managerial-accounting/