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Exam 14: Managerial Accounting Concepts and Principles

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Question 71

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Which of the following is never included in direct materials costs?

A) Invoice costs of direct materials.
B) Outgoing delivery charges.
C) Materials storage costs.
D) Materials handling costs.
E) Insurance on stored material.

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

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Question 72

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Both financial and managerial accounting report monetary information; managerial accounting also reports considerable nonmonetary information.

A) True
B) False

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Question 73

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Selling and administrative expenses are normally product costs.

Current information for the Austin Company follows: $\begin{array} { l r } \text { Beginning raw materials inventory } & \$ \\& 15,200 \\\text { Beginning goods in process inventory } & 22,400 \\\text { Ending raw materials inventory } & 16,600 \\\text { Ending goods in process inventory } & 28,000 \\\text { Direct labor } & 42,800 \\\text { Total factory overhead } & 30,000 \\\text { Raw material purchases } & 60,000\end{array}$ All raw materials used were traceable to specific batches of product. Austin Company's cost of goods manufactured for the year is:

Use the following data to determine the cost of goods manufactured: $\begin{array} { l r } \text { Beginning finished goods inventory } & \$ 10,800 \\\text { Direct labor } & 30,600 \\\text { Beginning goods in process inventory } & 7,200 \\\text { General and administrative expenses } & 13,500 \\\text { Direct materials used } & 40,500 \\\text { Ending goods in process inventory } & 9,000 \\\text { Indirect labor } & 6,300 \\\text { Ending finished goods inventory } & 9,500 \\\text { Indirect materials } & 13,500 \\\text { Depreciation - factory equipment } & 7,500\end{array}$

The following list indicates costs as they flow through the business as a product is manufactured. Some items are missing. Compute the missing amounts.

Products that are in the process of being manufactured but are not yet complete are called:

Raw materials purchased plus beginning raw materials inventory equals the ending balance of raw materials inventory.

An opportunity cost requires a future cash outlay and is relevant for decision making.

Both financial and managerial accounting affect people's decisions and actions.

___________________ is the process of setting goals and making plans to achieve them.

A sunk cost has already been incurred and cannot be avoided or changed, so it is irrelevant to decision making.

Which of the following items does not represent a difference between financial and managerial accounting?

Raw materials that physically become part of the product and can be traced to specific units or batches of product are called:

Which of the following items appears only in a manufacturing company's financial statements?

Flexibility of practice when applied to managerial accounting means that:

The following information is available for the year ended December 31: $\begin{array} { l r } \text { Beginning raw materials inventory } & \$ 2,500 \\\text { Raw materials purchases } & 4,000 \\\text { Ending raw materials inventory } & 3,000 \\\text { Office supplies expense } & 1,000\end{array}$ The amount of raw materials used in production for the year is:

Which of the following accounts would all appear on a manufacturing statement?

The following are all examples of product costs:

A ___________________ cost has already been incurred and cannot be avoided or changed, so it irrelevant to decision making.