Q&A Hero

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Q: At the beginning of 2011, the Taylor Company's work in process inventory account had a balance of $30,000. During 2011, $68,000 of direct materials were used in production, and $66,000 of direct labor costs were incurred. Manufacturing overhead in 2011 amounted to $90,000. The cost of goods manufactured was $220,000 in 2011. What is the balance in work in process inventory on December 31, 2011? A) $24,000 B) $66,000 C) $6,000 D) $34,000

Q: Which of the following describes the cost of goods manufactured? A) The cost of the goods that were sold during the period B) The total cost of all goods that were completed, or partially completed during the period C) The cost of those goods which were completed during the period D) The total costs in inventory at the end of the period

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Q: Which of the following describes the term cost object? A) An object which costs money to purchase B) Any type of cost which is incurred to produce a finished product C) Anything which requires a detailed record of its component costs to be kept D) Any cost which is treated as a period expense

Q: All of the following are examples of manufacturing overhead EXCEPT for: A) utilities incurred in the factory. B) insurance on factory equipment. C) wages of assembly line workers. D) indirect materials.

Q: Manufacturing overhead includes which of the following? A) Indirect labor and indirect materials B) Salaries of salesmen C) Direct materials and direct labor D) Delivery costs to ship goods to customers

Q: Which of the following is an example of direct labor? A) Wages of assembly line personnel B) Salary of vice president of production C) Wages of factory security guard D) Salary of production manager

Q: Period costs do NOT include which of the following? A) Sales commissions B) Factory janitorial costs C) Insurance on delivery vehicles D) Advertising costs

Q: Which of the following is NOT a product cost? A) Indirect labor B) Depreciation of factory equipment C) Indirect materials D) Depreciation of corporate headquarters

Q: Which of the following is NOT a part of manufacturing overhead? A) Indirect materials B) Indirect labor C) Factory insurance D) Depreciation on delivery vehicles

Q: Which of the following costs would appear on the income statements for both a merchandiser and a manufacturer? A) Direct labor B) Cost of goods manufactured C) Direct materials D) Operating expenses

Q: Which of the following is an example of a period cost? A) Advertising expense B) Depreciation on factory equipment C) Indirect materials D) Property taxes for the factory

Q: Which of the following are period costs? A) Current assets on the balance sheet B) Costs incurred and expensed during the accounting period C) Costs related to the manufacture of products D) Current liabilities on the balance sheet

Q: Which of the following costs do NOT go directly into the work in process account? A) Factory overhead B) Indirect labor C) Factory janitorial costs D) The purchase of raw materials

Q: Repair and maintenance costs of vehicles used to deliver products to the customers are included in manufacturing overhead.

Q: Repair and maintenance costs of vehicles used to deliver products to the customers are product costs.

Q: Repair and maintenance costs for factory equipment are included in manufacturing overhead.

Q: Repair and maintenance costs for factory equipment are product costs.

Q: Accounting, legal and administrative costs are included in manufacturing overhead.

Q: Accounting, legal and administrative costs are product costs.

Q: Advertising and marketing costs are included in manufacturing overhead.

Q: Advertising and marketing costs are product costs.

Q: Sales commissions are included in manufacturing overhead.

Q: Transportation costs to ship products to customers are product costs.

Q: Factory rent, taxes and insurance are included in manufacturing overhead.

Q: Factory rent, taxes and insurance are product costs.

Q: Indirect materials costs like lubes and cleaning fluids are included in manufacturing overhead.

Q: Indirect materials costs like lubes and cleaning fluids are product costs.

Q: The wages and benefits of the factory janitors are included in manufacturing overhead.

Q: The wages and benefits of the sales staff are product costs.

Q: The wages and benefits of the factory manager are included in manufacturing overhead.

Q: The wages and benefits of the factory manager are product costs.

Q: The wages and benefits of the assembly line workers are included in manufacturing overhead.

Q: The wages and benefits of the assembly line workers are product costs.

Q: The total manufacturing costs to account for during the year minus the beginning work in process equals cost of goods manufactured.

Q: The costs of indirect materials cannot easily be traced to the manufactured product and is therefore a component of manufacturing overhead.

Q: Selling and administrative expenses are subtracted from cost of goods sold to obtain gross profit.

Q: A manufacturer's inventory consists of merchandise inventory, work in process inventory, and finished goods inventory.

Q: Manufacturing overhead includes indirect costs, such as insurance and depreciation on the factory building.

Q: Manufacturing overhead includes all manufacturing costs, such as direct labor and direct materials.

Q: Cost of goods manufactured includes direct materials, direct labor, and manufacturing overhead.

Q: GAAP requires companies to treat product costs such as factory overhead as an asset until the product is sold.

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Q: Which of the following formulas represents cost of goods sold for a merchandising business? A) Beginning inventory - ending inventory = cost of goods sold B) Purchases and freight in - ending inventory = cost of goods sold C) Ending inventory + purchases and freight in - beginning inventory = cost of goods sold D) Beginning inventory + purchases and freight in - ending inventory = cost of goods sold

Q: Barrington Products is a merchandiser that sells a single type of specialized industrial chemical. Barrington reported the following information for the year 2012: Sales revenue $280,000 Cost of goods sold $126,000 Operating expenses $135,000 Net income $19,000 Number of units sold 90,000 How much was the unit cost per unit of product sold? (Please round to nearest cent.) A) $1.40 B) $1.71 C) $3.11 D) $0.21

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Q: Which of the following is an inventory account for a merchandise company? A) Work in process inventory B) Manufacturing overhead inventory C) Merchandise inventory D) Finished goods inventory

Q: Which of the following applies to the raw materials used by a manufacturing company? A) Materials inventory B) Work in process inventory C) Merchandise inventory D) Finished goods inventory

Q: Which of the following applies to goods that are partially completed? A) Materials inventory B) Work in process inventory C) Merchandise inventory D) Finished goods inventory

Q: Which of the following applies to goods that are produced by a manufacturing company and ready to sell? A) Materials inventory B) Work in process inventory C) Merchandise inventory D) Finished goods inventory

Q: Which of the following applies to goods that are purchased from a producer and sold by a merchandising company? A) Materials inventory B) Work in process inventory C) Merchandise inventory D) Finished goods inventory

Q: Merchandising businesses resell goods which they purchase from a producer.

Q: Bainbridge Services reported the following information for the year 2012: Service revenue $20,000 Operating expenses $15,750 Net income $4,250 Number of service calls for the year 21,000 How much was the unit cost per service call? A) $0.95 B) $2.20 C) $0.75 D) $0.20

Q: Which of the following is TRUE for a service company? A) Expenses are all period costs. B) Expenses are all product costs. C) Income statement includes gross profit. D) Balance sheet includes finished goods inventory.

Q: Which of the following could be found on the income statement of a service company? A) Rent expense B) Cost of goods manufactured C) Cost of goods sold D) Manufacturing overhead

Q: Which of the following is a characteristic of a service company? A) It transforms raw materials into finished goods. B) It makes a product. C) It does not have tangible products intended for sale. D) It has a single category of inventory.

Q: Both merchandising and manufacturing businesses produce their own products, but service businesses do not.

Q: Manufacturing businesses have inventory accounts, but service and merchandising businesses do not.

Q: A service company's income statement does NOT include cost of goods sold.

Q: Product costs, such as direct materials, are expensed during the period that they were incurred.

Q: You did not understand what the term accrual meant and failed to accrue the interest due at the end of the year on the company's bonds. Which IMA guideline has been violated? A) Integrity B) Confidentiality C) Competence D) Objectivity

Q: Your company is doing well and you tell your sister that the company will report earnings that are significantly higher than the financial analysts' estimated. Which IMA guideline has been violated? A) Objectivity B) Competence C) Confidentiality D) Integrity

Q: Which of the following events would NOT be considered unethical under IMA standards? A) A bank hired a bookkeeper to review foreclosure documents who had no training or experience in the area. B) An accountant was supposed to take continuing education courses but fell behind and was not current on important new developments in his industry. C) An accountant who had no background in internal control or finance was promoted to the position of controller. D) An accountant who had just successfully completed an in-house training course in management accounting made a large error in the year-end expense reports.

Q: Which of the following events would NOT be considered unethical under IMA standards? A) An accountant told his friends about the bids his company had received from contractors for construction contracts. B) An accountant provided a list of his company's foreign transactions to an investigative reporter who was working on a story for the paper. C) An accountant provided a list of his company's qualified suppliers to a small businessman that wanted to set up a similar business on his own. D) An accountant provided a copy of his company's published financial statements to a relative who owned a business that was directly competing with the accountant's company.

Q: Which of the following events would NOT be considered unethical under IMA standards? A) An inventory shipment was received on January 2, but was booked 3 days earlier in order to boost the year-end inventory balance. B) An accountant coded an expense to a fixed asset account so that the expense budget would not be overrun at year-end. C) A scheduled maintenance service originally planned for late December was delayed until the following year to reduce expenses recorded in the year just ended. D) A company shipped products to a customer on January 2, but recorded the transaction on the last day of December to boost revenues in the year just ended.

Q: Which of the following is NOT one of the key standards of ethical practice published by the IMA? A) Competence B) Environmental sensitivity C) Integrity D) Confidentiality

Q: Charleston Company was nearing year-end and the CEO wanted to report a high level of inventory on the balance sheet. An order of raw materials was scheduled for delivery on January 2 of the next year, but the CEO asked the accounting manager to record the shipment as being received on the last day of December. The shipment was actually received on January 2nd, and although the dollar impact of the transaction was not affected in any way, the misrepresentation of facts in the situation would make the behavior unethical.