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Exam 2: Building Blocks of Managerial Accounting

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Question 1

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Enter the letter of the type of company on the line in front of each statement.Letters may be used more than once or not at all. A)Service company B)Merchandising company C)Manufacturing company ____ Generally has no inventory ____ Has three types of inventory ____ Inventory consists of freight-in and the cost of the product ____ Has the highest percentage of labor costs ____ Wal-Mart is this type of company

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__A_ Generally has no inventory __C_ Has three types of inventory __B_ Inventory consists of freight-in and the cost of the product __A_ Has the highest percentage of labor costs __B_ Wal-Mart is this type of company

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A company's distribution system is an important part of the value chain.

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B) False

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Question 3

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Which of the following is characteristic of a service company?

When do inventoriable costs become expenses?

Variable costs:

First Sporting Equipment manufactures sporting goods.Selected costs from the past year include: $\begin{array}{|l|rr|}\hline \text { Plastics used to make products } & \$ & 151,000 \\\hline \text { Heating and lighting costs for factory } & \$ & 73,000 \\\hline \text { Factory janitor wages } & \$ & 67,000 \\\hline \text { Costs of shipping to customers } & \$ & 11,000 \\\hline \text { Lubricants used in factory equipment } & \$ & 2,000 \\\hline \text { Lighting costs for sales office } & \$ & 17,000 \\\hline \text { Depreciation on factory equipment } & \$ & 23,000 \\\hline \text { Office supplies for sales office } & \$ & 4,000 \\\hline \text { Insurance costs for factory } & \$ & 15,000 \\\hline \text { Maintenance worker wages } & \$ & 99,000 \\\hline \text { Freight-in (on plastics) } & \$ & 8,000 \\\hline \text { Aluminum used to make products } & \$ & 175,000 \\\hline \text { Assembly-line worker wages } & \$ & 142,000 \\\hline \text { Salaries of salespeople } & \$ &84,000 \\\hline\end{array}$ -Product costs for First Sporting Equipment totaled:

select the letter for the appropriate value chain activity Letters may be used more than once or not at all. Assume a manufacturer.

Differentiate between: A.Direct materials versus indirect materials B.Direct labor versus indirect labor

Selected information regarding a company's most recent quarter follows (all data in thousands) . $\begin{array} { | l | c c | } \hline \text { Direct labor } & \$ & 450 \\\hline \text { Bepinning wark in process inventary } & \$ & 320 \\\hline \text { Ending work in process inventory } & \$ & 310 \\\hline \text { Cost of goods manufactured } & \$ & 1,560 \\\hline \text { Manufacturing overhead } & \$ & 620 \\\hline\end{array}$ What was direct materials used for the quarter?

Readers Unlimited sells books.The following information summarizes the company's operating expenses for the year: $\begin{array} { | l | c c | } \hline \text { Purchases } & \$ & 90,000 \\\hline \text { Operating expenses } & \mathbf { \$ } & 53,000 \\\hline \text { Bepinning merchandise inventary } & \mathbf { 1 } & 12,000 \\\hline \text { Ending merchandise inventory } & \mathbf { \$ } & 15,000 \\\hline \text { Sales revenue } & \mathbf { \$ } & 172,000 \\\hline\end{array}$ - What is gross profit?

Comfy Furniture Company manufactures furniture at its Akron,Ohio,factory.Some of its costs from the past year include: $\begin{array}{|l|cc|}\hline \text { Depreciation on sales office } & \$ 11,000 \\\hline \text { Depreciation on factory equipment } & \$ 16,000 \\\hline \text { Factory supervisor salary } & \$ 52,500 \\\hline \text { Sales commissions } & \$ 23,000 \\\hline \text { Lubricants used in factory equipment } & \$ 3,000 \\\hline \text { Insurance costs for factory } & \$ 21,000 \\\hline \text { Wages paid to maintenance workers } & \$ 115,000 \\\hline \text { Fabric used to upholster furniture } & \$ 7,000 \\\hline \text { Freight-in (on raw materials) } & \$ 2,500 \\\hline \text { Costs of delivery to customers } & \$ 9,000 \\\hline \text { Wages paid to assembly-line workers } & \$ 132,500 \\\hline \text { Lumber used to build product } & \$ 72,000 \\\hline \text { Utilities in factory } & \$ 44,500 \\\hline \text { Utilities in sales office } &\$ 26,500 \\\hline\end{array}$ - Prime costs for Comfy Furniture Company totaled:

select the letter corresponding to the term that best fits that statement. You may use a letter more than once and some letters may not be used at all

Paris Plastics has monthly fixed costs of $90,000,while its variable costs are $4.00 per unit.If the sales price of a unit is $16.00 and Paris Plastics sell 12,000 units,the company's total variable costs will be:

Intel Corporation makes computer chips.Intel Corporation would be classified as a:

Manufacturing overhead costs for a product include:

Sunnybrook Orange Groves processes a variety of fresh juices.The company has the following expenses for July: $\begin{array}{|l|l|}\hline \text { Wages of factory workers } & \$ 75,000 \\\hline \text { Freshness seals/caps for juice bottles } & \$ 3,000 \\\hline \text { Reconfiguring the factory layout } & \$ 102,000 \\\hline \text { Customer help line } & \$ 2,000 \\\hline \text { Costs of refrigerated trucks used to deliver juice } & \$ 17,000 \\\hline \text { Depreciation expense on bottling machines } & \$ 63,000 \\\hline \text { Glass juice bottles } & \$ 54,000 \\\hline \text { Commissions for salespeople } & \$ 27,000 \\\hline \text { Salaries of nutrition researchers } & \$ 89,000 \\\hline \text { Costs of maintaining website used for customer orders } & \$ 4,000 \\\hline\end{array}$ What is the total cost for the customer service category of the value chain?

Which of the following describes full product costs for a product?

Direct labor for a company was $132,000; manufacturing overhead was $275,000; and direct materials were $253,000.Prime costs would total:

Which of the following would NOT be a cost object?

Olde Tyme Beverage Company's operating activities for the year are listed below. $\begin{array} { | l | r | } \hline \text { Purcheses } & \$ 126,000 \\\hline \text { Operating expenses } & 90,000 \\\hline \text { Bepinging inventory } & 14,000 \\\hline \text { Ending inventory } & 10,000 \\\hline \text { Sales revenue } & 250,000 \\\hline\end{array}$ -What is the gross profit for the year?