Deck 2: Building Blocks of Managerial Accounting

Question 1

How would Honda classify its partially completed vehicles?

A)Finished goods
B)Raw materials
C)Supplies
D)Work in process

Answer 1

D

Question 2

A company which is in the business of providing intangible services is what type of company?

A)Manufacturing
B)Service company
C)Retailer
D)Wholesaler

Answer 2

B

Question 3

Describe service,merchandising,and manufacturing companies.

Answer 3

Service companies sell intangible services such as insurance,consulting and health care.Salaries and wages often are the largest part of their costs.They usually do not have inventory or cost of goods sold accounts,although some service companies will have a small amount of supplies inventory which is used for their own use and not for sale to customers.Merchandising companies resell tangible products they buy from suppliers.Retailers and wholesalers are both types of merchandising companies.Retailers sell to end user consumers,while wholesalers sell to other resellers.Merchandisers have inventory.Manufacturing companies use labour,plant and equipment to convert raw materials into finished products which they sell to other companies.They have three types of inventory-raw materials,work in process,and finished goods.

Question 4

A company which is in the business of reselling tangible products purchased from supplier to businesses which resell the product is what type of company?

A)Manufacturing
B)Service company
C)Retailer
D)Wholesaler

Question 5

A company which is in the business of reselling tangible products purchased from suppliers to final users is what type of company?

A)Manufacturing
B)Service company
C)Retailer
D)Wholesaler

Question 6

A lawn mowing business would be classified as a

A)manufacturing company.
B)merchandising company.
C)service company.
D)wholesale company.

Question 7

Before these materials are used to manufacture its cars,Honda classifies steel,glass,and plastic as

A)finished goods inventory.
B)raw materials inventory.
C)work in process inventory.
D)merchandise inventory.

Question 8

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

A)manufacturing company.
B)merchandising company.
C)service company.
D)wholesale company.

Question 9

H & R Block,an income tax preparation service,is what type of company?

A)Manufacturer
B)Service company
C)Retailer
D)Wholesaler

Question 10

Wal-Mart classifies its clothing held for sale as

A)finished goods inventory.
B)raw materials inventory.
C)work in process inventory.
D)merchandise inventory.

Question 11

Among other things,General Mills makes breakfast cereal.Which type of company is General Mills?

A)Manufacturer
B)Service company
C)Retailer
D)Wholesaler

Question 12

Which type(s)of companies prepare income statements and balance sheets?

A)Service company
B)Merchandising company
C)Manufacturing company
D)All types of companies

Question 13

________ has/have three types of inventory.

A)A service company
B)A merchandising company
C)A manufacturing company
D)A wholesale company

Question 14

Which type of company typically produces its own inventory?

A)Manufacturer
B)Service company
C)Retailer
D)Wholesaler

Question 15

Which of the following is characteristic of a service company?

A)Service companies generally have no tangible products to sell.
B)Service companies have a single category of inventory.
C)Service companies make a product.
D)Service companies transform raw materials into finished goods.

Question 16

Which of the following costs could be found in work in process inventory for an ice cream manufacturer?

A)Utilities for administrative offices
B)Assembly worker wages
C)Depreciation on sales office
D)Customer order forms

Question 17

Explain the difference between raw materials inventory,work in process inventory,and finished goods inventory.

Question 18

Which type of company has the highest percentage of labour costs?

A)Service company
B)Merchandising company
C)Manufacturing company
D)Wholesale company

Question 19

The balance sheet of a service company has

A)little or no inventory.
B)raw materials inventory.
C)three categories of inventory.
D)two categories of inventory.

Question 20

A law firm would be classified as a

A)manufacturing company.
B)merchandising company.
C)service company.
D)wholesale company.

Question 21

A company decision as to where to locate a new store would be considered

A)customer service.
B)marketing.
C)production.
D)research and development.

Question 22

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

Question 23

What is the total cost for the production category of the value chain at Farm Fresh Dairy?

A)$200,000
B)$205,000
C)$207,000
D)$126,000

Question 24

A technical support hotline for customers would be considered which part of the value chain?

A)Customer service
B)Design
C)Distribution
D)Marketing

Question 25

All of the components of manufacturing-from research and development through customer service after the sale-are part of a firm's value chain.

Question 26

The value chain helps companies control costs of products only.

Question 27

The value chain is used by

A)only manufacturing and merchandising businesses.
B)only service and manufacturing businesses.
C)only service and merchandising businesses.
D)service,manufacturing and merchandising businesses.

Question 28

Describe a company that has some elements of all three types of companies.It is part service company,part manufacturer,and part merchandiser.

Question 29

Collectively,all costs such as design,customer service,etc.are part of

A)downstream activities.
B)fixed costs.
C)manufacturing costs.
D)the value chain.

Question 30

The costs associated with reengineering machinery and its location within the factory to increase efficiency would be considered which part of the value chain?

A)Customer service
B)Marketing
C)Design
D)Research and development

Question 31

What is the total cost of research and development at Farm Fresh Dairy?

A)$84,000
B)$155,000
C)$88,000
D)$239,000

Question 32

The activities in the value chain must take place in a specific order.

Question 33

Why do service firms not have inventory costs pertaining to items to be sold? What type of costs do they have?

Question 34

Receipt of materials is part of the firm's value chain.

Question 35

The promotion of products and services is known as

A)customer service.
B)design.
C)distribution.
D)marketing.

Question 36

Research and development is needed to improve products and to design new products.

Question 37

Advertising expenses would be considered which part of the value chain?

A)Customer service
B)Marketing
C)Production
D)Research and development

Question 38

Depreciation on a factory would be classified as a cost in which part of the value chain?

A)Design
B)Distribution
C)Production
D)Research and development

Question 39

What is the total cost for the customer service category of the value chain at Farm Fresh Dairy?

A)$80,000
B)$8,000
C)$71,000
D)$12,000

Question 40

What is the total cost for the research and development category of the value chain at Sunnybrook Orange Groves?

A)$93,000
B)$102,000
C)$89,000
D)$191,000

Question 41

Indirect costs can be traced to specific units.

Question 42

Costs can be either direct or indirect,depending upon the cost object.

Question 43

What is the total cost for the distribution category of the value chain at Sunnybrook Orange Groves?

A)$20,000
B)$21,000
C)$17,000
D)$19,000

Question 44

If a company wants to determine a product's cost,they must assign only direct costs.

Question 45

What is the total cost for the design category of the value chain at Farm Fresh Dairy?

A)$88,000
B)$84,000
C)$155,000
D)$239,000

Question 46

What is the total cost for the production category of the value chain at Sunnybrook Orange Groves?

A)$436,000
B)$54,000
C)$195,000
D)$293,000

Question 47

A product support hot line would be considered

A)customer service.
B)distribution.
C)production or purchases.
D)marketing.

Question 48

Place the value chain elements in the normal order by numbering them from 1 to 6.

Question 49

Name and briefly describe the activities that make up the value chain.

Question 50

What is the total cost for the customer service category of the value chain at Sunnybrook Orange Groves?

A)$29,000
B)$6,000
C)$2,000
D)$31,000

Question 51

What is the total cost for the marketing category of the value chain at Farm Fresh Dairy?

A)$71,000
B)$92,000
C)$67,000
D)$63,000

Question 52

What is the total cost for the design category of the value chain at Sunnybrook Orange Groves?

A)$177,000
B)$89,000
C)$102,000
D)$191,000

Question 53

Provide a description of an activity or process that a company could undertake to integrate sustainability into the value chain.

Question 54

What is the total cost for the distribution category of the value chain at Farm Fresh Dairy?

A)$19,000
B)$17,000
C)$21,000
D)$29,000

Question 55

What is the total cost for the marketing category of the value chain at Sunnybrook Orange Groves?

A)$29,000
B)$33,000
C)$31,000
D)$27,000

Question 56

Delivery expenses are charged to which of the following areas?

A)Customer service
B)Distribution
C)Production or purchases
D)Marketing

Question 57

Direct labour costs for Comfy Furniture Company totaled

A)$300,000.
B)$132,500.
C)$115,000.
D)$323,000.

Question 58

Manufacturing overhead costs for Comfy Furniture Company totaled

A)$324,000.
B)$122,000.
C)$228,000.
D)$252,000.

Question 59

Conversion costs consist of

A)direct labour and manufacturing overhead.
B)direct materials and direct labour.
C)direct materials and manufacturing overhead.
D)direct materials,direct labour and manufacturing overhead.

Question 60

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

Question 61

Conversion costs for Comfy Furniture Company totaled

A)$319,500.
B)$460,500.
C)$214,000.
D)$384,500.

Question 62

In a manufacturing plant,which type of employee wage is an example of indirect labour?

A)Chief operating officer's salary
B)Machine operator's wages
C)Plant manager's salary
D)salesperson commissions

Question 63

When determining the cost of a manufactured product,the cost of lighting the factory would be classified as

A)a direct cost.
B)an indirect cost.
C)a period cost.
D)a conversion cost.

Question 64

Prime costs consist of

A)direct labour and manufacturing overhead.
B)direct materials and direct labour.
C)direct materials and manufacturing overhead.
D)direct materials,direct labour and manufacturing overhead.

Question 65

Prime costs for Comfy Furniture Company totaled

A)$79,000.
B)$214,000.
C)$211,500.
D)$332,000.

Question 66

Which of the following is an example of overhead in a factory?

A)Wages of machine operators
B)Wages of factory maintenance personnel
C)Wages of administrators in the corporate office
D)Salaries of salespersons

Question 67

Indirect costs cannot be traced to the cost objects,so they are allocated.

Question 68

Which of the following is an example of direct labour?

A)Salary of a production manager
B)Salary of the vice-president of operations
C)Wages of assembly line personnel
D)Wages of factory security

Question 69

Which of the following are classified as manufacturing overhead?

A)Direct materials and direct labour
B)Indirect labour and indirect materials
C)All materials
D)Factory rent and direct labour

Question 70

Direct material costs for Comfy Furniture Company totaled

A)$81,500.
B)$79,000.
C)$7,000.
D)$72,000.

Question 71

Which statement describes direct materials in a manufacturing setting?

A)Direct materials are used to determine total inventoriable product costs.
B)Direct materials are used to determine total manufacturing overhead.
C)Direct materials cannot be separately and conveniently traced.
D)Direct materials do not become part of the finished product.

Question 72

When determining the cost of a manufactured product,a salesperson's salary would be classified as

A)a direct cost.
B)an indirect cost.
C)a period cost.
D)a conversion cost.

Question 73

When determining the cost of a manufactured product,a factory janitor's wages would be classified as

A)a direct cost.
B)an indirect cost.
C)a period cost.
D)a conversion cost.

Question 74

Inventoriable product costs consist of manufacturing overhead,direct labour and direct materials.

Question 75

Which of the following is an inventoriable cost?

A)Direct labour expenses
B)Distribution expenses
C)Marketing expenses
D)Research and development expenses

Question 76

Period costs are

A)always considered part of the inventory.
B)always recorded as an expense.
C)expensed only when the inventory is sold.
D)the same as indirect costs.

Question 77

An inventoriable cost could be the cost of the marketing and distribution of a product.

Question 78

When manufacturing products,which of the following is an example of an inventoriable cost?

A)Depreciation on office equipment
B)Depreciation on store building
C)Depreciation on factory equipment
D)Sales salaries expenses

Question 79

Inventoriable product costs for a manufactured product include

A)marketing and research and development costs.
B)the costs of direct materials,direct labour and manufacturing overhead.
C)the costs of direct materials and direct labour only.
D)sales commissions on selling the product.

Question 80

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

A)Full product costs are narrower in scope than inventoriable product costs.
B)Full product costs consist of direct materials,direct labour and manufacturing overhead.
C)Full product costs include all costs of the value chain.
D)Full product costs do not include non-manufacturing costs.