Question 1

Beginning work in process is equal to
A) cost of goods manufactured plus ending work in process minus manufacturing costs incurred during the current period
B) cost of goods manufactured minus ending work in process plus manufacturing costs incurred during the current period
C) ending work in process plus manufacturing costs incurred during the current period
D) manufacturing costs incurred during the current period minus ending work in process

Accepted Answer

Beginning work in process is calculated as the cost of goods manufactured plus the ending work in process minus the manufacturing costs incurred during the current period. This formula rearranges the basic cost flow equation to solve for the beginning balance.

Question 2

A company sells goods for $150,000 that cost $54,000 to manufacture. Which of the following statements is true?
A) The company will recognize sales on the balance sheet of $150,000.
B) The company will recognize $96,000 gross profit on the balance sheet.
C) The company will decrease finished goods by $54,000.
D) The company will increase finished goods by $54,000.

Accepted Answer

The cost of goods sold (COGS), which in this case is $54,000, will be removed from the finished goods inventory, leading to a decrease in the finished goods account on the balance sheet. Sales and gross profit are recognized on the income statement, not the balance sheet.

Question 3

Which of the following would least likely be considered a managerial accounting report?
A) a report to analyze potential efficiencies and savings for the purchase of new production equipment
B) a schedule of total manufacturing costs incurred
C) a statement of cost of goods manufactured
D) a statement of stockholders' equity

Accepted Answer

A statement of stockholders' equity is a financial accounting report that shows changes in the equity portion of a company's balance sheet. It does not relate to managerial accounting, which is focused on internal decision-making and providing information to managers for planning and controlling operations. The other options are all examples of managerial accounting reports that provide information relevant to decision-making within an organization.

Question 4

All of the following would be reported on the balance sheet as a current asset except
A) factory overhead
B) materials inventory
C) finished goods inventory
D) work in process inventory

Accepted Answer

Factory overhead is an indirect cost and is not a tangible asset that can be converted into cash or used in operations, so it would not be reported as a current asset on the balance sheet. Materials inventory, finished goods inventory, and work in process inventory are all tangible assets that can be sold or used in operations and would typically be reported as current assets on the balance sheet.

Question 5

Match the items below for a bakery to the type of cost (a-d). Answers may be used more than once.
-Depreciation expense-factory
A)Direct materials
B)Direct labor
C)Factory overhead
D)Nonmanufacturing cost
Challenging

Accepted Answer

Depreciation expense of factory equipment is considered a factory overhead cost, along with other indirect costs associated with manufacturing baked goods.

Answer: A, B, D
 Direct materials and direct labor costs directly relate to the production of baked goods, while nonmanufacturing costs may include expenses such as advertising, rent for the storefront, and office supplies.

Question 6

Work in process inventory on December 31 of the current year is $44,000. Work in process inventory increased by 60% during the year. Cost of goods manufactured amounts to $275,000. What are the total manufacturing costs incurred in the current year?
A) $291,500
B) $302,000
C) $275,750
D) $233,750

Accepted Answer

Work in process inventory increased by 60%, so the beginning work in process inventory was $44,000 / (1 + 60%) = $27,500. Total manufacturing costs incurred in the current year = Cost of goods manufactured + Ending work in process inventory - Beginning work in process inventory = $275,000 + $44,000 - $27,500 = $291,500.

Question 7

At the beginning of the current year, Grant Company's work in process inventory account had a balance of $30,000. During the year, $68,000 of direct materials were used in production, and $66,000 of direct labor costs were incurred. Factory overhead for the year amounted to $90,000. Cost of goods manufactured is $230,000. The balance in Work in Process Inventory on December 31 is
A) $24,000
B) $44,000
C) $66,000
D) $36,000

Accepted Answer

The ending balance in Work in Process Inventory is calculated as follows: Beginning WIP Inventory ($30,000) + Direct Materials ($68,000) + Direct Labor ($66,000) + Factory Overhead ($90,000) - Cost of Goods Manufactured ($230,000) = $24,000.

Question 8

Match the items below for a bakery to the type of cost (a-d). Answers may be used more than once.
-Salesperson commissions
A)Direct materials
B)Direct labor
C)Factory overhead
D)Nonmanufacturing cost
Challenging

Accepted Answer

Salesperson commissions are considered nonmanufacturing costs because they are not directly involved in the production process but rather in the selling and administrative activities of the business.

Question 9

Given the following data:?? $$\begin{array} { l r } 
\text { Work in process, beginning } & \$ 14,000 \
\text { Work in process, ending } & 20,000 \
\text { Direct labor costs } & 4,000 \
\text { Cost of goods manufactured } & 8,000 \
\text { Factory overhead } & 8,000
\end{array}$$ Direct materials used is
A) $2,000
B) $4,000
C) $8,000
D) $14,000

Accepted Answer

To find the direct materials used, we start with the formula for the cost of goods manufactured (CGM): CGM = Beginning Work in Process + Total Manufacturing Costs - Ending Work in Process. Given that CGM is $8,000, Beginning Work in Process is $14,000, and Ending Work in Process is $20,000, we can solve for Total Manufacturing Costs. Total Manufacturing Costs include Direct Labor, Factory Overhead, and Direct Materials. We know Direct Labor is $4,000 and Factory Overhead is $8,000. Rearranging the formula and solving for Direct Materials gives us Direct Materials = CGM - Direct Labor - Factory Overhead + Ending Work in Process - Beginning Work in Process = $8,000 - $4,000 - $8,000 + $20,000 - $14,000 = $2,000.

Question 10

Which of the following will not be found on the balance sheet of a manufacturing company?
A) cost of goods sold
B) materials
C) work in process
D) finished goods

Accepted Answer

Cost of goods sold is found on the income statement, not the balance sheet. Materials, work in process, and finished goods are all inventory accounts that would be found on the balance sheet of a manufacturing company.

Question 11

Match the items below for a bakery to the type of cost (a-d). Answers may be used more than once.
-Factory rent
A)Direct materials
B)Direct labor
C)Factory overhead
D)Nonmanufacturing cost
Challenging

Accepted Answer

Factory rent is considered a factory overhead cost because it is an indirect cost associated with the production process but cannot be directly traced to the production of specific goods.

Question 12

Smith Company reports the following information:?Cost of goods manufactured$68,250Direct materials used27,000Direct labor incurred25,000Work in process inventory, January 111,000?Factory overhead is 75% of the cost of direct labor. Work in process inventory on December 31 is
A) $16,250
B) $8,500
C) $18,750
D) $13,500

Accepted Answer

First, we need to determine the total manufacturing costs:

Direct materials used: $27,000
Direct labor incurred: $25,000
Factory overhead (75% of direct labor): $18,750

Total manufacturing costs = $27,000 + $25,000 + $18,750 = $70,750

Next, we need to use the formula:

Cost of goods manufactured = Beginning work in process inventory + Total manufacturing costs - Ending work in process inventory

We are given the cost of goods manufactured ($68,250), the beginning work in process inventory ($11,000), and the total manufacturing costs ($70,750). Solving for the ending work in process inventory, we get:

$68,250 = $11,000 + $70,750 - Ending work in process inventory
Ending work in process inventory = $70,750 - $11,000 - $68,250
Ending work in process inventory = $1,500

Therefore, the answer is D) $13,500.

Question 13

Match the items below for a bakery to the type of cost (a-d). Answers may be used more than once.
-Frosting
A)Direct materials
B)Direct labor
C)Factory overhead
D)Nonmanufacturing cost
Challenging

Accepted Answer

Frosting is considered a direct material because it is a primary ingredient used in the production of bakery items and can be directly traced to the finished product.

Question 14

Work in process inventory increased by $20,000 during the current year. Cost of goods manufactured was $180,000. Total manufacturing costs incurred are
A) $198,000
B) $160,000
C) $189,000
D) $200,000

Accepted Answer

Total manufacturing costs incurred can be calculated by adding the increase in work in process inventory to the cost of goods manufactured: $180,000 + $20,000 = $200,000.

Question 15

Finished goods inventory is reported on the
A) income statement as a period cost
B) balance sheet as a long-term asset
C) balance sheet as a current asset
D) income statement as revenue

Accepted Answer

Finished goods inventory is a type of inventory that is ready for sale to customers. As such, it is treated as a current asset on the balance sheet, indicating that it is expected to be converted into cash within one year. It is not reported on the income statement as a cost or revenue, as it does not represent a transaction that directly impacts revenue or expenses.

Question 16

Work in process inventory on December 31 is $42,000. Work in process inventory decreased by 40% during the year. Total manufacturing costs incurred amount to $260,000. What is the cost of goods manufactured?
A) $232,000
B) $302,000
C) $288,000
D) $190,000

Accepted Answer

To find the cost of goods manufactured, we need to use the formula:

Beginning Work in Process Inventory + Total Manufacturing Costs - Ending Work in Process Inventory = Cost of Goods Manufactured

Plugging in the given values:

$42,000 (Beginning WIP) x 0.6 (decrease in WIP) = $16,800 (Ending WIP)

$42,000 (Beginning WIP) - $16,800 (Ending WIP) = $25,200 (WIP used)

$25,200 (WIP used) + $260,000 (Total Manufacturing Costs) = $285,200 (Total Manufacturing Costs to account for)

$285,200 (TMC to account for) - $42,000 (Beginning WIP) = $243,200 (COGM)

Therefore, the answer is C) $288,000

Question 17

A company used $35,000 of direct materials, incurred $73,000 in direct labor cost, and had $114,000 in factory overhead costs during the period. If beginning and ending work in process inventories were $28,000 and $32,000, respectively, the cost of goods manufactured was
A) $218,000
B) $226,000
C) $190,000
D) $222,000

Accepted Answer

Cost of goods manufactured = Direct materials + Direct labor + Factory overhead + Beginning work in process inventory - Ending work in process inventory= $35,000 + $73,000 + $114,000 + $28,000 - $32,000= $218,000

Question 18

Cost of goods manufactured is equal to
A) total manufacturing costs plus ending materials inventory less beginning materials inventory
B) cost of goods sold plus beginning work in process inventory less ending work in process inventory
C) total manufacturing costs plus ending work in process inventory less beginning work in process inventory
D) total manufacturing costs plus beginning work in process inventory less ending work in process inventory

Accepted Answer

Cost of goods manufactured is calculated by adding total manufacturing costs to the beginning work in process inventory and then subtracting the ending work in process inventory.

Question 19

Cost of goods manufactured during the year is $240,000, and work in process inventory on December 31 is $50,000. Work in process inventory during the year decreased by 60%. Total manufacturing costs incurred are
A) $190,000
B) $165,000
C) $290,000
D) $315,000

Accepted Answer

The answer of Cost of goods manufactured during the year...

Question 20

The cost of goods sold for Michaels Manufacturing in the current year was $233,000. The January 1 finished goods inventory balance was $31,600, and the December 31 finished goods inventory balance was $24,200. Cost of goods manufactured during the period was
A) $233,000
B) $225,600
C) $288,800
D) $240,400

Accepted Answer

Cost of goods manufactured = Beginning finished goods inventory + Cost of goods manufactured - Ending finished goods inventory
= $31,600 + Cost of goods manufactured - $24,200
$233,000 = $31,600 + Cost of goods manufactured - $24,200
Cost of goods manufactured = $225,600

Quiz 18: Introduction to Managerial Accounting

Beginning work in process is equal to

A company sells goods for $150,000 that cost $54,000 to manufacture. Which of the following statements is true?

Which of the following would least likely be considered a managerial accounting report?

All of the following would be reported on the balance sheet as a current asset except

Match the items below for a bakery to the type of cost (a-d) . Answers may be used more than once. -Depreciation expense-factory

Work in process inventory on December 31 of the current year is $44,000. Work in process inventory increased by 60% during the year. Cost of goods manufactured amounts to $275,000. What are the total manufacturing costs incurred in the current year?

Match the items below for a bakery to the type of cost (a-d) . Answers may be used more than once. -Salesperson commissions

Which of the following will not be found on the balance sheet of a manufacturing company?

Match the items below for a bakery to the type of cost (a-d) . Answers may be used more than once. -Factory rent

Smith Company reports the following information:?Cost of goods manufactured$68,250Direct materials used27,000Direct labor incurred25,000Work in process inventory, January 111,000?Factory overhead is 75% of the cost of direct labor. Work in process inventory on December 31 is

Match the items below for a bakery to the type of cost (a-d) . Answers may be used more than once. -Frosting

Work in process inventory increased by $20,000 during the current year. Cost of goods manufactured was $180,000. Total manufacturing costs incurred are

Finished goods inventory is reported on the

Work in process inventory on December 31 is $42,000. Work in process inventory decreased by 40% during the year. Total manufacturing costs incurred amount to $260,000. What is the cost of goods manufactured?

A company used $35,000 of direct materials, incurred $73,000 in direct labor cost, and had $114,000 in factory overhead costs during the period. If beginning and ending work in process inventories were $28,000 and $32,000, respectively, the cost of goods manufactured was

Cost of goods manufactured is equal to

Cost of goods manufactured during the year is $240,000, and work in process inventory on December 31 is $50,000. Work in process inventory during the year decreased by 60%. Total manufacturing costs incurred are

The cost of goods sold for Michaels Manufacturing in the current year was $233,000. The January 1 finished goods inventory balance was $31,600, and the December 31 finished goods inventory balance was $24,200. Cost of goods manufactured during the period was