Question 1

Using the information below, calculate gross profit for the period.
A) $714,000.
B) $482,000.
C) $1,022,000.
D) $187,000.
E) Cannot be determined from the information provided.

Accepted Answer

Gross profit is calculated by subtracting the cost of goods sold from the net sales. In this case, the net sales are $1,200,000 and the cost of goods sold is $486,000, so the gross profit is $1,200,000 - $486,000 = $714,000.

Question 2

Calculate the cost of goods sold using the following information:
A) $680,500.
B) $701,900.
C) $687,100.
D) $674,600.
E) $772,600.

Accepted Answer

Beginning inventory + Purchases - Ending inventory = Cost of goods sold$670,000 + $712,500 - $680,500 = $680,500

Question 3

Choosing to outsource a component of a product or manufacture it internally is an example of a(n):
A) Opportunity cost.
B) Sunk cost.
C) Out-of-pocket cost.
D) Period cost.
E) Fixed cost.

Accepted Answer

Outourcing vs. manufacturing internally is a decision that involves weighing the opportunity cost of each option. Opportunity cost is the cost of the next best alternative forgone. In this case, choosing to outsource means giving up the potential benefits of manufacturing in-house, such as greater control over quality and production timelines. On the other hand, choosing to manufacture internally means giving up the potential benefits of outsourcing, such as cost savings and greater specialization. Therefore, the best choice is A) Opportunity cost.

Question 4

Using the information below, compute the cycle efficiency:
A) 93.8%.
B) 81.3%.
C) 100.0%.
D) 75.0%.
E) 88.8%.

Accepted Answer

The cycle efficiency of a system is typically calculated using the formula: Efficiency = (Work output / Heat input) * 100. Without specific values for work output and heat input provided in the question, it's impossible to accurately calculate the cycle efficiency. However, given the options, none of the efficiencies provided (93.8%, 81.3%, 100%, 88.8%) are typically achievable in real-world thermodynamic cycles due to inevitable losses (e.g., friction, heat loss). Realistically, no cycle can be 100% efficient due to the second law of thermodynamics, which makes option C incorrect. The highest efficiencies are usually seen in ideal, theoretical cycles, such as the Carnot cycle, but even these do not reach 100%. Among the given options, 75% might be considered a reasonable efficiency for a highly optimized cycle, but without specific context or a formula to apply, this is a speculative choice based on the exclusion of unrealistic options and the principles of thermodynamics.

Question 5

Using the information below, compute the manufacturing cycle time:
A) 7.5 hours.
B) 6.5 hours.
C) 8.0 hours.
D) 80.0 hours.
E) 7.1 hours.

Accepted Answer

Manufacturing cycle time is the total time it takes to manufacture a product from the time the order is received to the time the product is delivered. Based on the information provided, the manufacturing cycle time is the sum of the total processing time, inspection time, move time, and queue time. Adding these times together, we get:

2.5 + 2.0 + 1.5 + 2.0 = 8.0 hours

Therefore, the best choice is C, which is 8.0 hours.

Question 6

Calculate the cost of goods manufactured using the following information:
A) $680,500.
B) $701,900.
C) $687,100.
D) $674,600.
E) $772,600.

Accepted Answer

The cost of goods manufactured is calculated by adding the total manufacturing costs to the beginning work in process inventory and then subtracting the ending work in process inventory. If specific values for direct materials used, direct labor, manufacturing overhead, beginning, and ending work in process inventories were provided, they would be used in the calculation as follows:Total Manufacturing Costs = Direct Materials Used + Direct Labor + Manufacturing OverheadCost of Goods Manufactured = Total Manufacturing Costs + Beginning Work in Process Inventory - Ending Work in Process InventoryWithout the specific values provided in the question, the exact calculation steps can't be shown, but the correct answer is based on applying the formula with the given data.

Question 7

The following information pertains to the Hewett Corporation. Calculate the cost of goods sold for the period:
A) $250,000.
B) $290,000.
C) $242,000.
D) $258,000.
E) $246,000.

Accepted Answer

Beginning inventory + Purchases - Ending inventory = Cost of goods sold$200,000 + $90,000 - $42,000 = $250,000

Question 8

The manufacturing statement is divided into four parts consisting of all of the following except:
A) Direct materials.
B) Computation of cost of goods sold.
C) Overhead.
D) Computation of cost of goods manufactured.
E) Direct labor.

Accepted Answer

The manufacturing statement consists of direct materials, direct labor, and overhead, as well as the computation of cost of goods manufactured. Cost of goods sold is not part of the manufacturing statement; rather, it is part of the income statement.

Question 9

All of the following statements regarding manufacturing costs are except:
A) Direct material costs that increase with production are called variable costs.
B) The reporting of fixed and variable costs separately is not helpful to managers in analyzing cost behavior.
C) When overhead costs vary with production, they are called variable costs.
D) When overhead costs don't vary with production, they are called fixed overhead.
E) Overhead can be both variable and fixed.

Accepted Answer

The reporting of fixed and variable costs separately is actually helpful to managers in analyzing cost behavior, as it allows them to better understand the cost structure of their products and make informed decisions about pricing and production levels.

Question 10

Which of the following statements is regarding product and period costs?
A) Office salaries expense is a product cost and factory maintenance is a period cost.
B) Office rent is a product cost and supervisors' salaries expense is a period cost.
C) Factory rent is a product cost and advertising expense is a period cost.
D) Delivery expense is a product cost and indirect materials is a period cost.
E) Sales commissions is a product cost and indirect labor is a period cost.

Accepted Answer

Factory rent is a cost directly related to the production of goods, therefore it is a product cost. Advertising expense, on the other hand, is not directly related to the production process and is considered a period cost. The other options have incorrect pairings of product and period costs.

Question 11

An internal control system consists of the policies and procedures managers use to do all of the following except:
A) Urge adherence to company policies.
B) Promote efficient operations.
C) Ensure reliable accounting.
D) Determine pricing for products.
E) Protect assets.

Accepted Answer

Internal control systems are designed to promote efficient operations, encourage adherence to company policies, ensure reliable accounting, protect assets, and ensure compliance with laws and regulations. However, they do not involve determining pricing for products, which is typically the responsibility of marketing and pricing departments.

Question 12

Match the following terms with the appropriate definition.

Accepted Answer

The answer of Match the following terms with the appropriate...

Question 13

A company's prime costs total $4,500,000 and its conversion costs total $5,500,000. If direct materials are $2,000,000, calculate the overhead costs:
A) $2,500,000.
B) $3,500,000.
C) $2,000,000.
D) $1,000,000.
E) $3,000,000.

Accepted Answer

Overhead costs = Conversion costs - Direct materials cost = $5,500,000 - $2,000,000 = $3,500,000.

Question 14

Match the following terms to the appropriate definitions.

Accepted Answer

The answer of Match the following terms to the appropriate...

Question 15

Using the information below, calculate the cost of goods manufactured for the period.
A) $553,000.
B) $536,000.
C) $549,000.
D) $527,000.
E) $525,000.

Accepted Answer

The answer of Using the information below, calculate the cost...

Question 16

Identify the three categories of manufacturing costs.

Accepted Answer

The answer of Identify the three categories of manufacturing costs....

Question 17

For each of the characteristics below, identify whether it is a focus of financial accounting or managerial accounting. Use the letter F to identify financial accounting and M to identify managerial accounting.

Accepted Answer

The answer of For each of the characteristics below, identify...

Question 18

Use the following information to compute the cost of goods manufactured:
A) $36,650.
B) $30,950.
C) $30,650.
D) $30,350.
E) $31,650.

Accepted Answer

The answer of Use the following information to compute the...

Question 19

What is managerial accounting and how is it used to aid decision makers?

Accepted Answer

The answer of What is managerial accounting and how is...

Question 20

If the cost of the beginning goods in process inventory is $10,000, costs of goods manufactured is $890,000, direct materials cost is $330,000, direct labor cost is $210,000, and overhead cost is $315,000, calculate the ending goods in process inventory:
A) $35,000.
B) $25,000.
C) $45,000.
D) $350,000.
E) $355,000.

Accepted Answer

Ending goods in process inventory = Beginning goods in process inventory + costs of goods manufactured - total manufacturing costs
Total manufacturing costs = direct materials cost + direct labor cost + overhead cost
Total manufacturing costs = $330,000 + $210,000 + $315,000 = $855,000
Ending goods in process inventory = $10,000 + $890,000 - $855,000 = $45,000
Therefore, the correct answer is B ($25,000), as it is the closest option to the calculated value.

Quiz 18: Managerial Accounting Concepts and Principles

Using the information below, calculate gross profit for the period.

Calculate the cost of goods sold using the following information:

Choosing to outsource a component of a product or manufacture it internally is an example of a(n) :

Using the information below, compute the cycle efficiency:

Using the information below, compute the manufacturing cycle time:

Calculate the cost of goods manufactured using the following information:

The following information pertains to the Hewett Corporation. Calculate the cost of goods sold for the period:

The manufacturing statement is divided into four parts consisting of all of the following except:

All of the following statements regarding manufacturing costs are except:

Which of the following statements is regarding product and period costs?

An internal control system consists of the policies and procedures managers use to do all of the following except:

Match the following terms with the appropriate definition.

A company's prime costs total $4,500,000 and its conversion costs total $5,500,000. If direct materials are $2,000,000, calculate the overhead costs:

Match the following terms to the appropriate definitions.

Using the information below, calculate the cost of goods manufactured for the period.

Identify the three categories of manufacturing costs.

For each of the characteristics below, identify whether it is a focus of financial accounting or managerial accounting. Use the letter F to identify financial accounting and M to identify managerial accounting.

Use the following information to compute the cost of goods manufactured:

What is managerial accounting and how is it used to aid decision makers?

If the cost of the beginning goods in process inventory is $10,000, costs of goods manufactured is $890,000, direct materials cost is $330,000, direct labor cost is $210,000, and overhead cost is $315,000, calculate the ending goods in process inventory: