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Exam 18: Introduction to Managerial Accounting

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Question 51

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Which of the following would be considered a period cost for a manufacturing company?

A) indirect materials
B) factory utilities
C) direct labor
D) sales salaries

E) B) and C)
F) None of the above

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Question 52

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Riverside Manufacturing provided the following information for the month ended March 31: $\begin{array} { | l | r | } \hline \text { Sales Revenue } & \$ 27,000 \\\hline \text { Beginning Finished Goods Inventory } & 14,000 \\\hline \text { Ending Finished Goods Inventory } & 10,500 \\\hline \text { Cost of Goods Manufactured } & 14,600 \\\hline\end{array}$ Compute gross profit.

A) $8,900
B) $12,400
C) $15,900
D) $1,900

E) A) and C)
F) B) and C)

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Question 53

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In a manufacturing company,wages and benefits of assembly line workers are included in manufacturing overhead.

Define indirect labor and give two examples of indirect labor for a manufacturing company.

Ferrell,Inc.used $213,000 of direct materials and incurred $111,000 of direct labor costs during the year.Indirect labor amounted to $8,100,while indirect materials used totaled $4,800.Other operating costs pertaining to the factory included utilities of $9,300; maintenance of $13,500; repairs of $5,400; depreciation of $23,700; and property taxes of $7,800.There was no beginning or ending finished goods inventory.The Work-in-Process Inventory account reflected a balance of $16,500 at the beginning of the period and $22,500 at the end of the period. Required: Prepare a schedule of cost of goods manufactured for Ferrell,Inc.using the format below. Cost of Goods Manufactured $\begin{array} { | l | l | l | l | } \hline \text { Beginning Work-in-Process Inventory } & \quad\quad&\quad\quad & \quad\quad\\\hline \text { Direct Materials Used } & & & \\\hline \text { Direct Labor } & & & \\\hline \text { Manufacturing Overhead: } & & & \\\hline \text { Indirect Labor Used } & & & \\\hline \text { Indirect Materials } & & & \\\hline \text { Utilities } & & & \\\hline \text { Maintenance } & & & \\\hline \text { Repairs } & & & \\\hline \text { Depreciation } & & & \\\hline \text { Property Taxes } & & & \\\hline \text { Total Manufacturing Overhead } & & & \\\hline \begin{array} { l } \text { Total Manufacturing Costs Incurred } \\\text { during the Year }\end{array} & & & \\\hline \begin{array} { l } \text { Total Manufacturing Costs to Account } \\\text {for}\\\hline\text { Ending Work-in-Process Inventory }\end{array} & & & \\\hline \text { Cost of Goods Manufactured } & & & \\\hline\end{array}$

In a manufacturing company,administrative costs are included in period costs.

Define product cost.How does a merchandising company treat these costs?

Factory rent,as well as factory property taxes and insurance,are included in manufacturing overhead.

Lakeside Manufacturing provided the following information for the month ended March 31: $\begin{array} { | l | r | } \hline \text { Sales Revenue } & \$ 23,000 \\\hline \text { Beginning Finished Goods Inventory } & 7,000 \\\hline \text { Ending Finished Goods Inventory } & 9,500 \\\hline \text { Cost of Goods Manufactured } & 13,600 \\\hline\end{array}$ Compute cost of goods available for sale.

Kentucky,Inc.purchases and sells widgets.The following information summarizes the company's operating activities for the year: $\begin{array} { | l | r | } \hline \text { Selling and Administrative Expenses } & \$ 5,300 \\\hline \text { Purchases } & 156,000 \\\hline \text { Sales Revenue } & 783,000 \\\hline \text { Merchandise Inventory, January 1 } & 2,300 \\\hline \text { Merchandise Inventory, December 31 } & 38,800 \\\hline\end{array}$ If the company sold 7,000 units of widgets during the year,how much is the cost for one widget? (Round your answer to the nearest cent.)

Define indirect cost.

Managerial accounting provides financial statements that report results of operations,financial position,and cash flows both to managers and to external stockholders.

Poolside Manufacturing provided the following information for the month ended March 31: $\begin{array} { | l | r | } \hline \text { Sales Revenue } & \$ 17,000 \\\hline \text { Beginning Finished Goods Inventory } & 12,000 \\\hline \text { Ending Finished Goods Inventory } & 10,500 \\\hline \text { Cost of Goods Manufactured } & 19,600 \\\hline\end{array}$ Compute cost of goods sold.

Anything for which managers want a separate measurement of cost is called a ________.

The following information relates to Washington,Inc.: $\begin{array} { | l | r |} \hline \text { Sdvertising Costs } & \$ 19,000 \\\hline \text { Sales Salary } & 14,000 \\\hline \text { Sales Revenue } & 530,000 \\\hline \text { President's Salary } & 340,000 \\\hline \text { Office Rent } & 64,500 \\\hline \text { Manufacturing Equipment Depreciation } & 1,400 \\\hline \text { Indirect Materials Used } & 7,600 \\\hline \text { Indirect Labor } & 12,000 \\\hline \text { Factory Repair and Maintenance } & 920 \\\hline \text { Direct Materials Used } & 30,000 \\\hline \text { Direct Labor } & 41,000 \\\hline \text { Delivery Vehicle Depreciation } & 1,750 \\\hline \text { Administrative Salaries } & 29,000 \\\hline\end{array}$ How much were Washington's product costs?

Reed Productions has provided the following information for the year: $\begin{array} { | l | r | } \hline \text { Direct Labor } & \$ 153,000 \\\hline \text { Beginning Work-in-Process Inventory } & 62,000 \\\hline \text { Direct Materials Used } & 269,000 \\\hline \text { Ending Work-in-Process Inventory } & 52,800 \\\hline \text { Manufacturing Overhead } & 132,500 \\\hline\end{array}$ During the year,Reed produced 72,960 units of product.Calculate the unit product cost.(Round your answer to the nearest cent.)

Comparing actual performance to previously budgeted amounts is part of the ________.

Merchandising companies,like service companies,do not have a Cost of Goods Sold account.

KRD Supplies Corporation provided the following information for the year: $\begin{array} { | l | r | } \hline \text { Beginning Balance - Work-in-Process Inventory } & \$ 24,000 \\\hline \text { Ending Balance-Work-in-Process Inventory } & 56,000 \\\hline \text { Beginning Balance - Raw Materials Inventory } & 83,000 \\\hline \text { Ending Balance-Raw Materials Inventory } & 60,000 \\\hline \text { Purchases - Raw Materials } & 362,000 \\\hline \text { Direct Labor } & 470,000 \\\hline \text { Indirect Labor } & 18,000 \\\hline \text { Depreciation on Factory Plant and Equipment } & 24,000 \\\hline \text { Plant Utilities and Insurance } & 272,000 \\\hline\end{array}$ What was the amount of the manufacturing overhead costs?

In a manufacturing plant,indirect materials costs such as lubricants and cleaning fluids are product costs.