Assignment: Shown below are a number of costs incurred last year at Mecca Publishing Co., a manufacturer of elementary school textbooks:
Solvents and cleaners used by the custodians to clean the textbook printing presses $500
Depreciation on the automobiles used by sales representatives $4,200
Fire insurance on factory building $2,000
Shipping costs on textbooks sold $3,700
Problem 1. What is the total of the manufacturing overhead costs above?
- $500
- $2,500
- $6,200
- $6,700
Problem 2. All of the following are examples of product costs except:
- depreciation on the company's retail outlets.
- salary of the plant manager.
- insurance on the factory equipment.
- rental costs of the factory facility.
Problem 3. The person MOST likely to use management accounting information is a(n):
- banker evaluating a credit application
- shareholder evaluating a stock investment
- governmental taxing authority
- assembly department supervisor
Problem 4. Management accounting:
- focuses on estimating future revenues, costs, and other measures to forecast activities and their results.
- provides information about the company as a whole.
- reports information that has occurred in the past that is verifiable and reliable.
- provides information that is generally available only on a quarterly or annual basis.
Problem 5. Consider the following costs incurred in a recent period:
Direct materials $33,000
Depreciation on factory equipment $12,000
Factory janitor's salary $23,000
Direct labor $28,000
Utilities for factory $9,000
Selling expense $16,000
Production supervisor's salary $34,000
Administrative expenses $21,000
What was the total amount of the period costs listed above for the period?
- $78,000
- $71,000
- $46,000
- $37,000
Problem 6. All of the following are characteristics of a pull production system EXCEPT:
- Inventories are reduced to a minimum by purchasing raw materials and producing units only as needed to meet consumer demand.
- Raw materials are released to a production far in advance of being needed to ensure no interruptions in work flows due to shortages of raw materials.
- Products are completed just in time to be shipped to customers.
- Manufactured parts are completed just in time to be assembled into products.
Problem 7. A plant manufactures several different products. The wages of the maintenance staff in the plant can be classified as a (an):
- direct cost
- product cost
- opportunity cost
- nonmanufacturing cost
Problem 8. The plans of management are often expressed formally in:
- financial statements.
- performance reports.
- budgets.
- ledgers.
Problem 9. Which of the following statements refers to management accounting information?
- There are no regulations governing the reports.
- The reports are generally delayed and historical.
- The audience tends to be stockholders, creditors, and tax authorities.
- The scope tends to be highly aggregate.
Problem 10. The one cost that would be classified as part of both prime cost and conversion cost would be:
- indirect material
- direct labor
- direct material
- indirect labor
Problem 11. Which of the folloiwng is NOT one of the five steps in the lean thinking model discussed in the text?
- Continuously pursue perfection in the business process.
- Identify value in specific products/services.
- Implement an enterprise system.
- Create a pull system that responds to customer orders.
Problem 12. The Institute of Management Accountants (IMA):
- is a professional organization of management accountants
- is a professional organization of financial accountants
- issues standards for management accounting
- issues standards for financial accounting
Problem 13. The Institute of Management Accountants' Standards of Ethical Conduct contains a policy regarding confidentiality that requires that management accountants:
- refrain from disclosing confidential information acquired in the course of their work except when authorized by management.
- refrain from disclosing confidential information acquired in the course of their work in all situations.
- refrain from disclosing confidential information acquired in the course of their work except when authorized by management, unless legally obligated to do so.
- refrain from disclosing confidential information acquired in the course of their work in all cases since the law requires them to do so.
Problem 14. During the month of July, direct labor cost totaled $12,000 and direct labor cost was 30% of prime cost. If total manufacturing costs during July were $86,000, the manufacturing overhead was:
- $46,000
- $40,000
- $28,000
- $74,000
Problem 15. Conversion costs consist of:
- direct and indirect labor.
- direct labor and direct materials.
- direct labor and manufacturing overhead.
- prime costs and manufacturing overhead.
Problem 16. Which of the following groups would be LEAST likely to receive detailed management accounting reports?
- stockholders
- customer service representatives
- production supervisor
- vice president of operations
Problem 17. Manufacturing overhead includes:
- all direct material, direct labor and administrative costs.
- all manufacturing costs except direct labor.
- all manufacturing costs except direct labor and direct materials.
- all selling and administrative costs.
Problem 18. The five step framework used to guide Six Sigma improvement efforts includes all of the following EXCEPT:
- Analyze.
- Control.
- Digitize.
- Measure.
Problem 19. The cost of inventory reported on the balance sheet may include the cost of all the following EXCEPT:
- advertising
- wages of the plant supervisor
- depreciation of the factory equipment
- parts used in the manufacturing process
Problem 20. A key element of any organization's strategy is identifying:
- its potential shareholders
- its target customers
- competitor's products
- employee needs