ACCT 2302 Managerial Accounting - Midterm Exam Review

Craigmont Company's direct materials costs are $4,400,000, its direct labor costs total $8,260,000, and its factory overhead costs total $6,260,000. Its prime costs total:

(Hint: Prime Costs = Direct Materials + Direct Labor)

• $12,660,000.

• $10,660,000.

• $14,520,000.

• $6,400,000.

• $18,920,000.

Answer explanation

Prime Costs = Direct Materials + Direct Labor; $4,400,000 + $8,260,000 = $12,660,000.

The method that rejects the notion of "good enough" and challenges employees and managers to improve operations, is called:

• Continuous improvement.

• Customer orientation.

• Just-in-time.

• Theory of constraints.

• Total quality measurement.

Which of the following is the correct formula for calculating cost of goods manufactured?

• Direct materials used + direct labor + factory overhead + beginning work in process + ending work in process.

• Direct materials used + direct labor + factory overhead + beginning work in process − ending work in process.

• Direct materials used + direct labor + factory overhead − beginning work in process + ending work in process.

• Direct materials used + direct labor + factory overhead − beginning work in process − ending work in process.

Use the following information to calculate cost of goods sold for the period:

• $164,300

• $126,800

• $125,300

• $146,300

• $128,300

Answer explanation

Cost of Goods Sold = Beginning Finished Goods Inventory + Cost of Goods Manufactured − Ending Finished Goods Inventory

= $19,500 + $126,800 − $18,000 = $128,300

Flash Company produces lamps. Which of the following is not a direct cost?

• Wages for assembly.

• Electrical cord.

• Factory rent.

• Lamp shade.

• Switch.

A manufacturing company has a beginning finished goods inventory of $28,800, cost of goods manufactured of $59,000, and an ending finished goods inventory of $28,100. The cost of goods sold for this company is:

• $115,900.

• $58,300.

• $2,100.

• $87,100.

• $59,700.

Answer explanation

Beginning Finished Goods + Cost of Goods Manufactured − Ending Finished Goods = COGS

$28,800 + $59,000 − $28,100 = $59,700.

Which of the following costs is not included in factory overhead?

• Indirect materials.

• Indirect labor.

• Depreciation of manufacturing equipment.

• Repairs of factory equipment.

• Direct materials.

Answer explanation

Factory Overhead includes indirect costs only.

Types of Overhead:

• - Indirect materials:

• - Indirect labor

• - Other indirect costs (depreciation, insurance, repairs, etc)

Flexibility of practice when applied to managerial accounting means that:

• The information must be presented in electronic format so that it is easily changed.

• Managers must be willing to accept the information as the accountants present it to them, rather than in the format they ask for.

• Managerial accounting information must follow concepts and rules known as GAAP.

• Managerial accounting systems provide internal information reflecting the needs of managers to analyze, plan, and control products and processes.

• Managerial accounting systems must provide consistent and comparable financial statements across companies.

Managerial accounting is different from financial accounting in that:

• Managerial accounting is more focused on the organization as a whole, while financial accounting is more focused on projects, processes, and divisions of the organization.

• Managerial accounting never includes nonmonetary information.

• Managerial accounting includes many projections and estimates whereas financial accounting has a minimum of predictions.

• Managerial accounting is used extensively by investors, whereas financial accounting is used only by creditors.

• Managerial accounting is structured and controlled by GAAP.

Use the following information to calculate the cost of goods sold for the period:

• $176,300.

• $130,800.

• $129,300.

• $154,300.

• $132,300.

Answer explanation

Cost of Goods Sold = Beginning Finished Goods Inventory + Cost of Goods Manufactured − Ending Finished Goods Inventory

Cost of Goods Sold = $23,500 + $130,800 − $22,000 = $132,300