Chapter 11 Flashcards
Primary users of reports
Financial accounting
External users; stockholders, creditors, and regulators
Types and frequency of reports
Financial accounting
External financial statements
Quarterly and annually
Purpose of reports
Financial accounting
General purpose
Content of reports
Pertains to business as a whole
Highly aggregated (condensed)
Limited to accrual accounting and cost data
Governed by generally accepted accounting principles (GAAP)
Verification process
Financial accounting
Audited by CPA
Managerial accounting
Primary users of reports:
Types and frequency of reports:
Purpose of reports:
Content of reports:
Verification process:
Internal users; officers and managers
Internal reports, as frequently needed
Special-purpose for specific decisions
Pertains to subunits of the business. Very detailed. Extends beyond accrual accounting to any relevant data. Evaluated based on relevance to decisions.
No independent audits
Product costs
Manufacturing costs
Direct material
Direct labor
Manufacturing overhead
-indirect material
-indirect labor
-other indirect costs
Period costs
Non manufacturing costs
Selling expenses
Administrative expenses
Example of product costs
-Wood cores, fiberglass, and resin (direct materials)
-labor to trim and shape boards (direct labor)
- factory equipment depreciation (manufacturing overhead)
-property taxes on factor building( manufacturing overhead)
- factory maintenance salaries (manufacturing overhead)
- salary of factory worker (manufacturing overhead)
- salary if product quality inspector (manufacturing overhead)
Examples of period costs
-advertising costs
-sales commissions
-cost of shipping boards to customers
Raw materials inventory
Shows the cost of raw materials on hand
Work in process inventory
Shows the cost applicable to units that have been started into production but are only partially completed
Finished goods inventory
Shows the cost of completed goods on hands
Cost of goods manufactured equation
- Beg W/P inventory + total manufacturing costs= total cost of W/P
- Total cost of W/P - ending W/P inventory = cost of goods manufactured
Which of the following is characteristic of managerial accounting reports?
A. Management accounting reports should be audited by an objective external accountant.
B. They pertain to the business as a whole.
C. Designed to provide the decision maker with the appropriate information.
D. The reports are highly aggregated.
C. Designed to provide the decision maker with the appropriate information.
How are financial and managerial accounting similar?
A. Both produce general-purpose reports.
B. Both preparé quarterly and annual reports.
C. Both deal with the economic events of an enterprise.
D. Both have the same primary users
C. Both deal with the economic events of an enterprise
Anderson Manufacturing has direct material costs of $3.00 per unit, advertising costs.of $.20 per unit, manufacturing overhead of $1.90 per unit, administrative expenses of $1.30 per unit, and direct labor of $2.40 per unit. What is Anderson’s total product cost per unit?
A. $8.80
B. $7.30
C. $5.40
D. $7.50
B. 7.30
Property taxes on a manufacturing plant should be classified as which type of cost?
A. neither a period cost nor a product cost B. a period cost but not a product cost
C. a product cost but not a period cost
D. both a period cost and a product cost
C. a product cost but not a period cost
Major Industries manufactures covers for iPads. One of its most popular products, Hercules, has the föllowing costs to produce 1,000 units: $24,000 direct materials, $4,800 advertising posts, $2,400 plant manager salary, and $1,600 salaries for factory maintenance. If the cost to produce one Hercules Cover is $36.80, how much is direct labor?
A. $8,800
B. $10,400
C. $5,600
D. 4,000
4000
Cropper’s Supermarket is having a sale before a holiday weekend. The cost of placing the ads on local TV and in the local newspaper would be classified as
A. a period cost
B. both a period cost and overhead.
C. an overhead cost.
D. neither a period cost nor overhead.
A. A period cost
Grant, In. had beginning and ending raw materials inventory of $80,000 and $100,000, respectively. If the cost or
raw materials purchased was $407,500, what was the amount of direct materials used?
$587,500
$427,500
$227,500
$387,500
Calculation: ($80,000 + $407,500) - $100,000 = $387,500.
The following information is provided by Ace Industries for the most recent period:
Direct materials purchased: $154,000
Direct materials used in production: $178,000
Direct labor: $42,000
Manufacturing overhead: $30,000
Beginning work in process inventory: $3,000
Ending work in process inventory: $8,000
Beginning finished goods inventory: $15,000
Ending finished goods inventory: $22,000
Given this information, what is the cost of goods manufactured for the period?
$245,000
$255,000
$221,000
$243,000
Direct materials+ direct labor+ manufacturing overhead - beg. W/P + end W/P
255,000
During 2023, Handy Appliances made and sold coffee makers. At the beginning of the year, the company had 37 completed units on hand, 14,382 units were sold during the year, and 14,385 units were produced during the year.
Each coffee maker costs $8.42 to produce and each coffee maker is sold for $15.50. At the end of the year, what amount will Handy report on its balance sheet for finished goods inventory?
A. $25.26
B. $286.28
C. $336.80
D. $527.00
14385-14382= 3
3 * 8.42 =
25.26
Which of the following will correctly calculate cost of goods sold for a manufacturer?
A. Beginning work in process inventory + current period manufacturing costs + ending work in process inventory + ending frished goods inventory - beginning finished goods inventory
B. Beginning finished goods inventory + Ending finished inventory - cost of. goods manufactured
C. Cost of goods manufactured + ending finished goods inventory + beginning finished goods inventory
D. Beginning work in process inventory + current period manufacturing costs - ending work in process inventory + beginning finished goods inventory - ending finished goods inventory
D. Beginning work in process inventory + current period manufacturing costs - ending work in process inventory + beginning finished goods inventory - ending finished goods inventory
