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Exam 18: Managerial Accounting Concepts and Principles

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Question 41

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Product costs include direct labor and advertising expense.

A) True
B) False

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Question 42

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Prime costs are the combination of direct labor costs and factory overhead costs.

A) True
B) False

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Question 43

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A diagram of the operating structure of an organization is called an organization chart.

In the income statement of a manufacturing company, what replaces purchases in the cost of goods section of a retail company?

Indirect labor and indirect materials would be part of factory overhead.

Direct costs can be specifically traced to a cost object.

If the cost of direct materials is a small portion of total production cost, it may be classified as part of:

Planning is the process of developing the company's objectives or goals and translating these objectives into courses of action.

Identify the following costs as a (a) product cost or (b) period cost for a cake factory. 1. _____ Frosting 2. _____ Baker's wages 3. _____ Advertising fees 4. _____ Transportation out

Beginning work in process is equal to:

Classify the following costs as direct, indirect, or neither:

Managerial accounting provides useful information to managers on product costs.

The plant manager's salary in a manufacturing business would be considered an indirect cost.

Accounting is an information system that provides essential data about the economic activities of an entity to various users to aid them in making informed judgments and decisions.

Prime costs consist of factory overhead and direct labor.

Cost of oil used to lubricate factory machinery and equipment is an example of a direct materials cost.

Rosalba Manufacturing Company had the following account balance for 2012: Collections on account were $625,000 in 2012. Cost of goods sold was 68% of sales. Direct materials purchased amounted to $90,000. Factory overhead was 300% of the cost of direct labor. Compute: a) sales revenue (all sales were on account) b) cost of goods sold c) cost of goods manufactured d) direct labor incurred e) direct materials used f) factory overhead incurred

Managerial accounting information includes both historical and estimated data.

Which of the following accounts will be found on the income statement?

Cost of goods sold for a manufacturer equals cost of goods manufactured plus: