TEST BANK MANAGERIAL ACCOUNTING TOOLS FOR BUSINESS DECISION MAKING 7TH TB AT 01

Achievement Test 1: Chapters 1-2 Managerial Accounting, 7e Part Points Name _ Instructor Section # _ Date I II III IV Total 30 20 22 28 100 Score PART I — MULTIPLE CHOICE (30 points) Instructions: Designate the best answer for each of the following questions A debit balance in the Manufacturing Overhead account at the end of an interim month means that a the balance should be reported as an asset in the monthly balance sheet b corrective action by management is necessary c overhead has been underapplied d cost of goods sold should be credited on the monthly income statement In a job order cost system, which of the following accounts is not a control account? a Raw Materials Inventory b Factory Labor c Finished Goods Inventory d Manufacturing Overhead In the current assets section of the balance sheet, in which order are manufacturing inventories listed? a Raw materials, work in process, finished goods b Finished goods, work in process, raw materials c Work in process, finished goods, raw materials d Finished goods, raw materials, work in process Which one of the following costs is a component of both manufacturing overhead and total manufacturing costs? a Direct labor b Direct materials c Selling and administrative costs d Factory utilities Manufacturing costs are typically classified as a product costs or period costs b direct materials or direct labor c direct materials, direct labor, or manufacturing overhead d direct materials, direct labor, or selling and administrative AT1- Test Bank for Managerial Accounting, Seventh Edition The following data should be used for questions 6–9: Raw materials inventory, January Raw materials inventory, December 31 Work in process, January Work in process, December 31 Finished goods, January Finished goods, December 31 Raw materials purchases Direct labor Factory utilities Indirect labor Factory depreciation Selling and administrative expenses $ 12,000 16,000 5,000 8,000 17,000 12,000 118,000 165,000 64,000 12,000 18,000 220,000 How much is the cost of the direct materials used? a $118,000 b $114,000 c $122,000 d $130,000 Assume your answer to question above is $130,000 How much are total manufacturing costs? a $389,000 b $393,000 c $295,000 d $609,000 Assume your answer to question above is $400,000 How much is cost of goods manufactured? a $400,000 b $389,000 c $397,000 d $403,000 Assume your answer to question above is $420,000 How much is cost of goods sold? a $420,000 b $408,000 c $295,000 d $425,000 10 The formula for computing a predetermined overhead rate is a estimated annual overhead costs ÷ estimated annual operating activity b estimated annual overhead costs ÷ actual annual operating activity c actual annual overhead costs ÷ actual annual operating activity d actual annual overhead costs ÷ estimated annual operating activity 11 Which one of the following is an example of a period cost? a Maintenance on factory machines b Wages of factory workers c Salesmen's commissions d Depreciation on the factory building Achievement Test AT1- 12 When production costs are debited to Work in Process Inventory, which accounts will be credited? a Raw Materials Inventory, Factory Labor, and Finished Goods Inventory b Manufacturing Overhead, Factory Labor, and Cost of Goods Sold c Raw Materials Inventory, Factory Labor, and Manufacturing Overhead b Accounts Payable, Factory Wages Payable, and Accumulated Depreciation 13 What are the functions of management in an organization? a Planning, controlling, and decision making b Planning, directing, and controlling c Directing, controlling, and decision making d Directing, planning, and decision making 14 Which one of the following is not one of the major activities of managerial accounting? a Providing a basis for controlling costs by comparing actual results with planned objectives b Preparing financial statements designed primarily for stockholders and creditors c Preparing internal reports for management d Determining the behavior of costs as activity levels change 15 Which of the following would most likely use a job order cost system? a Cement manufacturer b Cat food manufacturer c Specialty printing company d Automobile manufacturer AT1- Test Bank for Managerial Accounting, Seventh Edition PART II — CLASSIFICATION OF COSTS AND EXPENSES (20 points) Instructions: Classify the following manufacturing costs and expenses by using the following code letters: A B C D Direct materials cost Direct labor cost Manufacturing overhead cost Period cost Wood You Manufacturing Company incurs the following costs and expenses in making furniture: Insurance on delivery equipment Oak and cherry wood used in desks and chairs Lubricants, rosin, and polishing compounds used in manufacturing Advertising in trade magazines Rent on leased factory machinery Wages of assembly line workers Salesperson's commissions Insurance on factory machines Depreciation on factory machinery 10 Wages of factory janitors Achievement Test AT1- PART III—DETERMINE WORK IN PROCESS AND FINISHED GOODS BALANCES (22 points) Hanover Manufacturing begins operations on April Information from job cost sheets shows the following: Manufacturing Costs Assigned (non-cumulative) Job April May June 15 $10,200 16 5,100 $6,400 18 3,600 5,900 $4,000 19 7,300 7,400 20 3,100 Job 15 was completed in April Job 16 was completed in May Job 18 was completed in June Each job was sold in the month following completion Instructions: Determine the following amounts: Work in process inventory, April 30 $ _ Finished goods inventory, April 30 $ _ Work in process inventory, May 31 $ _ Finished goods inventory, May 31 $ _ Work in process inventory, June 30 $ _ Finished goods inventory, June 30 $ _ AT1- Test Bank for Managerial Accounting, Seventh Edition PART IV — JOB ORDER COST ACCOUNTING ENTRIES (28 points) The ledger accounts of CynaWood Cabinet Company are presented below, with an identification number for each Instructions: Prepare appropriate job order cost system entries to record the data/events given below Place the appropriate identification number(s) in the debit and credit columns provided and the dollar amount in the adjoining column Cash Accumulated Depreciation Accounts Receivable 10 Sales Revenue Raw Materials Inventory 11 Depreciation Expense Work in Process Inventory 12 Factory Labor Finished Goods Inventory 13 Wages Expense Manufacturing Overhead 14 Cost of Goods Sold Accounts Payable 15 Other Accounts Factory Wages Payable ——————————————————————————————————————————_ Account(s) Account(s) Dollar Entry Information Debited Credited Amount ——————————————————————————————————————————_ Purchased raw materials on account—$96,000 ——————————————————————————————————————————_ Incurred factory labor—$75,000 ——————————————————————————————————————————_ Charged direct labor to job X43—$68,000 ——————————————————————————————————————————_ Charged direct materials to job X43—$82,000 ——————————————————————————————————————————_ Incurred manufacturing overhead on account— $38,000 ——————————————————————————————————————————_ Recorded the remaining factory labor as indirect labor ——————————————————————————————————————————_ Recognized depreciation on factory equipment— $11,000 ——————————————————————————————————————————_ Charged overhead to job X43 at 80% of direct labor cost ——————————————————————————————————————————_ Recorded completion of job X43 ——————————————————————————————————————————_ 10 Recorded cost of sales for job X43 ——————————————————————————————————————————_ 11 Recorded revenue from sale of job X43 on account — $330,000 ——————————————————————————————————————————_ 12 Assume total actual overhead was $560,000 and total applied overhead was $547,000 for the year Record the entry to close the manufacturing overhead account Achievement Test AT1- Solutions — Achievement Test 1: Chapters 1-2 PART I — MULTIPLE CHOICE (30 points) C B B D C 10 B A C D A 11 12 13 14 15 C C B B C PART II — CLASSIFICATION OF COSTS AND EXPENSES (20 points) D A C D C 10 B D C C C PART III—DETERMINE WORK IN PROCESS AND FINISHED GOODS BALANCES (22 points) $8,700 ($5,100 + $3,600) $10,200 $16,800 ($3,600 + $5,900 + $7,300) $11,500 ($5,100 + $6,400) $17,800 ($7,300 + $7,400 + $3,100) $13,500 ($3,600 + $5,900 + $4,000) *Four points each, except for item (2 points) PART IV — JOB ORDER COST ACCOUNTING ENTRIES (28 points)* Account(s) Debited 12 4 6 Account(s) Credited 12 12 Dollar Amount $96,000 75,000 68,000 82,000 38,000 7,000 10 11 12 Account(s) Debited 14 14 Account(s) Credited 10 Dollar Amount $11,000 54,400 204,400 204,400 330,000 13,000 *One point for each account title and one point for computed amounts (Entries 6, 8, 9, and 12)  .. .AT1 - Test Bank for Managerial Accounting, Seventh Edition The following data should be used for questions 6–9: Raw materials inventory, January Raw materials inventory, December... 10 The formula for computing a predetermined overhead rate is a estimated annual overhead costs ÷ estimated annual operating activity b estimated annual overhead costs ÷ actual annual operating... manufacturer c Specialty printing company d Automobile manufacturer AT1 - Test Bank for Managerial Accounting, Seventh Edition PART II — CLASSIFICATION OF COSTS AND EXPENSES (20 points) Instructions: Classify