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Exam 2: Building Blocks of Managerial Accounting

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Question 111

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Decision making is guided only by differential costs.

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Question 112

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A company is deciding whether to purchase hybrid cars for its salespeople or gasoline-engine cars.Which of the following costs would NOT be relevant to its decision?

A) The cost per gallon of gasoline
B) The purchase price of the hybrid model
C) The purchase price of the gasoline-engine model
D) The book value of the current fleet of sales vehicles

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Question 113

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Comfy Furniture Company manufactures furniture at its Akron,Ohio,factory.Some of its costs from the past year include: $\begin{array}{|l|cc|}\hline \text { Depreciation on sales office } & \$ & 11,000 \\\hline \text { Depreciation on factory equipment } & \$ & 16,000 \\\hline \text { Factory supervisor salary } & \$ & 52,500 \\\hline \text { Sales commissions } & \$ & 23,000 \\\hline \text { Lubricants used in factory equipment } & \$ & 3,000 \\\hline \text { Insurance costs for factory } & \$ & 21,000 \\\hline \text { Wages paid to maintenance workers } & \$ & 115,000 \\\hline \text { Fabric used to upholster furniture } & \$ & 7,000 \\\hline \text { Freight-in (on raw materials) } & \$ & 2,500 \\\hline \text { Costs of delivery to customers } & \$ & 9,000 \\\hline \text { Wages paid to assembly-line workers } & \$ & 132,500 \\\hline \text { Lumber used to build product } & \$ & 72,000 \\\hline \text { Utilities in factory } & \$ & 44,500 \\\hline \text { Utilities in sales office } &\$& 26,500 \\\hline\end{array}$ -Product costs for Comfy Furniture Company totaled:

On the line in front of each statement,enter the letter corresponding to the term that best fits that statement.You may use a letter more than once and some letters may not be used at all. $\begin{array} { | l | l | l | l | } \hline \text { A. } & \text { Materials inventory } & \text { E. } & \text { Work in process inventary } \\\hline \text { B. } & \text { Service companies } & \text { F. } & \text { Manufacturing companies } \\\hline \text { C. } & \text { Merchandise inventory } & \text { G. } & \text { Merchandising companies } \\\hline \text { D. } & \text { Finished egods inventory } & & \\\hline\end{array}$ ____ Typically have a single category of inventory ____ Resell products they previously purchased ready-made from suppliers ____ Do not have inventory for resale ____ Produce its own inventory ____ Transform raw materials into new finished products ____ Ready to sell inventory of manufacturers ____ Partially completed items of manufacturers

Differentiate between relevant and irrelevant costs and give an example using both.

Collectively,all costs such as design,customer service,etc.are part of:

All of the following activities are included in the value chain EXCEPT for:

Raw materials,work in process and finished goods are the three types of inventory held by which of the following types of companies?

Describe a company that has some elements of all three types of companies.It is part service company,part manufacturer,and part merchandiser.

Which type of company has the highest percentage of labor costs?

The balance sheet of a service company has:

Sunnybrook Orange Groves processes a variety of fresh juices.The company has the following expenses for July: $\begin{array} { | l | c | } \hline \text { Depreciation expense an bottling machines } & \$ 63,000 \\\hline \text { Glass juice bottles } & \$ 54,000 \\\hline \text { Comrissions for salespeople } & \$ 27,000 \\\hline \text { Salaries of mutrition researchers } & \$ 89,000 \\\hline \text { Costs of maintaining website used for custamer orders } & \$ 4,000 \\\hline \text { Wages of factory workers } & \$ 75,000 \\\hline \text { Freshess seals/caps for juice battles } & \$ 3,000 \\\hline \text { Reconfiguring the factory layout } & \$ 102,000 \\\hline \text { Custamer help line } & \$ 2,000 \\\hline \text { Costs of refrigerated trucks used to deliver juice } & \$ 17,000 \\\hline\end{array}$ -What is the total cost for the design category of the value chain?

Period costs are:

Indicate whether each of the following costs is a product cost or a period cost.Assume a manufacturer. A)_________ Direct materials used in factory B)_________ Factory utilities C)_________ Salespersons' commissions D)_________ Salary of plant manager E)_________ Indirect materials used in factory F)_________ Depreciation expense on store equipment G)_________ Indirect labor incurred in factory H)_________ Advertising expense I)_________ Direct labor incurred in factory J)_________ Factory machinery repairs and maintenance K)_________ Depreciation expense on factory machinery L)_________ Supplies used in store M)_________ Plant insurance expired

Sunnybrook Orange Groves processes a variety of fresh juices.The company has the following expenses for July: $\begin{array} { | l | c | } \hline \text { Depreciation expense an bottling machines } & \$ 63,000 \\\hline \text { Glass juice bottles } & \$ 54,000 \\\hline \text { Comrissions for salespeople } & \$ 27,000 \\\hline \text { Salaries of mutrition researchers } & \$ 89,000 \\\hline \text { Costs of maintaining website used for custamer orders } & \$ 4,000 \\\hline \text { Wages of factory workers } & \$ 75,000 \\\hline \text { Freshess seals/caps for juice battles } & \$ 3,000 \\\hline \text { Reconfiguring the factory layout } & \$ 102,000 \\\hline \text { Custamer help line } & \$ 2,000 \\\hline \text { Costs of refrigerated trucks used to deliver juice } & \$ 17,000 \\\hline\end{array}$ - What is the total cost for the marketing category of the value chain?

select the best choice

First Sporting Equipment manufactures sporting goods.Selected costs from the past year include: $\begin{array}{|l|rr|}\hline \text { Plastics used to make products } & \$ & 151,000 \\\hline \text { Heating and lighting costs for factory } & \$ & 73,000 \\\hline \text { Factory janitor wages } & \$ & 67,000 \\\hline \text { Costs of shipping to customers } & \$ & 11,000 \\\hline \text { Lubricants used in factory equipment } & \$ & 2,000 \\\hline \text { Lighting costs for sales office } & \$ & 17,000 \\\hline \text { Depreciation on factory equipment } & \$ & 23,000 \\\hline \text { Office supplies for sales office } & \$ & 4,000 \\\hline \text { Insurance costs for factory } & \$ & 15,000 \\\hline \text { Maintenance worker wages } & \$ & 99,000 \\\hline \text { Freight-in (on plastics) } & \$ & 8,000 \\\hline \text { Aluminum used to make products } & \$ & 175,000 \\\hline \text { Assembly-line worker wages } & \$ & 142,000 \\\hline \text { Salaries of salespeople } & \$ &84,000 \\\hline\end{array}$ - Period costs for First Sporting Equipment totaled:

Which element in the value chain would contain inventoriable costs for a manufacturer?

You are trying to decide whether or not to sell back your accounting textbook at the end of the class.The cost you paid for the book is relevant to your decision.