Topic 1 Practice Problems

Which from the following is a manufacturing overhead:

-Glue for frames

-Depreciation on company cars used by sales force

-Plant depreciation

-Interest expense

-Lenses

-Company president's salary

-Plant foreman's salary

-Plant janitor's wages

-Oil for manufacturing equipment

-Plant foreman's salary

-Plant janitor's wages

-Plant depreciation

-Glue for frames

-Oil for manufacturing equipment

For each of the​ following, indicate whether the statement relates to managerial accounting or financial​ accounting:

a. Helps investors make investment decisions

a. Financial Accounting

For each of the​ following, indicate whether the statement relates to managerial accounting or financial​ accounting:

b. Provides detailed reports on parts of the company.

b. Managerial Accounting

For each of the​ following, indicate whether the statement relates to managerial accounting or financial​ accounting:

c. Helps in planning and controlling operations.

c. Managerial Accounting

For each of the​ following, indicate whether the statement relates to managerial accounting or financial​ accounting:

d. Reports must follow Generally Accepted Accounting Principles (GAAP).

d. Financial Accounting

For each of the​ following, indicate whether the statement relates to managerial accounting or financial​ accounting:

e. Reports audited annually by independent certified public accountants.

e. Financial Accounting

The Institute of Management​ Accountants' Statement of Ethical Professional Practice requires managerial accountants to meet standards regarding​ competence, confidentiality,​ integrity, and credibility. Consider the following situations. Which​ standard(s) is(are) violated in each​ situation?

Situation:

You tell your brother that your company will report earnings significantly above financial​ analysts' estimates.

a. Providing earnings information to your brother before it is publicly announced violates the _____ standard.

▼

competence

confidentiality

credibility

integrity

Confidentiality

Situation:

You see others take home office supplies for personal use. As an​ intern, you do the same​ thing, assuming that this is a​ "perk."

b. Stealing from your employer is a violation of the _____ standard.

▼

competence

confidentiality

credibility

integrity

Integrity

Situation:

At a​ company-paid conference on​ e-commerce, you skip the afternoon session and go sightseeing.

c. Skipping continuing education sessions could violate the requirement to maintain professional _____.

▼

competence

confidentiality

credibility

integrity

If your company paid for you to attend the​ conference, skipping the sessions also violates the _____standard.

▼

competence

confidentiality

credibility

integrity

Competence ;

Integrity

Situation:

You failed to read the detailed specifications of a new accounting software package that you asked your company to purchase. After it is​ installed, you are surprised that it is incompatible with some of your​ company's older accounting software.

d. Failing to read the specifications of the software package before purchasing it violates the _____ standard.

▼

competence

confidentiality

credibility

integrity

Competence

Situation:

You do not provide top management with the detailed job descriptions they requested because you fear they may use this information to cut a position in your department.

e. Failing to provide top management with detailed job description information violates the _____ standard.

▼

competence

confidentiality

credibility

integrity

If you did not provide the information because you fear losing your position also violates the _____ standard.

▼

competence

confidentiality

credibility

integrity

Credibility;

Integrity

Blake Cards is a manufacturer of greeting cards. Classify its costs by matching the costs to the terms.

a. Artists' wages

▼

1. Direct materials

2. Direct labor

3. Indirect materials

4. Indirect labor

5. Other manufacturing overhead

2. Direct labor

Blake Cards is a manufacturer of greeting cards. Classify its costs by matching the costs to the terms.

b. Wages of materials handling warehouse workers

▼

1. Direct materials

2. Direct labor

3. Indirect materials

4. Indirect labor

5. Other manufacturing overhead

4. Indirect labor

Blake Cards is a manufacturer of greeting cards. Classify its costs by matching the costs to the terms.

c. Paper

▼

1. Direct materials

2. Direct labor

3. Indirect materials

4. Indirect labor

5. Other manufacturing overhead

1. Direct materials

Blake Cards is a manufacturer of greeting cards. Classify its costs by matching the costs to the terms.

d. Depreciation on manufacturing equipment

▼

1. Direct materials

2. Direct labor

3. Indirect materials

4. Indirect labor

5. Other manufacturing overhead

5. Other manufacturing overhead

Blake Cards is a manufacturer of greeting cards. Classify its costs by matching the costs to the terms.

e. Manufacturing plant manager's salary

▼

1. Direct materials

2. Direct labor

3. Indirect materials

4. Indirect labor

5. Other manufacturing overhead

4. Indirect labor

Blake Cards is a manufacturer of greeting cards. Classify its costs by matching the costs to the terms.

f. Property taxes on manufacturing plant

▼

1. Direct materials

2. Direct labor

3. Indirect materials

4. Indirect labor

5. Other manufacturing overhead

5. Other manufacturing overhead

Blake Cards is a manufacturer of greeting cards. Classify its costs by matching the costs to the terms.

g. Glue for envelopes

▼

1. Direct materials

2. Direct labor

3. Indirect materials

4. Indirect labor

5. Other manufacturing overhead

3. Indirect materials

Classify each cost of a paper manufacturer as either a product cost or a period​ cost:

a. Salaries of scientists studying ways to speed forest growth

▼

Period cost

Product cost

Period cost

Classify each cost of a paper manufacturer as either a product cost or a period​ cost:

b. Cost of computer software to tract WIP Inventory

▼

Period cost

Product cost

Product cost

Classify each cost of a paper manufacturer as either a product cost or a period​ cost:

c. Cost of electricity at the paper mill

▼

Period cost

Product cost

Product cost

Classify each cost of a paper manufacturer as either a product cost or a period​ cost:

d. Salaries of the company's top executives

▼

Period cost

Product cost

Period cost

Classify each cost of a paper manufacturer as either a product cost or a period​ cost:

e. Cost of chemicals to treat the paper

▼

Period cost

Product cost

Product cost

Classify each cost of a paper manufacturer as either a product cost or a period​ cost:

f. Cost of TV ads

▼

Period cost

Product cost

Period cost

Classify each cost of a paper manufacturer as either a product cost or a period​ cost:

g. Depreciation on the manufacturing plant

▼

Period cost

Product cost

Product cost

Classify each cost of a paper manufacturer as either a product cost or a period​ cost:

h. Cost to purchase wood pulp

▼

Period cost

Product cost

Product cost

Classify each cost of a paper manufacturer as either a product cost or a period​ cost:

i Life insurance on the CEO

▼

Period cost

Product cost

Period cost

COGS equation (retail MERCHANDISE)

Beginning Merchandise Inventory

+ Purchases

+ Freight In

---------------

= Cost of Goods Available for Sale

- Ending Merchandise Inventory

---------------

= Cost of Goods Sold

Total Quality Management (TQM)

A philosophy designed to integrate all organizational areas in order to provide customers with superior products and services while meeting organizational objectives. Requires improving quality and eliminating defects and waste.

E-commerce

Use of the Internet for business functions such as sales and customer service. Enables companies to reach customers around the world.

Triple bottom line

Evaluating a company's performance by its economic, social, and environmental impact.

Enterprise Resource Planning (ERP)

Software system that integrates all of a company's functions, departments, and data into a single system.

Just-in-Time (JIT) Management system

A system in which a company produces products just when they are needed to satisfy needs. Suppliers deliver materials when they are needed to begin production, and finished units are completed at the right time for delivery to customers.

b.

Match the following terms to the appropriate statement. Some terms may be used more than​ once, and some terms may not be used at all.

Accounting systems that must follow GAAP

▼

-Controlling

-Creditors

-Creditors & Managers

-Creditors & Stockholders

-Directing

-Financial

-Managerial

-Managers

-Managers & Stockholders

-Planning

-Stockholders

Financial

Match the following terms to the appropriate statement. Some terms may be used more than​ once, and some terms may not be used at all.

External parties for whom financial accounting reports are prepared.

▼

-Controlling

-Creditors

-Creditors & Managers

-Creditors & Stockholders

-Directing

-Financial

-Managerial

-Managers

-Managers & Stockholders

-Planning

-Stockholders

Creditors & Stockholders

Match the following terms to the appropriate statement. Some terms may be used more than​ once, and some terms may not be used at all.

The role managers play when they are monitoring day-to-day operations and keeping the company on track

▼

-Controlling

-Creditors

-Creditors & Managers

-Creditors & Stockholders

-Directing

-Financial

-Managerial

-Managers

-Managers & Stockholders

-Planning

-Stockholders

Controlling

Match the following terms to the appropriate statement. Some terms may be used more than​ once, and some terms may not be used at all.

Internal decision makers

▼

-Controlling

-Creditors

-Creditors & Managers

-Creditors & Stockholders

-Directing

-Financial

-Managerial

-Managers

-Managers & Stockholders

-Planning

-Stockholders

Managers

Match the following terms to the appropriate statement. Some terms may be used more than​ once, and some terms may not be used at all.

Accounting system that provides information on a company's past performance.

▼

-Controlling

-Creditors

-Creditors & Managers

-Creditors & Stockholders

-Directing

-Financial

-Managerial

-Managers

-Managers & Stockholders

-Planning

-Stockholders

Financial

Match the following terms to the appropriate statement. Some terms may be used more than​ once, and some terms may not be used at all.

Accounting system not restricted by GAAP

▼

-Controlling

-Creditors

-Creditors & Managers

-Creditors & Stockholders

-Directing

-Financial

-Managerial

-Managers

-Managers & Stockholders

-Planning

-Stockholders

Managerial

Match the following terms to the appropriate statement. Some terms may be used more than​ once, and some terms may not be used at all.

The management function that involves choosing goals and deciding how to achieve them.

▼

-Controlling

-Creditors

-Creditors & Managers

-Creditors & Stockholders

-Directing

-Financial

-Managerial

-Managers

-Managers & Stockholders

-Planning

-Stockholders

Planning

Hadiqa Weiss is the controller at Need for​ Speed, a car dealership. Daniel Salazar recently has been hired as the bookkeeper. Salazar wanted to attend a class in Excel​ spreadsheets, so Weiss temporarily took over​ Salazar's duties, including overseeing a fund used for gas purchases before test drives. Weiss found a shortage in the fund and confronted Salazar when he returned to work. Salazar admitted that he occasionally uses the fund to pay for his own gas. Weiss estimated the shortage at​ $450.

Requirement 1. What should Hadiqa Weiss do?

(PART 1/3)

.....

A new employee who has engaged in this behavior is __Likely/unlikely__ to become a valued and trusted employee. This type of behavior is __ethical/unethical__.

As controller, Weiss probably hired Salazar, and he is also responsible for the lack of controls that permitted a new employee to commit this theft. Weiss will need to _____

▼

-Also use the fund to pay for her gas.

-Let the bookkeeper do his job without interfering.

-Supervise the next bookkeeper more carefully.

(PART 2/3)

A new employee who has engaged in this behavior is __unlikely__ to become a valued and trusted employee. This type of behavior is __unethical__.

As controller, Weiss probably hired Salazar, and he is also responsible for the lack of controls that permitted a new employee to commit this theft. Weiss will need to __supervise the next bookkeeper more carefully__

Requirement 2. Would you change your answer if Weiss was the one recently hired as controller and Daniel Salazar was a​ well-liked, longtime employee who indicated he always eventually repaid the​ fund?

The new information makes​ Weiss' decision more complex.

Being new, she may want to also use the fund to put gas in her care/ discuss the situation with the company president/ ignore the theft and hope he stops on his own

Unless Weiss can obtain additional information, she may want to indicate to Salazar that this behavior will be ignored/ be tolerated/ not be tolerated in the future.

Weiss should establish better controls and closer supervision/ start letting employees use the fund to put gas in their cars/ turn a blind eye to this type of behavior

(PART 3/3)

Being new, she may want to discuss the situation with the company president

Unless Weiss can obtain additional information, she may want to indicate to Salazar that this behavior will not be tolerated in the future.

Weiss should establish better controls and closer supervision

Prime costs

Combine the direct costs --> The direct costs of the manufacturing process: Direct materials + direct labor.

Conversion costs

The cost to convert direct materials into finished goods: Direct labor + manufacturing overhead.

What term is used to describe:

A management system that focuses on maintaining lean inventories while producing products as needed by the customer.

Just-in-time management (JIT)

What term is used to describe:

A philosophy designed to integrate all organizational areas in order to provide customers with superior products and services while meeting organizational objectives.

Total quality management (TQM)

What term is used to describe:

Integrates all of a company's functions, departments, and data into a single system.

Enterprise resource planning (ERP)

What term is used to describe:

Adopted by firms to conduct business on the Internet.

E-commerce

Match each item to the appropriate triple bottom line​ component: Profits​ (economic), People​ (social), or Planet​ (environmental).

Winnebago Industries, Inc. employees have contributed more than 10,000 volunteer hours in their communities sine 2019.

People (social)

Match each item to the appropriate triple bottom line​ component: Profits​ (economic), People​ (social), or Planet​ (environmental).

Advanced materials, engine technology, and aerodynamic designs make Winnebago Industries, Inc. motorhomes more energy efficient.

Planet (environmental)

Match each item to the appropriate triple bottom line​ component: Profits​ (economic), People​ (social), or Planet​ (environmental).

Winnebago Industries, Inc. has established priorities of waste reduction, GHG emissions reduction, water reduction, and product sustainability and has committed to meeting specific goals in each category by 2030.

Planet (environmental)

Match each item to the appropriate triple bottom line​ component: Profits​ (economic), People​ (social), or Planet​ (environmental).

Winnebago Industries, Inc.'s operating income for the year was $407 million.

Profits (economic)