Q: Which equation correctly calculates the cost of goods manufactured?

Cost of goods manufactured $$= \text{Total manufacturing costs} + \text{Beginning WIP Inventory} - \text{Ending WIP Inventory}$$

Question 1

Which of the following best describes the primary purpose of managerial accounting?

Accepted Answer

To provide information for internal decision makers such as managers.

Question 2

A manufacturing company has three types of inventory. Which inventory account includes goods that are in the manufacturing process but are not yet complete?

Accepted Answer

Work-in-Process Inventory

Question 3

Which of the following is an example of a period cost?

Accepted Answer

Selling and administrative expenses

Question 4

A company produced 2,200 tablets and sold 2,000 tablets in a year. If the cost of goods manufactured was $440,000, what is the unit product cost?

Accepted Answer

Unit product cost $$= \frac{440,000}{2,200} = 200$$

Question 5

Which of the following is NOT a function of managerial accounting?

Accepted Answer

Auditing external financial statements

Question 6

According to the Institute of Management Accountants (IMA), which principle is NOT included in their Statement of Ethical Professional Practice?

Accepted Answer

Profitability

Question 7

Which of the following costs is considered a direct cost in manufacturing?

Accepted Answer

Direct labor

Question 8

A company’s board of directors is responsible for:

Accepted Answer

Developing the strategic goals of the corporation.

Question 9

Which equation correctly calculates the cost of goods manufactured?

Accepted Answer

Cost of goods manufactured $$= 	ext{Total manufacturing costs} + 	ext{Beginning WIP Inventory} - 	ext{Ending WIP Inventory}$$

Question 10

Which of the following is a trend affecting managerial accounting?

Accepted Answer

Shift toward a service economy

Question 11

If Smart Touch Learning has beginning Finished Goods Inventory of $$0, ending Finished Goods Inventory of 60$$,000, and cost of goods manufactured of $440,000, what is the cost of goods sold?

Accepted Answer

Cost of goods sold $$= 440,000 - 60,000 = 380,000$$

Question 12

Which of the following best describes the value chain in Total Quality Management (TQM)?

Accepted Answer

Each step adds value to the end product.

Question 13

Which of the following is a conversion cost?

Accepted Answer

Direct labor and manufacturing overhead

Question 14

A merchandising company records the cost of inventory purchased as an asset called:

Accepted Answer

Merchandise Inventory

Question 15

Which of the following is an ethical action according to the IMA Statement of Ethical Professional Practice?

Accepted Answer

Communicate information fairly and objectively.

Question 16

Which of the following is a product cost for a manufacturing company?

Accepted Answer

Direct materials

Question 17

If a company uses Just-in-Time (JIT) management, what is the primary goal?

Accepted Answer

To minimize inventory and reduce waste.

Question 18

Which of the following is a plausible consequence of violating the revenue recognition principle, as illustrated in the ethical scenario with Sam Butler?

Accepted Answer

Financial statements may be misleading to stakeholders.

Question 19

Which formula is used to calculate direct materials used in production?

Accepted Answer

Direct materials used $$= 	ext{Beginning Raw Materials Inventory} + 	ext{Purchases} - 	ext{Ending Raw Materials Inventory}$$

Question 20

Which of the following is a plausible reason for managers in service and merchandising companies to use managerial accounting?

Accepted Answer

To determine cost per service or cost per item for pricing decisions.

Chapter 1 (16): Introduction to Managerial Accounting – Study Notes

Study Guide - Practice Questions

Study Guide - Flashcards