The cost of manufacturing a product includes all of the following except Multiple Choice overhead advertising labor. materials. The cost of a small amount of glue used to manufacture a product may be called Multiple Choice an indirect cost an overhead cost All of the choices are terms that may be used to describe small quantities of materials consumed in the process of making products product cost Which of the following describes the flow of product costs in a manufacturing company? Multiple Choice Product costs are first accumulated in an expense account (Cost of Goods Sold) and then transferred to an asset account (Inventory) When the goods are sold. Product costs are first accumulated in an asset account (Inventory) and then transferred to an expense account (Cost of Goods Sold) when the products are sold Product costs are recorded in an expense account (Cost of Goods Sold) as the goods are being manufactured Product costs are never expensed The wages of factory maintenance personnel would usually be considered as: b) c) d) Indirect Labor Manufacturing Overhead No Yes Yes No Yes Yes No No Which of the following costs would not be included as part of manufacturing overhead? Multiple Choice Lubricants for production equipment Maintenance workers' salaries at the factory Insurance on sales vehicles Depreciation of production equipment Product costs are placed in which financial statement account when incurred? Multiple Choice Selling expense Property, plant, and equipment Cost of goods sold Inventory The cost of denim used to manufacture blue jeans would most likely be classified as a Multiple Choice manufacturing overhead direct material direct labor indirect material Mustafa Manufacturing Company began operations on January 1. During the year, it started and completed 3,000 units of product. The financial statements are prepared in accordance with GAAP The company incurred the following costs: 1. Raw materials purchased and used56,200. 2. Wages of production workers-57,400. 3. Salaries of administrative and sales personnel-$3,000. 4. Depreciation on manufacturing equipment-$4,400. 5. Depreciation on administrative equipment-$2,200. Mustafa sold 2,400 units of product. Required a. Determine the total product cost for the year, b. Determine the total cost of the ending inventory c. Determine the total of cost of goods sold. a Total product cost b. Total cost of ending Inventory c Total cost of goods sold a. Information is factual and is characterized by objectivity, reliability, consistency, and accuracy. b. Information is reported continuously and has a current or future orientation c. Information is provided to outsiders, including investors, creditors, government agencies, analysts, and reporters d. Information is regulated by the SEC, FASB, and other sources of GAAP. e. Information is based on estimates that are bounded by relevance and timeliness. f. Information is historically based and usually reported annually. g. Information is local and pertains to subunits of the organization. h. Information includes economic and nonfinancial data as well as financial data. i. Information is global and pertains to the company as a whole. J. Information is provided to insiders, including executives, managers, and employees. a b C d e 9 h Required Indicate whether each of the following costs should be classified as a product cost or as an SG&A cost in accordance with GAAP: a. Direct materials used in a manufacturing company b. Indirect materials used in a manufacturing company. c. Salaries of employees working in the accounting department. d. Commissions paid to sales staff e. Interest on the mortgage for the company's corporate headquarters. f. Indirect labor used to manufacture inventory 9. Attorney's fees paid to protect the company from frivolous lawsuits, h. Research and development costs incurred to create new drugs for a pharmaceutical company. 1. The cost of secretarial supplies used in a doctor's office J. Depreciation on the office furniture of the company president a b C d 9 Which of the following statements is true? Multiple Choice Managerial accounting data are prepared for external users. Managerial accounting standards are established by the federal government. Managerial accounting is characterized by its objectivity, reliability consistency and historical nature, Managerial accounting reports are less regulated than financial accounting reports. Which of the following branches of accounting focuses more on historical data? Multiple Choice Managerial accounting. Financial accounting The Financial Accounting Standards Board (FASB) establishes standards for the preparation of financial accounting reports while the Securities and Exchange Commission (SEC) establishes standards for the preparation of managerial accounting reports. This statement is Multiple Choice true false Managerial accounting focuses on the needs of external users while financial accounting focuses on the needs of internal users. This statement is Multiple Choice false true Which of the following are characteristics of managerial accounting information? Multiple Choice All of the answers describe characteristics of managerial accounting information Is future oriented Provides information to the company's management team. Is more willing to sacrifice reliability to gain relevance than is financial accounting A review of the accounting records of Jordan Manufacturing indicated that the company incurred the following payroll costs during the month of March Assume the company's financial statements are prepared in accordance with GAAP. 1. Salary of the company president-$32,700. 2. Salary of the vice president of manufacturing $16,500. 3. Salary of the chief financial officer-$18,500. 4. Salary of the vice president of marketing--$15,600. 5. Salaries of middle managers (department heads, production supervisors) in manufacturing plant-$191.000. 6. Wages of production workers--$934.000, 7. Salaries of administrative secretaries$111,000. 8. Salaries of engineers and other personnel responsible for maintaining production equipment-$174,000. 9. Commissions paid to sales staff $245,000. Required o. What amount of payroll cost would be classifi as SG&A expense? b. Assuming that Jordan made 4,000 units of product and sold 3,200 of them during the month of March, determine the amount of payroll cost that would be included in cost of goods sold. (Do not round intermediate calculations.) Payroll cost to be included in SG&A cont b. Payroll cost to be included in cost of goods sold Required Use the following table to classify each cost as a product cost or an SG&A cost. Also indicate whether the cost would be recorded as an asset or an expense. Assume product cost is defined by generally accepted accounting principles. The first item is shown as an example. (Select "Neither" if none of the categories apply.) Product/SG&A AsseuExpense Asset Product cost Cost Category Wages of production workers Advertising costs Promotion costs Production supplies Depreciation on administration building Depreciation on manufacturing equipment Research and development costs Coot to set up manufacturing equipment Utilities used in manufacturing facility Cars for sales staff Real estate tax levied on a factory General office supplies Raw materials used in the manufacturing process Cost to rent office equipment