ACC 406 Study Guide - Final Guide: Cost Driver, European Cooperation In Science And Technology, British Association For Immediate Care

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Breakeven point in units or = total revenues from operations cost of goods sold and operating expenses (excluding income taxes) selling price per unit variable cost per unit (selling price variable cost) / selling price (or) contribution margin per unit selling price per unit contribution margin per unit x # of units sold contribution margin. Overhead or = or = unit sales x unit price unit sales x units in ending inventory (or) production needs units in beginning inventory production x unit direct material (or) production need x direction material in ending inventory (or) total need direct material in beginning inventory (or) direct material purchase x direct material cost per unit (or) production x direct labour house per unit (or) direct labour hours needed x direct labour rate beginning cash + cash sales cash available disbursements paid with cash unit sales x vsar.

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The information below relates to Derby Manufacturing Company'soperations for a recent month. (Assume that all raw materials aredirect materials.):

	Purchases of raw materials........................	$91,000
	Direct labor cost........................................	$122,000
	Selling costs (total)....................................	$42,000
	Administrative costs (total).......................	$56,000
	Manufacturing overhead costs (total).......	$340,000
	Raw materials inventory, beginning..........	$22,000
	Work in process inventory, beginning.......	$27,000
	Finished goods inventory, beginning........	$42,000
	Raw materials inventory, ending...............	$7,000
	Work in process inventory, ending............	$35,000
	Finished goods inventory, ending.............	$15,000

What was Derby's cost of goods manufactured for the month?

	a.	$545,000
	b.	$560,000
	c.	$568,000
	d.	$587,000

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1.) When products held in inventory are sold:

A.)Cost of Goods Sold is credited.

B.)Work in Process Inventory is credited.

C.)Finished Goods Inventory is credited.

D.)Finished Goods Inventory is debited.

2.)Since manufacturing costs (direct materials, direct labor,and overhead) are incurred in the process of manufacturing units ofproduct, these costs are credited t

A.)	The Direct Materials Inventory, Direct Labor, and ManufacturingOverhead accounts respectively.
B.)	Liability accounts.
C.)	The Work in Process Inventory account.
D.)	The Cost of Goods Sold account.

3.)Management accounting systems are designed to assistorganizations in the performance of all of the following functionsexcept:

A.)	The assignment of decision-making authority over companyassets.
B.)	Planning and decision-making.
C.)	Monitoring, evaluating, and rewarding performance.
D.)	The preparation of income tax returns.

4.)In a schedule of cost of finished goods manufactured, thefigure for total manufacturing costs:

	A.) May be less than the cost of direct materials used.
	B.) May be less than the direct labor costs assigned toproduction.
	C.) May be less than the manufacturing overhead applied toproduction.
	D.) May be less than the cost of finished goodsmanufactured.

5.) When a manufacturing company purchases raw materials orcomponent parts to be used in manufacturing finished goods, thesecosts are initially debited to:

	A.) Expense accounts.
	B.) Raw Materials Inventory.
	C.) Finished Goods Inventory.
	D.) Manufacturing Overhead.

6.) The wages paid to employees working directly on a company'sproducts would be shown as a:

	A.) Credit to Direct Labor.
	B.) Debit to Direct Labor.
	C.) Credit to Work in Process.
	D.) Debit to Manufacturing Overhead.

7.) Amounts credited to the Work in Process inventory accountmay best be described as:

	A.) The cost of finished goods manufactured.
	B.) Total manufacturing costs charged to production.
	C.) The cost of goods sold.
	D.) Direct materials purchased, direct labor costs paid, andpayments for items classified as manufacturing overhead.

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ACC 406 Study Guide - Final Guide: Cost Driver, European Cooperation In Science And Technology, British Association For Immediate Care

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