Managerial Accounting Quiz Chapter 16

Quiz 16 Practice

Example 1

During the year, Coronado Boat Yard has incurred manufacturing costs of $420,000 in building three large sailboats. At year-end, each boat is about 70 percent complete.

How much of these manufacturing costs should be recognized as expense in Coronado Boat Yard's income statement for the current year?

0

Coronado Boat Yard should not recognize any of the manufacturing costs on their year end income statement. These are product costs and as a result, will not appear on the income statement until the boats are sold and the revenue is earned.

Example 2

During the current year, the cost of direct materials purchased by a manufacturing firm was $340,000, and the direct materials inventory increased by $20,000.

What was the cost of direct materials used during the year?

320000

Direct materials used is $340,000 less the $20,000 increase in the ending balance of direct materials or $320,000.

Example 3

Hula's Heavyweights, Inc., is a company that manufactures forklifts. During the year, Hula's purchased $1,450,000 of direct materials and placed $1,525,000 worth of direct materials into production. Hula's beginning balance in the Materials Inventory account was $320,000.

What is the ending balance in Hula's Materials Inventory account?

245000

Direct Materials Inventory |

Balance, 1/1 | $ | 320,000 |   |   |   |

Purchases of direct materials | $ | 1,450,000 | Direct materials used | $ | 1,525,000 |

Balance, 12/31 | $ | 245,000 |   |   |   |

Example 4

Listed below are eight technical accounting terms introduced or emphasized in this chapter:

Work in Process Inventory | Cost of finished goods manufactured |

Conversion costs | Cost of Goods Sold |

Period costs | Management accounting |

Prime costs | Manufacturing overhead |

Each of the following statements may (or may not) describe one of these technical terms. For each statement, indicate the accounting term described, or answer...