INTERNATIONAL SCHOOL 210112 - MANAGERIAL ACCOUNTING WEEKLY ASSIGNMENTS

SEMESTER BETH 2014

PLEASE NOTE THE FOLLOWING IMPORTANT POINTS:
1. Read the weekly assig !e t details "a#e$%lly t& e s%#e that y&% atte!'t a d "&!'lete the "&##e"t (%esti& s ea"h week. )&!'leted E*e#"ises $&# Le"t%#e 1 sh&%ld +e s%+!itted +y 11.,, a.!. & the day &$ Le"t%#e - a d s& & . -. . less y&% s%+!it at least /,0 &$ the assig !e ts y&% !ay all&wed t& sit $&# the $i al e*a!. &t +e

TOPIC 1 1.1. Multiple Choice Questions

Choose the most appropriate answer (eg. A, B, C, and D). 1. Which of the following functions involves choosing among available alternatives A. Decision ma!ing. B. "lanning. C. Directing operational activities. D. Controlling. $itan Compan% has set various goals, and management is now ta!ing appropriate action to ensure that the firm achieves these goals. &ne such action is to reduce outla%s for overhead, which have e'ceeded budgeted amounts. Which of the following functions best describes this process A. Decision ma!ing. B. Coordinating. C. Controlling. D. &rgani(ing. Which of the following is not an ob*ective of mangement accounting A. "roviding information for decision ma!ing B. "roviding information for planning C. "roviding information for profit and loss statements D. "roviding information for control ,anagerial accountingA. is not re.uired and unregulated. B. produces information that is useful onl% for manufacturing organi(ations. C. is based e'clusivel% on historical data. D. generall% focuses on reporting information about the enterprise in its entiret% rather than b% subunits. Which is not a characteristic of management accounting information A. 0ocuses on the future B. 1mphasises the e'ternal fianacial statements C. 1mphasises relevance D. "rovides detailed information about individual parts of the compan% Which of the following statements represents a similarit% between financial and managerial accounting A. Both are useful in providing information for e'ternal users. B. Both are governed b% 3AA". C. Both draw upon data from an organi(ation4s accounting s%stem. D. Both are solel% concerned with historical transactions. #

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$he chief managerial and financial accountant of an organi(ation is theA. Controller or C0&. B. $reasurer C. C1&. D. 6nternal auditor. Which of the following is 8&$ one of the .uestions management accountants might attempt to help answer in the formulation of strateg% a. Who are our most important customers b. What substitute products e'ist in the mar!etplace c. Does the strateg% compl% with 3AA" (3enerall% Accepted Accounting "rinciples) d. Will ade.uate cash be available to implement the strateg% "lace the four business functions in the order the% appear along the value chainA : Customer service B : Design C : Distribution D : "roduction a. ABDC b. ACDB c. BDCA d. BADC $he income statement of a service<sector firm reportsa. period costs onl% b. inventoriable costs onl% c. both period and inventoriable costs d. period and inventoriable costs but at different times= the reporting varies >ist and describe four important differences between managerial and financial accounting Distinguish between line and staff positions. 3ive two e'amples of each in a ?niversit% setting. What is meant b% the following statement @,anagerial accounting often serves an attention<directing roleA. What is the chief difference between firms in manufacturing and service industries Can managerial accounting pla% an important role in a non<profit organi(ation 1'plain %our answer.

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A large manufacturer of electronic machiner% stated the following as one of its goals- @$he compan% should become the low<cost producer in its industr% Bow can managerial accounting help the compan% achieve this goal What do %ou thin! it means to be a professional 6n %our view, are management accountants professional

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1<9. 3ive an e'ample of managerial accounting information that could help a manger ma!e each of the following decisions 1. #. ). +. $he "resident of Budget Cent<a<Car is deciding whether to add lu'ur% cars to the rental car fleet. $he "roduction ,anager in a Dolvo plant is deciding whether to have routine maintenance performed on a machine wee!l% or biwee!l%. $he manger of a $arget store is deciding how man% securit% personnel to emplo% for the purposes of reducing shoplifting $he ,achon >ev Board is deciding whether to build an addition onto one of its libraries. 1<1;. "rogressive Applications Corporation, a developer and distributor of business application software, has been in business for five %ears. $he compan%Es main products include programs used for list management, billing and accounting for the mail order shopping business. "rogressiveEs sales have increased steadil% to the current level of F#/ million per %ear. $he compan% has #/; emplo%ees. Andrea 8olan *oined progressive appro'imatel% one %ear ago as accounting manager. 8olanEs duties include supervision of the compan%Es accounting operations and preparation of the compan%Es financial statements. 8o one has noticed that in the past si' months "rogressiveEs sales have ceased to rise and have actuall% declined in the two most recent months. $his une'pected downturn has resulted in cash shortages. Compounding these problems, "rogressive had to dela% the introduction of a new product due to dela%s in documentation preparation. "rogressive contracts most of its printing re.uirements to Web 3raphic 6nc., a small compan% owned b% Cob Borman. Borman has dedicated a ma*or portion of his printing capacit% to "rogressiveEs re.uirements because "rogressiveEs contracts represent appro'imatel% /; percent of Web 3raphicEs business. 8olan has !nown Borman for man% %ears= as a matter of fact, she learned of "rogressiveEs need for an accounting manager through Borman. While preparing "rogressiveEs most recent financial statements, 8olan became concerned about the compan%Es abilit% to maintain stead% pa%ments to its suppliers= she estimated that pa%ment to all vendors, normall% made within ); da%s, could e'ceed 5/ da%s. 8olan is particularl% concerned about pa%ments to +

Web 3raphics- she !nows that "rogressive had recentl% placed a large order with Web 3raphics for the printing for the special paper re.uired for "rogressiveEs documentation and she !nows that Web 3raphic will soon be placing an order for the special paper re.uired for "rogressiveEs documentation. 8olan is considering telling Borman about "rogressiveEs cash problems= however she is aware that a dela% in printing of the documentation would *eopardi(e "rogressiveEs new product. Ce.uired1. Describe 8olanEs ethical responsibilities in this situation 2. 6ndependent to %our answer to re.uirement (1), assume that 8olan learns that Borman of Web 3raphics has decided to postpone the special paper order re.uired for "rogressiveEs printing *ob- 8olan believes Borman must have heard rumours about "rogressiveEs financial problems from some other source because she has not tal!ed to Borman. Ghould 8olan tell the appropriate "rogressive officials that Borman has postponed the order 1'plain %our answer. 3. 6ndependent of %our answers to the first two .uestions, assume that Borman has decided to postpone the special paper order because he has learned of "rogressiveEs financial problems from some other source other than 8olan. 6n addition, 8olan reali(es that Him 3rason, "rogressiveEs purchasing manager, !nows of her friendship with Borman. 8ow 8olan is concerned that 3rason ma% suspect she told Borman of "rogressiveEs financial problems when 3rason finds out Borman has postponed the order. Describe the steps that 8olan should ta!e to resolve this situation.

TOPIC 2 2.1. Multiple Choice Questions

Choose the most appropriate answer (eg. A, B, C, and D). 1. Which of the following statements is true A. $he word IcostI has the same meaning in all situations in which it is used. B. Cost data, once classified and recorded for a specific application, can then be used in an% application. C. Different cost concepts and classifications are used for different purposes. D. Costs incurred in one %ear are alwa%s meaningful in the following %ear. "roduct costs areA. e'pensed when incurred. B. inventoried. C. alwa%s variable in nature. D. alwa%s fi'ed in nature. Which of the following would not be classified as a product cost A. Direct ,aterials B. Direct >abour C. 6ndirect ,aterials D. Gales commissions An emplo%ee accidentall% overstated the %ear4s advertising e'pense b% F/;,;;;. Which of the following correctl% depicts the effect of this error A. Cost of goods manufactured will be overstated b% F/;,;;;. B. Cost of goods sold will be overstated b% F/;,;;;. C. Cost of goods sold will be overstated b% F/;,;;;, and cost of goods manufactured will be understated b% F/;,;;;. D. 8one of the above. ,idwest ,otors manufactures automobiles. Which of the following would not be classified as direct materials b% the compan% A. Gheet metal used in the automobile4s bod%. B. $%res. C. 6nterior leather. D. Wheel lubricant. Jualit% Appliance produces washers and dr%ers in an assembl%<line process. >abour costs incurred during a recent period were- corporate e'ecutives, F1;;,;;;= assembl%line wor!ers, F2;,;;;= securit% guards, F11,;;;= and plant supervisor, F17,;;;. $he total of Jualit%4s direct labor cost wasA. F2;,;;;. B. F51,;;;. 2

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C. F79,;;;. D. F179,;;;. 5. $he accounting records of Diego Compan% revealed the following costs, among others0actor% insurance Caw material used Customer entertainment 6ndirect labour Depreciation on salespersons4 cars "roduction e.uipment rental costs F )#,;;; #/2,;;; 1/,;;; +/,;;; ##,;;; 5#,;;;

Costs that would be considered in the calculation of manufacturing overhead totalA. F1+9,;;;. B. F151,;;;. C. F172,;;;. D. F++#,;;;. 7. Which of the following costs is not a component of manufacturing overhead A. 6ndirect materials. B. 0actor% utilities. C. 0actor% e.uipment. D. "ropert% ta'es on the manufacturing plant. ,anufacturing overheadA. includes direct materials, indirect materials, indirect labour, and factor% depreciation. B. is easil% traced to *obs. C. includes all selling costs. D. is a pool of indirect production costs that must somehow be attached to each unit manufactured.

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1;. $he accounting records of $acoma Compan% revealed the following costs- direct materials used, F15;,;;;= direct labour, F)/;,;;;= manufacturing overhead, F+;;,;;;= and selling and administrative e'penses, F##;,;;;. $acoma4s product costs totalA. F/#;,;;;. B. F5/;,;;;. C. F9#;,;;;. D. F1,1+;,;;;. 11. "rime costs are comprised ofA. direct materials and manufacturing overhead. B. direct labour and manufacturing overhead. C. direct materials and direct labour. 5

D. direct materials and indirect materials. 1#. 6n a manufacturing compan%, the cost of goods completed during the period would include which of the following elements A. Caw materials used. B. Beginning finished goods inventor%. C. ,ar!eting costs. D. Depreciation of office e.uipment. 1). Kansas "lating Compan% reported a cost of goods manufactured of F#2;,;;;, with the firm4s %ear<end balance sheet revealing wor! in process and finished goods of F)/,;;; and F25,;;;, respectivel%. 6f supplemental information disclosed direct materials used in production of F+;,;;;, direct labour of F5;,;;;, and manufacturing overhead of F1#;,;;;, the compan%4s beginning wor! in process must have beenA. F/,;;; B. F)5,;;; C. F2/,;;; D. F95,;;; 1+. 0or the %ear *ust ended, Cole Corporation4s manufacturing costs (raw materials used, direct labour, and manufacturing overhead) totaled F1,/;;,;;;. Beginning and ending wor!<in<process inventories were F2;,;;; and F9;,;;;, respectivel%. Cole4s balance sheet also revealed respective beginning and ending finished<goods inventories of F#/;,;;; and F17;,;;;. &n the basis of this information, how much would the compan% report as cost of goods manufactured (C&3,) and cost of goods sold (C&3G) A. C&3,, F1,+);,;;;= C&3G, F1,+2;,;;;. B. C&3,, F1,+5;,;;;= C&3G, F1,/+;,;;;. C. C&3,, F1,/);,;;;= C&3G, F1,+2;,;;;. D. C&3,, F1,/5;,;;;= C&3G, F1,/+;,;;;. 1/. Which of the following is not an e'ample of a variable cost A. Gtraight<line depreciation on a machine e'pected to last five %ears. B. "iece<rate wages paid to manufacturing wor!ers. C. >umber used to ma!e patio furniture. D. Commissions paid to sales personnel. 12. $he variable costs per unit are F+ when a compan% produces 1;,;;; units of product. What are the variable costs per unit when 7,;;; units are produced A. F+.;;. B. F+./;. C. F/.;;. D. F/./;. 15. $he fi'ed costs per unit are F1; when a compan% ma!es 1;,;;; units. What are the per unit fi'ed costs when 1#,/;; units are produced 7

A. F1#.;;. B. F1;.;;. C. F 7.;;. D. F 2.;;. 17. 6ndirect costsA. can be traced to a cost ob*ect. B. cannot be traced to a particular cost ob*ect. C. are alwa%s variable costs. D. ma% be indirect with respect to Disne% World but direct with respect to one its ma*or components, 1pcot Center 19. $he salar% that is sacrificed b% a college student who pursues a degree full time is a(n)A. sun! cost. B. out<of<poc!et cost. C. opportunit% cost. D. marginal cost. #;. $%re and Gpo!e ,anufacturing currentl% produces 1,;;; bic%cles per month. $he following per unit data appl% for sales to regular customersDirect materials Direct manufacturing labor Dariable manufacturing overhead 0i'ed manufacturing overhead $otal manufacturing costs F/; / 1+ 1; F59

$he plant has capacit% for ),;;; bic%cles and is considering e'panding production to #,;;; bic%cles. What is the per unit cost of producing #,;;; bic%cles A. F59 per unit B. F1/7 per unit C. F5+ per unit D. F1)+ per unit #1. Which of the following statements is true A. Gervice firms have little need for determining the cost of their Iproducts.I B. $he concept of product costing is relevant onl% for manufacturing firms. C. $he cost of %ear<end unused services appears on the balance sheet as an inventoriable asset. D. Gervice companies use cost information for planning and control purposes. ##. Which of the following inventories would a compan% ordinaril% hold for sale A. Caw materials. B. Wor! in process. C. 0inished goods. D. Wor! in process and finished goods. 9

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What is meant b% the phrase, @Different costs for different purposesA Distinguish between "roduct costs and "eriod costs. Wh% is the cost of idle time treated as manufacturing overhead Which of the following costs are li!el% to be controllable (C) b% the chief of a nursing hospital a. Cost of medication administered b. Cost of overtime paid to nurses due to scheduling errors c. Cost of depreciation of hospital beds 6ndicate whether each of the following cost is a direct cost (D) or indirect cost (6) of the restaurant in a hotel a. Cost of food served b. ChefEs salar% and fringe benefits c. "art of the cost of maintaining the grounds around the hotel d. "art of the cost of advertising the hotel

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#.2 Distinguish between out<of<poc!et costs and opportunit% costs. #.5 Distinguish between marginal and average costs #.7 Ale'andria Aluminum Compan%, a manufacturer of rec%clable soda cans, had the following inventor% balances at the beginning and end of #;L1. 6nventor% Classification Hanuar% 1, #;L1 December )1, #;L1 Caw ,aterial F2;,;;; F5;,;;; Wor! 6n "rocess 1#;,;;; 11/,;;; 0inished 3oods 1/;,;;; 12/,;;; During #;L1, the compan% purchased F#/;,;;; of raw material and spent F+;;,;;; on direct labour. ,anufacturing overhead costs were as follows6ndirect ,aterial 6ndirect >abour Depreciation on plant and e.uipment ?tilities &ther F1;,;;; #/,;;; 1;;,;;; #/,;;; );,;;;

Gales revenue was F1,1;/,;;; for the %ear. Gelling and Administrative e'penses for the %ear amounted to F11;,;;;. $he firmEs ta' rate is +; percent. Ce.uired 1. "repare a schedule of cost of goods manufactured 2. "repare a schedule of cost of goods sold 1;

3. "repare an income Gtatement 4. Ghow how both cost schedules and the income statement will change if the following data change- direct labour is F)9;,;;; and ?tilities cost F)/,;;;. #<9 ,ight% ,uffler 6nc. operates an automobile service facilit% that speciali(es in replacing mufflers on compact cars. $he following table shows the costs incurred during a month when 2;; mufflers were replaced 8umber of ,uffler Ceplacements /;; 2;; 5;; $otal costs0i'ed costs.................................................................... Dariable costs................................................................ $otal costs............................................................... Cost per muffler replacement0i'ed cost...................................................................... Dariable cost................................................................. $otal cost per muffler replacement......................... (a) (c) (e) (g) (*) (m) F+#,;;; );,;;; F5#,;;; (h) (!) (n) (b) (d) (f) (i) (l) (o)

Ce.uired- 0ill in the missing amounts labeled (a) through (o), in the table. #<1; Determine the missing amounts in each of the following independent cases Case A Beginning inventor%, raw material.................................. 1nding inventor%, raw material........................................ "urchases of raw material................................................ Direct material used......................................................... Direct labor...................................................................... ,anufacturing overhead.................................................. $otal manufacturing costs................................................ Beginning inventor%, wor! in process............................. 1nding inventor%, wor! in process.................................. Cost of goods manufactured............................................ Beginning inventor%, finished goods............................... Cost of goods available for sale....................................... 1nding inventor%, finished goods.................................... Cost of goods sold............................................................ Gales................................................................................. 3ross margin.................................................................... Gelling and administrative e'penses................................ 6ncome before ta'es......................................................... 6ncome ta' e'pense.......................................................... 8et income....................................................................... 11 9;,;;; 1;;,;;; 5;,;;; #/;,;;; /#;,;;; )/,;;; /#/,;;; /;,;;; /+/,;;; #//,;;; 1/;,;;; +;,;;; Case B Case C F #;,;;; F 1/,;;; );,;;; 7/,;;; 9/,;;; 1;;,;;; 1#/,;;; 12;,;;; )+/,;;; )+;,;;; #;,;;; )/,;;; /,;;; )/;,;;; +;,;;; )5;,;;; #/,;;; ));,;;; +7;,;;; 15;,;;; 5/,;;; 9;,;;; +/,;;; //,;;;

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