Accounting- Chapter 15 Financial and Managerial Accounting Exam verified solutions and

Accounting- Chapter 15: Financial and Managerial Accounting Exam verified solutions and explanations Period Costs - Correct Answers: nonproduction costs (selling and administrative) and are expensed when incurred prime/product costs - Correct Answers: direct materials costs, direct labor costs, and factory overhead selling costs - Correct Answers: costs to market, distribute, and service a product or service administrative costs - Correct Answers: costs associated with research, development, and general administration of the organization that cannot be assigned to either selling or production two major functional categories of expenses are - Correct Answers: costs of goods sold (production costs) and operating expenses (nonproduction costs) managerial accounting reports must be prepared according to generally accepted accounting principles (GAAP) - Correct Answers: false; financial accounting does not have to follow the same rules as managerial accounting identify the following costs as (a) direct materials, (b) direct labor, or (c) factory overhead for a lawn mower manufacturer. 1. Wheels 2. Depreciation on worker's tools 3. Wages of assemblers 4. Grease for wheel axles - Correct Answers: Wheels- a Depreciation on worker's tools- c Wages of assemblers- b Grease for wheel axles- c identify the following costs as (a) prime cost, (b) conversion cost, or (c) both for a cake factory. 1. Frosting 2. Wages of the baker 3. Sprinkles for the topping (considered an indirect material) 4. Depreciation on oven - Correct Answers: Frosting- a Wages of the baker- c Sprinkles for the topping (considered an indirect material) - b Depreciation on oven- b Identify the following costs as a (a) product cost or (b) period cost for a cake factory. 1. Frosting 2. Baker's wages 3. Advertising fees 4. Transportation out - Correct Answers: 1. Frosting - a 2. Baker's wages - a 3. Advertising fees - b 4. Transportation out - b product cost - Correct Answers: factory period cost - Correct Answers: selling Materials inventory - Correct Answers: + beginning inventory + purchases - ending inventory = direct materials used Work-in-Process Inventory (WIP) - Correct Answers: + beginning inventory + Direct materials used (found) + direct labor + factory overhead - ending inventory = cost of goods manufactured Finished goods inventory - Correct Answers: + beginning inventory + Cost of goods manufactured (found) - ending inventory = cost of goods sold predetermined factory overhead rate - Correct Answers: estimated total factory overhead costs / estimated activity base