601 1,2,7 solutions

601 1,2,7 solutions - EXERCISE 1-25 (25 MINUTES) 1....

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EXERCISE 1-25 (25 MINUTES) 1. Measuring inventory costs is most closely associated with the first two objectives of managerial accounting activity: (1) providing information for decision making and planning, and (2) assisting managers in directing and controlling operational activities. Since inventory costs are used in external financial reports, they are also relevant to measuring the performance of managers and subunits within the organization. 2. Estimating costs is particularly relevant to the objective of providing information for decision making and planning. 3. Measuring operating costs is relevant to all of the objectives of managerial accounting activity. 4. Comparing operating statistics such as those mentioned for a hotel is particularly relevant to the following objective of managerial accounting: Assessing the organization's competitive position and working with other managers to ensure the organization's long-run competitiveness in its industry. 5. Developing a bonus reward system for managerial personnel is an example of motivating managers and other employees toward the organization's goals. To be effective, the bonus system must provide incentives for managers to work toward achieving those goals. 6. Comparing actual and planned costs is consistent with two objectives of managerial accounting activity: (1) assisting managers in controlling operations, and (2) measuring the performance of activities, subunits, managers, and other employees within the organization. 7. Determining manufacturing costs is related to all of the objectives of managerial accounting. It is especially closely related to the objective of providing information for decision making and planning.
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EXERCISE 2-24 (20 MINUTES) 1. Advertising costs: Period cost, fixed 2. Straight-line depreciation: Product cost, fixed, manufacturing overhead 3. Wages of assembly-line personnel: Product cost, variable, direct labor 4. Delivery costs on customer shipments: Period cost, variable 5. Newsprint consumed: Product cost, variable, direct material 6. Plant insurance: Product cost, fixed, manufacturing overhead 7. Glass costs: Product cost, variable, direct material 8. Tire costs: Product cost, variable, direct material 9. Sales commissions: Period cost, variable 10. Wood glue: Product cost, variable, either direct material or manufacturing overhead (i.e., indirect material) depending on how significant the cost is 11. Wages of security guards: Product cost, variable, manufacturing overhead 12. Salary of financial vice-president: Period cost, fixed EXERCISE 2-28 (25 MINUTES) 1. A LHAMBRA A LUMINUM C OMPANY S CHEDULE OF C OST OF G OODS M ANUFACTURED F OR THE Y EAR E NDED D ECEMBER 31, 20 X 1 Direct material: Raw-material inventory, January 1. ............... $ 55,000 Add: Purchases of raw material. ................... 240,0 00 Raw material available for use. .................... $295,0 00 Deduct: Raw-material inventory, December 31 75,000 Raw material used. ...................................... $220,0
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601 1,2,7 solutions - EXERCISE 1-25 (25 MINUTES) 1....

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