Question : 111. Ethical issues may arise when management dips into LIFO layers A. when : 1230648

Accounting

111. Ethical issues may arise when management dips into LIFO layers A. when some LIFO liquidations are unavoidable due to shortages of raw materialsB. due to improved inventory control systems that reduce the amount of inventory neededC. in order to manage earnings in a particular year rather than replenish inventoriesD. all of the aboveE. none of the above

112. Thomas Engine CompanyThomas Engine Company is a wholesaler of marine engine parts. The activity of carburetor 2642J during the month of March is presented below.

Balance or

Unit

Date

Transaction

Units

Unit Cost

Sales Price

March 1

Inventory

3,200

$64.30

$86.50

Purchase

3,400

64.75

87.00

Sales

3,600

87.25

Purchase

3,500

66.00

87.25

Sales

3,450

88.00

(CMA adapted, Jun 96 #13) Refer to the Thomas Engine Company example. If Thomas uses a last-in, first-out periodic inventory system, the total cost of the inventory for carburetor 2642J at March 31 is A. $196,115B. $197,488C. $201,300D. $263,825E. $296,115

113. (CMA adapted, Jun 96 #15) Refer to the Thomas Engine Company example. If Thomas uses a weighted average periodic inventory system, the total cost of the inventory for carburetor 2642J at March 31 is A. $188,374B. $194,200C. $198,301D. $198,374E. $199,233

114. Unrealized holding gain denotes the difference between the A. current replacement cost of the inventory and its acquisition cost B. selling price of the inventory and its original acquisition costC. acquisition cost of the inventory and its net realizable valueD. selling price of the inventory and its net realizable valueE. none of the above

115. Managements face the decision as to when to replenish inventories at year-end. Assuming inflation, a company using LIFO would experience which of the following? A. Buy in December and these higher acquisition costs go into cost of goods sold. Wait until January of next year to purchase and the current year’s cost of goods sold contains costs older, usually lower, than December’s. B. Buy in December and these lower acquisition costs go into cost of goods sold. Wait until January of next year to purchase and the current year’s cost of goods sold contains costs older, usually higher, than December’s.C. Buy in December and these higher acquisition costs go into cost of goods sold. Wait until January of next year to purchase and the current year’s cost of goods sold contains costs older, usually higher, than December’s.D. Buy in December and these lower acquisition costs go into cost of goods sold. Wait until January of next year to purchase and the current year’s cost of goods sold contains costs older, usually lower, than December’s.E. none of the above

116. Peters Peepers Inc. manufactures high quality sunglasses that carry the endorsements of several sports personalities. In an effort to achieve sales targets for the fourth quarter of the year, Peters Peepers Inc. pressured its independent distributors to make unusually large orders of the sunglasses. Low-priced imitations of these sunglasses hit the market soon thereafter, causing the distributors to accumulate large inventories. The distributors shipped these sunglasses back to Peters Peepers Inc. Peters Peepers Inc.stored the returned sunglasses in a remote warehouse out of the view of its auditors and did not record them as returned goods. The actions A. are in accordance with U.S. GAAPB. are in accordance with IFRSC. violate ethical principlesD. are in accordance with U.S. GAAP, but not IFRSE. are in accordance with IFRS, but not U.S. GAAP

117. Kant Kount Inc. uses large warehouses to store its finished goods ready for sale. After its personnel and auditors conducted a physical inventory of goods on one side of its warehouses, Kant Kount Inc. transported a portion of the inventory to another part of the warehouse, removing the inventory tags that indicated that the items had already been counted in inventory, and thereby included the items a second time in inventory. In this way, the firm overstated its ending inventory for the current year, understated its cost of goods sold, and overstated its earnings. This action resulted in an overstatement of the beginning inventory for the next year. Assuming a correct count of the ending inventory for the second year, the action has the result of overstating cost of goods sold for the second year and understating earnings. Net income for the two years combined, however, is correctly stated, the net result of an overstatement in the first year offset by an equal understatement in the second year. The actions A. are in accordance with U.S. GAAPB. are in accordance with IFRSC. violate ethical principlesD. are in accordance with U.S. GAAP, but not IFRSE. are in accordance with IFRS, but not U.S. GAAP

118. On December 10 of the current year, All Star Sports Inc. receives an advance of $50,000 from a hockey team for 20,000 custom-made shirts with the team’s logo, which the team intends to distribute to fans entering a hockey game during the first week in January. All Star Sports Inc. completes the manufacturing of the shirts on December 30, intending to ship them on December 31 before its accounting period ends. Unfortunately, a snowstorm on December 31 prevented their shipment. All Star Sports Inc. recorded this transaction as a sale for December, and reduced its inventory accordingly. It set the items aside in its shipping room on December 31 with a clear sign to its own personnel conducting a physical inventory on that date and to its auditors who were observing the count that the items were not to be counted as inventory. These actions A. are in accordance with U.S. GAAPB. are in accordance with IFRSC. violate ethical principlesD. are in accordance with U.S. GAAP, but not IFRSE. are in accordance with IFRS, but not U.S. GAAP

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July 1, 2023

36.Labor and overhead are often grouped together and referred to as

A.prime costs.

B.conversion costs.

C.total manufacturing costs.

D.equivalent unit costs.

37.Which of the following statements about process costing is true?

A.Total transferred-in cost is equal to the total transferred-out cost during a period.

B.The costs of inventory completed in its final department in the manufacturing process will be transferred to Finished Goods inventory.

C.If a department has transferred-in costs, it means that the inventory accounts were not closed correctly at the end of the last period.

D.None of the answer choices are correct.

38.A cost incurred by the Baking Department that is transferred to the Packaging Department is called a

A.conversion cost by the Baking Department.

B.transferred-out cost by the Packaging Department.

C.equivalent unit cost by the Baking Department.

D.transferred-in cost by the Packaging Department.

39.When direct labor costs are incurred in the Mixing Department, the journal entry to record the transaction includes a

A.debit to Wages Payable.

B.credit to Manufacturing Overhead.

C.credit to Work in Process, Mixing Department.

D.debit to Work in Process, Mixing Department.

40.In a process costing system, manufacturing overhead is added to Work in Process

A.using a predetermined overhead rate or based on actual overhead.

B.only in the final production department.

C.at the same rate as the direct materials are added.

D.only when Work in Process is transferred to Finished Goods.

41.Transferred-in costs are recorded with a journal entry that includes a credit to

A.Raw Materials.

B.Manufacturing Overhead.

C.Work in Process.

D.Finished Goods.

42.Which of the following will never be a component of the cost of Work in Process in a company’s initial production department?

A.Direct material

B.Direct labor

C.Transferred-in costs

D.Manufacturing overhead

43.How are equivalent units calculated in a process costing system?

A.By adding the units started to the equivalent units in beginning and ending inventory

B.By adding the units completed to the equivalent units in ending Work in Process

C.By subtracting the equivalent units in beginning inventory from the total units to account for

D.By adding the units started to the equivalent units in ending inventory

44.In the calculation of the cost per equivalent unit, the denominator

A.is the total work done during the period plus the equivalent units in ending inventory.

B.includes both the number of units completed and the number of equivalent units in ending Work in Process.

C.equals the work done during the period less the work remaining to finish ending inventory.

D.is the work done for the current and preceding departments.

45.The Baking Department began the period with 16,000 units which were 45% complete. During the period, the department received another 78,000 units from the previous department, and at the end of the period, 9,000 units remained which were 40% complete. Conversion costs are added evenly throughout the process and materials are added at the beginning of the process. How much are equivalent units for conversion costs in the Baking Department’s Work in Process inventory at the end of the period?

A.5,400 units

B.3,600 units

C.3,000 units

D.9,000 units