Question : 81. Which of the following a product cost? A. customer serviceB. supervisory factory laborC. depreciation : 1230645

 

 

81. Which of the following is a product cost? A. customer serviceB. supervisory factory laborC. depreciation on sales showroomD. marketing vice president’s salaryE. advertising costs

 

82. Using these abbreviations–DL = Direct Labor, MO = Manufacturing Overhead, DM = Direct Materials, WIP = Work-in-Process, FG = Finished Goods, COGS = Cost of Goods Sold–how would you represent the flow of manufacturing costs through the accounts? (Use + to mean “add to” and ® to mean “is transferred to.”) A. DL + MO ® WIP ® DM ® COGSB. DM + DL + MO ® WIP ® FG ® COGS  C. WIP ® FG ® COGSD. DM + DL ® WIP + MO ® FG ® COGSE. none of the above

 

83. At the end of a manufacturing company’s accounting period, Work-in-Process is generally A. zero because all units are in finished goods inventoryB. the product costs incurred for units not yet transferred to finished goods inventoryC. an amount which includes all raw materials purchased but not yet sold as finished goodsD. all product and period costs for units not yet completedE. none of the above

 

84. Value CompanyValue Company’s beginning and ending inventories for the fiscal year ended September 30, Year 5, are 

 

October 1, Year 4

September 30, Year 5

Raw materials

$15,000

$22,000

Work-in-process

40,000

35,000

Finished goods

8,000

12,000

 

 

 

Production data for the fiscal year ended September 30, Year 5, are 

Raw materials purchased

 

$  80,000

Purchase discounts

 

1,000

Direct labor

 

100,000

Manufacturing overhead

 

75,000

 

 

 

Assume Value Company treats all raw materials as direct materials once they enter the production process. Thus, no raw materials are treated as manufacturing overhead. (CMA adapted, Dec 95 #28) Refer to the Value Company example. Cost of goods sold for the year ended September 30, Year 5, for Value Company is A. $262,000B. $252,000C. $260,000D. $248,000E. $224,000

 

85. Value CompanyValue Company’s beginning and ending inventories for the fiscal year ended September 30, Year 5, are 

 

October 1, Year 4

September 30, Year 5

Raw materials

$15,000

$22,000

Work-in-process

40,000

35,000

Finished goods

8,000

12,000

 

 

 

Production data for the fiscal year ended September 30, Year 5, are 

Raw materials purchased

 

$  80,000

Purchase discounts

 

1,000

Direct labor

 

100,000

Manufacturing overhead

 

75,000

 

 

 

Assume Value Company treats all raw materials as direct materials once they enter the production process. Thus, no raw materials are treated as manufacturing overhead. (CMA adapted, Dec 95 #29) Refer to the Value Company example. The total value of inventory to be reported on the balance sheet as of September 30, Year 5, for Value Company is A. $22,000B. $35,000C. $12,000D. $69,000E. $96,000

 

86. Which of the following is not a generally accepted basis for inventory valuation? A. net realizable valueB. variable manufacturing costC. replacement costD. acquisition costE. net realizable value reduced by a normal profit margin

 

87. Which of the following is/are correct regarding the valuation of inventory A. GAAP require firms to record inventories at acquisition costB. GAAP does not permit firms to revalue inventories above acquisition costC. GAAP require firms to write down inventories when their replacement cost, or market value, declines below acquisition costD. all of the aboveE. none of the above

 

88. The lower-of-cost-or-market basis for inventory valuation is a conservative accounting policy because A. it recognizes losses from decreases in market value before the firm sells goodsB. it does not record gains from increases in market value before a sale takes placeC. it reports inventories on the balance sheet at amounts that are never greater, but may be less than acquisition costD. all of the aboveE. none of the above

 

89. The lower-of-cost-or-market basis results in reporting A. unrealized holding losses on inventory items currently through lower net income amountsB. delays reporting unrealized holding gains until the firm sells the goodsC. unrealized holding gains on inventory items currently through higher net income amountsD. a and bE. none of the above

 

90. (CMA adapted, Jun 96 #3) An item of inventory purchased in Year 5 for $25.00 has been incorrectly written down to a current replacement cost of $17.50. The item is currently selling in Year 6 for $50.00, its normal selling price. Which one of the following statements is correct? A. The income for Year 5 is overstated.B. The cost of sales for Year 6 will be overstated.C. The income for Year 6 will be overstated.D. The closing inventory of Year 5 is overstated.E. none of the above