91. For merchandising firms, inventory items are valued at acquisition cost which includes
A. invoice price less any cash discounts taken for prompt payment.
B. cost of transporting, receiving, unpacking, inspecting, and shelving.
C. costs to record the purchases in the accounts.
D. all of the above
E. none of the above
92. A department store had items in its inventory at the end of the year that had a recorded book value of $10,000 and, because of fashion changes, a market value of only $7,000. The department store failed to write down these inventory items to market value. To keep the obsolete condition of the inventory items away from its auditors, the firm shipped the goods to a remote warehouse. The effect of this error was to
A. understate the inventory turnover ratio.
B. overstate the cost of goods sold to sales percentage.
C. overstate the total assets turnover ratio.
D. understate net income.
E. none of the above
93. On January 1, 20x3, Fallon Company, a manufacturer of consumer products, had a balance in direct materials inventory of $100,000. During the year, an additional $400,000 of direct materials were purchased. Also during 20x3, direct materials worth $450,000 were transferred to work-in-process inventory. What was Fallon Company's ending direct materials inventory at December 31, 20x3?
A. $15,000
B. $25,000
C. $50,000
D. $100,000
E. $0
94. During 20x4, all sales and purchases at Virginia Corporation were on credit. At December 31, 20x4, Virginia Corporation shipped goods to the New York Corporation but failed to record the sale. As a result, before making any corrections to the accounting records
A. Accounts receivable was understated, inventory was overstated, sales were understated, and cost of goods sold was understated.
B. Accounts receivable was understated, inventory was understated, sales were understated, and cost of goods sold was understated.
C. Accounts receivable was overstated, inventory was understated, sales were overstated, and cost of goods sold was overstated.
D. Accounts receivable was overstated, inventory was overstated, sales were overstated, and cost of goods sold was overstated.
E. Accounts receivable was overstated, inventory was overstated, sales were understated, and cost of goods sold was overstated.
95. Which of the following is a product cost?
A. customer service
B. supervisory factory labor
C. depreciation on sales showroom
D. marketing vice president's salary
E. advertising costs
96. 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 ® COGS
B. DM + DL + MO ® WIP ® FG ® COGS
C. WIP ® FG ® COGS
D. DM + DL ® WIP + MO ® FG ® COGS
E. none of the above
97. At the end of a manufacturing company's accounting period, Work-in-Process is generally
A. zero because all units are in finished goods inventory.
B. the product costs incurred for units not yet transferred to finished goods inventory.
C. an amount which includes all raw materials purchased but not yet sold as finished goods.
D. all product and period costs for units not yet completed.
E. none of the above
98. Winner Company
Winner 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 Winner 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 Winner Company example. Cost of goods sold for the year ended September 30, Year 5, for Winner Company is
A. $262,000
B. $252,000
C. $260,000
D. $248,000
E. $224,000
99. Winner Company
Winner 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 Winner 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 Winner Company example. The total value of inventory to be reported on the balance sheet as of September 30, Year 5, for Winner Company is
A. $22,000
B. $35,000
C. $12,000
D. $69,000
E. $96,000
100. Which of the following is not a generally accepted basis for inventory valuation?
A. net realizable value
B. variable manufacturing cost
C. replacement cost
D. acquisition cost
E. net realizable value reduced by a normal profit margin