MIDTERM 1-COST

Question 1
1 / 1 pts
Joey Bruce is a cost accountant at ABC Industries. Joey told Tanner Scott, his financial advisor, that he
was working on a project to determine the feasibility of a merger of ABC Industries with Left Guard
Company, a major competitor. Which of the Institute of Management Accountant’s (IMA) ethical
standards may have been violated?

Integrity
Correct!
Confidentiality
Credibility
Competence

Question 2
Total manufacturing costs for the year plus beginning Work in Process Inventory cost equals

ending Work in Process Inventory

Correct Answer
total manufacturing costs to account for
cost of goods manufactured in the year.
cost of goods available for sale

Question 3
1 / 1 pts
Which of the following statements about job order cost sheets is true?

If material requisition forms are used, job order cost sheets do not need to be maintained.
Job order cost sheets show costs for direct material and direct labor, but not for manufacturing
overhead since it is an applied amount.
Correct!
Job order cost sheets can serve as subsidiary ledger information for both Work in Process
Inventory and Finished Goods Inventory.
All job order cost sheets serve as the general ledger control account for Work in Process Inventory.

Question 4
1 / 1 pts
After the completion of production, standard and actual costs are compared to determine the
______________ of the production process.

complexity
Correct!
efficiency
homogeneity
effectiveness

Question 5
0 / 1 pts
The logical explanation for an entry that includes a debit to Manufacturing Overhead control and a
credit to Prepaid Insurance is

insurance was paid on production equipment.

overhead for insurance was applied to production.
the insurance company sent the company a refund of its policy premium.
Correct Answer
insurance for production equipment expired.
Question 6
1 / 1 pts
The journal entry to apply overhead to production includes a credit to Manufacturing Overhead
control and a debit to

Cost of Goods Sold.

Correct!
Work in Process Inventory
Finished Goods Inventory.
Raw Material Inventory.

Question 7
1 / 1 pts
Which of the following is not an element of competency?

To develop appropriate knowledge about a particular subject.

Correct!
To refrain from engaging in an activity that would discredit the accounting profession.
To perform duties in accordance with relevant technical standards.
To perform duties in accordance with relevant laws.

Question 8
1 / 1 pts
The statement of cost of goods manufactured includes:

Office supplies used in accounting office.

Salary of sales manager.
Correct!
Deprecation of factory building.
Rent paid on finished goods warehouse.

Question 9
1 / 1 pts
A unit that is rejected at a quality control inspection point, but that can be reworked and sold, is

scrap unit.
abnormal unit.
Correct!
defective unit
spoiled unit

Question 10
0 / 1 pts
Listed below are steps of purchasing and receiving materials:

1. The receiving clerk prepares a receiving report.

2. Purchase requisitions are prepared to notify the purchasing agent that additional materials are
needed.
3. The purchase of merchandise is recorded by the accounting department.

4. The purchasing agent complete a purchase order.

Correct Answer
2, 4, 1, 3
4, 2, 1, 3
2, 4, 3, 1
4, 2, 3, 1
Question 11
1 / 1 pts
All of the following are true about materials control personnel, except:

Correct!
The storeroom keeper, who has charge of the materials after they have received, is also
responsible in preparing the materials requisition.
The purchasing agent completes a purchase order, and addresses it to the chosen vendor, describing
the materials wanted, stating the price and terms, and fixing the date and method of delivery.
One of the assigned functions of a production department supervisor is to prepare or approve the
requisitions designating the quantities and kinds of material needed for the work to be done in the
department.
The receiving clerk is responsible for supervising the receipt of incoming shipments.

Question 12
1 / 1 pts
If the amount of materials on hand at the end of the period is less than the control account balance,
the control account balance should be decreased by the following entry:

Debit - Materials Credit - Work in Process

Debit - Work in Process Credit - Materials
Debit - Materials Credit - Factory Overhead
Correct!
Debit - Factory Overhead Credit - Materials

Question 13
0 / 1 pts
Shrinkage of product should be treated as

Correct Answer
spoiled units.
miscellaneous expense.
a reduction of overhead.
defective units.

Question 14
1 / 1 pts
The cost sheets for incomplete jobs at the end of the period comprise the subsidiary ledger for

Finished Goods Inventory.

Correct!
Work in Process Inventory.
Raw Material Inventory.
Supplies Inventory.

Question 15
1 / 1 pts
A law firm wanting to track the costs of serving different clients may use a:

cost control system.

Correct!
job order cost system.
process cost system.
standard cost system
Question 16
1 / 1 pts
Marley Company hired a consultant to help improve its operations. The consultant’s report stated
that Marley’s inventory levels are excessive and cited several negative consequences to Marley as a
result. Which of the following consequences was not cited in the report?

Possible other uses for working capital now tied up in inventory

Higher property taxes and insurance costs
Large quantities of obsolete materials
Correct!
Production stoppages due to parts not being available

Question 17
1 / 1 pts
Which of the following is not true about backflush costing?

Different companies may choose different trigger points.

A single account is used for raw and in-process materials because materials are issued to production
when received from the supplier.
Correct!
Production costs are attached to products as they move through work in process.
Direct labor is usually insignificant in a highly automated system, so is not cost effective to account
for it separately.

Question 18
1 / 1 pts
Witt Company maintains a continuous record of purchases, materials issued into production and
balances of all goods in stock, so that inventory valuation data is available at any time. This is an
example of a(n)

inventory cost method.

Correct!
perpetual inventory system.
inventory control account.
periodic inventory system.

Question 19
0 / 1 pts
Expense A is a fixed cost; expense B is a variable cost. During the current year the activity level has
increased, but is still within the relevant range. In terms of cost per unit of activity, we would expect
that:

You Answered
Expense B has increased
expense B has decreased.
Correct Answer
expense A has decreased
expense A has remained unchanged.

Question 20
1 / 1 pts
Under a backflush accounting system, the following entry is made when products are completed:

Debit-Finished Goods Credit-Work In Process

Debit-Cost of Goods Sold Credit-Finished Goods
Debit-Cost of Goods Sold Credit-Raw and In Process Credit-Conversion Costs
Correct!
Debit-Finished Goods Credit-Raw and In Process Credit-Conversion Costs

Question 21
1 / 1 pts
In a job order costing system, the dollar amount of the entry that debits Finished Goods Inventory and
credits Work in Process Inventory is the sum of the costs charged to all jobs

completed and sold during the period.

Correct!
completed during the period.
started in process during the period.
in process during the period.

Question 22
1 / 1 pts
The inventory method which results in the most recent cost being assigned to cost of goods sold is:

Moving average.
Last-in, last-out.
Correct!
Last-in, first-out.
First-in, first-out.

Question 23
1 / 1 pts
In the financial statements, Materials should be categorized as:

Expenses
Correct!
Assets
Revenue
Liabilities

Question 24
1 / 1 pts
For a manufacturer, the total cost of manufactured goods completed but still on hand is:

Raw Materials.
Merchandise Inventory.
Work in Process.
Correct!
Finished Goods.

Question 25
1 / 1 pts
Factory overhead includes:

Correct!
All manufacturing costs, except direct materials and direct labor
All manufacturing costs, except indirect materials and indirect labor.
Indirect labor but not indirect materials.
Indirect materials but not indirect labor.

Question 26
1 / 1 pts
Factory overhead includes:
Correct!
Supervisor’s salary
Wages of office clerk.
Tax accountant’s salary.
Sales manager’s salary.

Question 27
1 / 1 pts
In a backflush accounting system, a single account is used for the following:

Finished goods inventories and cost of goods sold.

Correct!
Labor and overhead
Factory overhead and raw materials.
Work in process and finished goods inventories

Question 28
1 / 1 pts
During March, Hart Company incurred the following costs on Job 120 for the manufacture of 200
motors:

Original cost accumulation:  

   Direct materials $2,600

   Direct labor 900

   Factory overhead 1,350

  $4,850

Direct costs of reworking 10 units:

 
   Direct materials $  100
Direct labor  180
Factory overhead    270

Assume the rework costs are to be spread over all jobs that go through the production cycle. The
journal entry needed to record the rework costs includes

A credit to Work in process amounting to $550

Correct!
A debit to Factory Overhead amounting to $550
A debit to Work in process amounting to $550
A debit to Factory Overhead amounting to $1,350
Question 29
1 / 1 pts
In a period of rising prices, the use of which of the following cost flow methods would result in the
highest cost of goods sold?

Weighted average cost

Correct!
LIFO
FIFO
Moving average cost

Question 30
1 / 1 pts
Arwen Company has correctly computed its economic order quantity at 500 units; however,
management feels it would rather order in quantities of 400 units. How should Arwen's total annual
order cost and total annual carrying cost for an order quantity of 400 units compare to the respective
amounts for an order quantity of 500 units?

Lower total order cost and higher total carrying cost

Lower total order cost and lower total carrying cost
Correct!
Higher total order cost and lower total carrying cost
Higher total order cost and higher total carrying cost

Question 31
2 / 2 pts
Chacha Company uses 20,000 units of Material C in making a finished product. The cost to place one
order for material C is P8.00 and the annual cost to carry one material C is P2.00. The economic order
quantiy for material C is

100 units
565 units
282 units
Correct!
400 units

Solution:
EOQ= √ 2 X 20,000 units X 8 /2=400

Question 32
2 / 2 pts
Masipag Company produces and sells a single item of product. Inventory at the beginning of January
was 400 units valued at P1.80 per unit. Further receipts and sales during the month were as follows:

                                                            Units                   Cost per unit

                         Jan 8       Receipts          600                         P2.10
                               20      receipts           500                             ?
                               25      Sales              1,250                         4.00
The Company uses FIFO method in stock valuation.  Gross margin for
January 25 sales was  P2,500.00
         What is the cost per unit of the 500 units received on January 20?
$1.04
Correct!
$2.08
$1.94
$2.00
Solution:
Beginning 400 @ 1.80 = 720
Sept. 8 600 @ 2.10 = 1,260
Sept. 20 250 @ 2.08 = 520 (*520/250UNITS = $2.08)
Sales 1250 @ 4.00 = 2,500
* 2,500 SALES - (720 BEG + 1,260 SEPT 8 ) = *520
Question 33
Winter Company incurred direct materials costs of P500,000 during the year.
Manufacturing overhead applied was P90,000 and is applied at the rate of
60% of direct labor costs. Winter Company’s total manufacturing costs for
the year were?

You Answered
P644,000
Correct Answer
P740,000
P890,000
P734,000
SOLUTION
direct materials costs of P500,000
Manufacturing overhead applied was P90,000
Applied manufacturing overhead ( 90,000/ 60%) P 150,000
TOTAL MANUFACTURING OVERHEAD P740,000
Question 34
2 / 2 pts
The following data are from Burton Corporation, a manufacturer, for the month
of September:

Direct materials used $145,000

Supervisors’ salaries 6,000

Machine operators’ wages 200,000

Sales office rent and utilities 22,000

Factory Machine depreciation 35,000

Secretary to the Chief Executive

3,000
Officer salary

Factory insurance 15,000

Total conversion costs are:

Correct!
$256,000
$354,000
$145,000
$345,000
SOLUTION:
Supervisors’ salaries 6,000

Machine operators’ wages 200,000

Factory Machine depreciation 35,000

Factory insurance 15,000

$256,000
TOTAL
Question 35
2 / 2 pts
Umberg Merchandise Company’s cost of goods sold last month was $1,450,000. Merchandise
Inventory at the beginning of the month was $325,000 and $250,000 at the end of the month.
Umberg’s merchandise purchases were:

$1,775,000
$1,525,000
$1,450,000
Correct!
$1,375,000

SOLUTION:
COGS $1,450,000.

PLUS ENDING INVENTORY $250,000

1,700,000
LESS BEGINNING INVENTORY 325,000
MERCH PURCHASES $1,375,000

Question 36
2 / 2 pts
The balance in Electric Industries’ Finished Goods account at December 31 was $325,000. Its
December cost of goods manufactured was $1,500,000, its total manufacturing costs were $1,350,000
and its cost of goods sold in December was $1,455,000. What was the balance in Electric’s Finished
Goods at December 1?

$220,000
$430,000
$370,000
Correct!
$280,000

COGS $1,455,000.

PLUS ENDING INVENTORY $325,000

1,780,000
LESS CGM 1,500,000
Finished Goods at December 1 $280,000

Question 37
2 / 2 pts
Kansas Plating Company reported a cost of goods manufactured of $260,000, with the firm's year-end
balance sheet revealing work in process and finished goods of $35,000 and $67,000, respectively. If
supplemental information disclosed raw materials used in production of $40,000, direct labor of
$70,000, and manufacturing overhead of $120,000, the company's beginning work in process must
have been:

$37,000
$5,000
Correct!
$65,000
$97,000
SOLUTION:
cost of goods manufactured $260,000
PLUS ENDING WIP $35,000
295,000
LESS MANUFACTURING COSTS:
raw materials used in
production of $40,000
direct labor of $70,000
manufacturing overhead of 230,000
$120,000
Finished Goods at December 1 $65,000

Question 38
2 / 2 pts
Jarratt Inc., a manufacturing company, has provided the following data for the month of September.
The balance in the Work in Process inventory account was $21,000 at the beginning of the month and
$24,000 at the end of the month. During the month, the company incurred direct materials cost of
$69,000 and direct labor cost of $31,000. The manufacturing overhead cost applied to Work in
Process was $58,000. The cost of goods manufactured for September was:

$158,000
$151,000
$154,000
Correct!
$155,000

SOLUTION:
MANUFACTURING COST:
direct materials cost $69,000
direct labor cost $31,000
manufacturing overhead cost $58,000 158,000
ADD WIP BEG. $21,000
179,000
LESS END WIP $24,000
cost of goods manufactured $155,000

Question 39
2 / 2 pts
Mcmackin Corporation had $35,000 of raw materials on hand on August 1. During the month, the
company purchased an additional $66,000 of raw materials. During August, $81,000 of raw materials
were requisitioned from the storeroom for use in production. These raw materials included both
direct and indirect materials. The indirect materials totaled $7,000. The debits to the Work in Process
account as a consequence of the raw materials transactions in August total:

Correct!
$74,000
$81,000
$66,000
$0
SOLUTION:
WIP $74,000
FOH 7,000
MATERIALS 81,000

Question 40
2 / 2 pts
The variable costs per unit are $4 when a company produces 10,000 units of product. What are the
variable costs per unit when 8,000 units are produced?

$5.50
$4.50
Correct!
$4
$5

Question 41
2 / 2 pts
The accounting records of Diego Company revealed the following costs, among others:
Factory insurance $  32,000
Raw materials used 256,000
Customer entertainment 15,000
Indirect labor 45,000
Depreciation on salesperson's cars 22,000
Production equipment rental costs 72,000
Costs that would be considered in the calculation of manufacturing overhead total:

$186,000
Correct!
$149,000
$171,000
$442,000

Solution:
Factory insurance $  32,000
Indirect labor 45,000
Production equipment rental costs 72,000

manufacturing overhead total $149,000

Question 42
2 / 2 pts
Selected data concerning the past fiscal year's operations (000's omitted) of the Stanley
Manufacturing Company are presented below:

INVENTORIES

  Beginning Ending

Materials $ 90  $ 85 

Work in process  50  65

Finished goods 100  90

Other data:    
   Direct materials used   $365

   Total manufacturing costs

charged to production during
the year (includes direct  
materials, direct labor, and  680
factory    overhead)

   Cost of goods available for

   765
sale

   Selling and general

   250
expenses

Assuming Stanley does not use indirect materials, the cost of materials purchased during the year
amounted to:

$365
$455
Correct!
$360
$450
Solution:
end materials $ 85
Materials used $365
450
Less beg materials $ 90
materials purchased $360

Question 43
2 / 2 pts
Arnold Furniture Company produced 4,000 chairs in July. The manufacturing costs were:

Direct materials $20,000

Direct labor 11,000

Factory overhead 5,000

Selling expense 5,000

Administrative expense 6,000

The cost per tent is:

$12.00
Correct!
$9.00
$6.25
$14.75
Solution

Direct materials $20,000

Direct labor 11,000

Factory overhead 5,000

36,000 /
4,000 units =
$9.00
Total

Question 44
2 / 2 pts
Watson Manufacturing Company employs a job order cost accounting system and keeps perpetual
inventory records. The following transactions occurred in the first month of operations:

1. Direct materials requisitioned during the month:

Job 101                   P22,000

Job 102                   16,000

Job 103                   24,000

                                 P62,000

2. Direct labor incurred and charged to jobs during the month was:

Job 101                   P30,000

Job 102                   26,000

Job 103                   20,000

                              P76,000

3. Manufacturing overhead was applied to jobs worked on using a

predetermined overhead rate based on 75% of direct labor costs.
4. Job 101 consisting of 1,000 units and Job 103 consisting of 200 units
were completed during the month.

What is the balance in Work in Process Inventory at the end of the month?

P59,000
P74,500
P57,000
Correct!
P61,500

Solution:
Jobs Direct Direct labor FOH-75% Total
materials
Job 101 P22,000 22,500 74,500 FGI
P30,000

Job 102 26,000 19,500 61,500 Wip

26,000

Job 103 24,000 15,000 59,000 FGI

20,000

Total P62,000 P76,000 57,000 195,000

Question 45
2 / 2 pts
The following data are from Burton Corporation, a manufacturer, for the month of September:

Total prime costs are:

Direct materials used $145,000

$256,000
Supervisors’ salaries 60,000
Correct!
$354,000
$345,000 Machine operators’ wages 209,000
$145,000
Sales office rent and utilities 22,000
SOLUTION

Direct materials used $145,000 Machine depreciation 35,000

Secretary to the Chief Executive Officer

Machine operators’ 3,000
209,000 salary
wages

Factory insurance 15,000

TOTAL 354,000

Question 46
2 / 2 pts
Selected data concerning the past fiscal year's operations (000's omitted) of Kraig Fabricators are
presented below:

INVENTORIES

  Beginning Ending

Materials $180  $  170

Work in process 130    100

Finished goods 200    180

Other data:    

   Direct materials used   $  730

   Total manufacturing costs charged to
production during
   the year (includes direct materials, direct  
labor, and factory 1,360
   overhead)

   Cost of goods available for sale   1,530

   Selling and general expenses      500

The cost of goods manufactured during the year was:

$1,410
1,470
$1,330
Correct!
$1,390
Total 1,360
manufacturing
costs charged to
production
ADD WIP BEG 130

1,490

LESS WIP END    100

CGM 1,390

Question 47
2 / 2 pts
The balance in Electric Industries’ Finished Goods account at December 31 was $325,000. Its
December cost of goods manufactured was $1,350,000, its total manufacturing costs were $1,500,000
and its cost of goods sold in December was $1,455,000. What was the balance in Electric’s Finished
Goods at December 1?

$370,000
$220,000
$280,000
Correct!
$430,000
SOLUTION

COGS $1,455,000.

PLUS ENDING INVENTORY $325,000

1,780,000
LESS CGM 1,350,000
Finished Goods at December 1 $430,000
Question 48
2 / 2 pts
The Shiplett Company’s payroll summary showed the following in November:
What will be included in direct labor for November?
Supervisors’ salaries $50,000
$200,000
$250,000
Correct! Legal department salaries 10,000

$120,000
$80,000 Maintenance workers’ wages 30,000
Solution:
Machine operators’ wages 70,000
Machine operators’ wages 70,000

Assembly workers’ wages 50,000

Assembly workers’ wages 50,000

Sales department salaries 20,000

$120,000
Total

Question 49
2 / 2 pts
Umberg Merchandise Company’s cost of goods sold last month was $1,525,000. Merchandise
Inventory at the beginning of the month was $250,000 and $325,000 at the end of the month.
Umberg’s merchandise purchases were:

$1,375,000
$1,450,000
$1,525,000
Correct!
$1,600,000

Solution
COGS $1,525,000.

PLUS ENDING INVENTORY $325,000

1,850,000
LESS BEGINNING INVENTORY 250,000
MERCH PURCHASES $1,600,000

Question 50
2 / 2 pts
Dale Company, which applies overhead at the rate of 190% of direct labor cost, began work on job no.
101 during June. The job was completed in July and sold during August, having accumulated direct
material and labor charges of $27,000 and $15,000, respectively. On the basis of this information, the
total overhead applied to job no. 101 amounted to:
$70,500
Correct!
$28,500
$79,800
$51,300

Solution
overhead at the rate of 190% of direct labor cost x 15,000= $28,500

Question 51
2 / 2 pts
The following data were taken from Mansfield Merchandisers on January 31:

Merchandise inventory, January 1 $ 100,000

Sales salaries    35,000

Merchandise inventory, January 31    65,000

Purchases   530,000

What was the merchandise available for sale in January?

$595,000
Correct!
$630,000
$565,000
$660,000
Solution:

Merchandise inventory, January

$ 100,000
1

Purchases   530,000

merchandise available for sale $630,000

Question 52
2 / 2 pts
Selected data concerning the past fiscal year's operations (000's omitted) of Hercules Mills are
presented below:

INVENTORIES

  Beginning Ending

Materials $ 18 $ 17

Work in process  10  13

Finished goods 20  18

Other data:    

   Direct materials used   $ 73

   Total manufacturing costs charged to  

production during
   the year (includes direct materials, direct
labor, and factory 136
   overhead)

   Cost of goods available for sale   153

   Selling and general expenses   50

The cost of goods sold during the year was:

$155
Correct!
$135
$153
$146

Question 53
2 / 2 pts
Silay company manufactures engine components. During the previous month, the Company
manufactured 12,000 units of Component XRB for Job 3524 and incurred the following unit costs:

Direct materials $32.00

Direct labor 9.00

Factory overhead 6.00

When the units were tested after production, 300 units did not meet
specifications and needed further polishing work.  The unit cost of correcting
the defects was:

Direct labor 3.00

Factory overhead 2.00

If the defects resulted from the exacting specifications of Job 3524, how
much will be the cost per unit?
$47.00
$52.00
$48.205
Correct!
$47.125
SOLUTION
Number of units produced 12,000
Original cost per unit ($32.00 + 9.00 + 6.00) X $ 47.00
Total original cost $564,000
Plus cost of correcting defective work(300X 5) 1,500
Total cost of Job 3524 $565,500
Cost per unit of Job 3524 ($565,500 / 12,000) $ 47.125
Question 54
2 / 2 pts
The Reddog Company predicts that 3,200 units of material will be used during
the year. The expected daily usage is 15 units, there is an expected lead time
of 10 days, and there is a safety stock of 200 units. The material is expected
to cost $4 per unit. It is estimated that it will cost $25 to place each order.
The annual carrying cost is $1 per unit.

Compute the total cost of ordering and carrying at the EOQ point.

$500
Correct!
$600
$200
$400

EOQ =√ 2 X 3,2 00 units X 25/1=400

ORDER COST= 3,200/400= 8 X 25= 200
CARRYING COST= [400/2] X 1 +200= 400
Total order and carrying cost= 200+400 = $600

Question 55
2 / 2 pts
Moreland Corporation manufactures bells and whistles. In June, 6,000 bells
were completed on Job Order No. BX46. On final inspection, 400 bells were
rejected and transferred to the spoiled goods inventory to be sold at $.50
each.

Costs recorded on Job Order No. BX46 follow:

Direct materials $2,400

Direct labor 2,100

Factory overhead 1,200

If the loss on spoilage is charged to all jobs worked on during the period,
how much should be charged to Finished Goods?

$5,700
$5,500
$5,488
Correct!
$5,320
Solution: Finished Goods ((6,000 - 400) × *$.95) 5,320
Work in Process 5,320
* Cost per unit $5,700 / 6,000 = $.95

Question 56
2 / 2 pts
The materials account of Hetzer Industries reflected the following changes
during May :

Balance, May 1 180 units @ $30

Received, May 2 60 units @ $32

Issued, May 4 80 units

Received, May 27 100 units @ $34

Issued, May 31 150 units

Assuming that Hetzer maintains perpetual inventory records, calculate the

cost of the ending inventory at May 31 and the cost of the units issued in May
using the LIFO method.

$3,740
$3,400
Correct!
$3,300
$3,720

Question 57
2 / 2 pts
The materials account of the Flynn Company reflected the following changes
during May:

Balance, May 1 500 units @ $10

Received, May 5 300 units @ $12

Issued, May 10 400 units

Received, May 15 200 units @ $15

Issued, May 25 300 units

Assuming that Flynn Company maintains perpetual inventory records,

calculate the cost of the units issued in May using the moving average
method:

Correct!
$7,950
$8,000
$7,400
$8,600

Question 58
2 / 2 pts
Wiggins, Inc. uses sulfuric acid in a manufacturing process. Information as to
balances on hand, purchases, and requisitions of acid is given in the following
table.

        Transaction Number of Price per Balance of

Date
Gallons Gallon Gallons

Jan. 1 Beginning balance 10,000 $.60 10,000

Feb. 24 Purchased  30,000 $.65 40,000

Mar. 8 Issued 8,000 32,000

Apr. 16 Issued 14,000 18,000

May.
Purchased 15,000 $.72 33,000
11

Jul. 18 Issued 13,000   20,000

Oct. 6 Issued 11,000   9,000

Nov. 15 Purchased 15,000 $.78 24,000

Nov. 29 Issued 14,000   10,000

If a perpetual inventory record of Raw Material A is maintained on a LIFO

basis, the 20,000 units in inventory at July 18 will consist of:

10,000 units @ $.50, 6,000 units @ $.65 and 4,000 units @ $.7
5,000 units @ $.72 and 15,000 units @ $.65
10,000 units @ $.60 and 10,000 units @ $.65
Correct!
2,000 units @ $.72, 8,000 units @ $.65 and 10,000 units @ $.60

Question 59
2 / 2 pts
Murphy Company uses 2,000 yards of material each day to make hats. It
usually takes five days from the time Murphy orders the material to when it is
received. If Murphy’s desired safety stock is 5,000 yards, what is Murphy’s
order point?

21,000 yards
12,000 yards
6,000 yards
Correct!
15,000 yards

Question 60
2 / 2 pts
Machete Industries produces 5,000 units each day, and the average number
of units in work in process is 25,000.

Assuming the same daily output can be achieved while reducing the work in
process by 50%, with an average annual carry cost of 15%, and an average
work in process inventory of $500,000, how much will be the projected new
annual carrying cost?

50,000
$150,000
Correct!
$37,500
$75,000

Question 61
2 / 2 pts
The Egbert Company uses an industrial chemical, XRG, in a manufacturing
process. Information as to balances on hand, purchases, and requisitions of
XRG is given in the following table.
Number Price
        Transactio Balance
Dat of per
n of
e Kilogram Kilogra
Kilograms
s m

Jan. Beginning
1,000 $2.10 1,000
1 balance

Jan.
Purchased  2,500 $2.25 3,500
24

Feb.
Issued 700 2,800
8

Mar.
Issued 1,200 1,600
16

Jun.
Purchased 1,500 $2.75 3,100
11

Aug.
Issued 800   2,300
18

Sep.
Issued 1,600   700
6

Oct.
Purchased 2,000 $2.80 2,700
15

Dec.
Issued 600   2,100
29

If a perpetual inventory record of XRG is maintained on a FIFO basis, the

March 16 issue will consist of:

Correct!
300 kilograms @ $2.10 and 900 kilograms @ $2.25
700 kilograms @ $2.10 and 500 kilograms @ $2.25
1,200 kilograms @ $2.25
1,000 kilograms @ $2.10 and 200 kilograms @ $2.25

Question 62
2 / 2 pts
Filmac, Inc. uses speakers when assembling computers. Information as to
balances on hand, purchases, and requisitions of speakers is given in the
following table.

          
Dat Number Unit Balance
Transaction
e of Units Price of Units

Jan. $15.0
Beginning balance 200 200
1 0

Jan. $16.0
Purchased  100 300
15 0

Feb.
Issued 50 250
24

Mar.
Issued 70 180
8

Jun. $17.0
Purchased 100 280
23 0

Aug.
Issued 80   200
8

Sep.
Issued 30   170
29

Oct. $19.0
Purchased 100 270
7 0

Dec.
Issued 50   220
16

If a perpetual inventory record of speakers is maintained on a LIFO basis, the

March 8 issue will consist of:

70 units @ $15.00
20 units @ $15.00 and 50 units @ $16.00
Correct!
50 units @ $16.00 and 20 units @ $15.00
70 units @ $16.00

Question 63
2 / 2 pts
Skeeter Company produces 100,000 insect repellent devices each day, and
the average number of units in work in process is 150,000, with an average
value of $300,000. The average annual carrying cost percentage is 30%.

If the same daily output can be achieved while reducing the work in process
by 40%, determine the new throughput time.

.6 days
1.5 days
1 day
Correct!
.9 days

Question 64
2 / 2 pts
Expected annual usage of a particular raw material is 180,000 units, and
standard order size is 15,000 units. The invoice cost of each unit is $300, and
the cost to place one purchase order is $80. Assuming the company does not
maintain safety stock, the average inventory is:

10,000 units
6,000 units
Correct!
7,500 units
15,000 units

Question 65
2 / 2 pts
Expected annual usage of a particular raw material is 1,200,000 units, and
standard order size is 10,000 units. The invoice cost of each unit is $105, and
the cost to place one purchase order is $145. The estimated annual order
cost is:

$800,000
$12,000
Correct!
$17,400
$12,600