Under the FIFO method, the equivalent units of production relate only to work done
during the current period.
Answer:
Advertising costs are considered product costs for external financial reports because
they are incurred in order to promote specific products.
Answer:
Dividing the market price of a share of stock by the dividends per share gives the
price-earnings ratio.
Answer:
When production is less than sales for the period, absorption costing net operating
income will generally be less than variable costing net operating income.
Answer:
A mixed cost is partially variable and partially fixed.
Answer:
A company has a standard cost system in which fixed and variable manufacturing
overhead costs are applied to products on the basis of direct labor-hours. A fixed
manufacturing overhead volume variance will necessarily occur in a month in which
there is a fixed manufacturing overhead budget variance.
Answer:
A gain on the sale of equipment would be included as part of a company’s financing
activities on the statement of cash flows.
Answer:
Paying taxes to governmental bodies is considered an operating activity on the
statement of cash flows.
Answer:
The fixed manufacturing overhead volume variance will be unfavorable if production
volume is less than sales volume.
Answer:
Mark Company currently sells a video recorder with a selling price of $300 per unit.
The variable expense per unit is $175 and fixed expenses are $100,000. If the company
reduces variable expenses by $20 per unit and increases the fixed expenses by $10,000,
the break-even point will increase.
Answer:
A debit balance in the Manufacturing Overhead account at the end of the year means
that manufacturing overhead is overapplied.
Answer:
In activity-based costing, unit product costs computed for external financial reports
include manufacturing overhead costs that are computed by multiplying activity rates
by the direct labor-hours required to produce a product.
Answer:
In a contribution format income statement for a merchandising company, cost of goods
sold is a variable cost that gets included in the “Variable expenses” portion of the
income statement.
Answer:
Automation results in a shift away from variable costs toward more fixed costs.
Answer:
Under the FIFO method, the percentage of completion of the ending inventory must be
greater than the percentage of completion of the beginning inventory.
Answer:
Canler Inc. uses the weighted-average method in its process costing system. The
following data concern the operations of the company’s first processing department for
a recent month.
Using the weighted-average method, determine the equivalent units of production for
materials and conversion costs.
Answer:
A company can have a net loss and still generate a positive net cash provided by
operating activities in its statement of cash flows.
Answer:
A company has a standard cost system in which fixed and variable manufacturing
overhead costs are applied to products on the basis of direct labor-hours. The amount of
overhead that the company would apply to finished production would ordinarily be the
standard hours allowed for the actual units of finished output times the predetermined
overhead rate per direct labor-hour.
Answer:
Variable manufacturing overhead costs are treated as period costs under both absorption
and variable costing.
Answer:
The equivalent units in the ending work in process inventory will be the same under
both the FIFO and the weighted-average methods of process costing.
Answer:
The performance measures on an individual’s scorecard should not be overly influenced
by actions taken by others in the company or by events that are outside of the
individual’s control.
Answer:
The contribution margin is viewed as a better gauge of the long run profitability of a
segment than the segment margin.
Answer:
Under the FIFO method, costs per equivalent unit will contain only costs from the
current period.
Answer:
One benefit of budgeting is that it coordinates the activities of the entire organization.
Answer:
All costs incurred in a merchandising firm are considered to be period costs.
Answer:
If expenses exceed revenues in a department, then it would be considered a cost center.
Answer:
Depreciation is always considered a product cost for external financial reporting
purposes in a manufacturing firm.
Answer:
Although the contribution format income statement is useful for external reporting
purposes, it has serious limitations when used for internal purposes because it does not
distinguish between fixed and variable costs.
Answer:
When assigning costs to partially completed units in the ending work in process
inventory, it is not necessary to consider the percentage completion of the units under
the weighted-average method.
Answer:
The use of return on investment as a performance measure may lead managers to make
decisions that are not in the best interests of the company as a whole.
Answer:
Managers of cost centers are evaluated according to the profits which their departments
are able to generate.
Answer:
Joint costs are not relevant to the decision to sell a product at the split-off point or to
process the product further.
Answer:
Residual income is the net operating income that an investment center earns above the
minimum required return on the investment in operating assets.
Answer:
Under the direct method of determining the net cash provided by operating activities on
the statement of cash flows, an increase in accounts payable would be added to cost of
goods sold to convert cost of goods sold to a cash basis.
Answer:
In a standard costing system where the denominator activity for the predetermined
overhead rate is labor-hours, overhead costs are applied to work in process on the basis
of actual hours worked.
Answer:
A volume variance and an efficiency variance are computed for fixed manufacturing
overhead costs.
Answer:
Reference: 8-28
Cox Engineering performs cement core tests in its laboratory. The following standards
have been set for each core test performed:
During March, the laboratory performed 2,000 core tests. On March 1 no direct
materials (sand) were on hand. Variable manufacturing overhead is assigned to core
tests on the basis of standard direct labor-hours. The following events occurred during
March:
– 8,600 pounds of sand were purchased at a cost of $7,310.
– 7,200 pounds of sand were used for core tests.
– 840 actual direct labor-hours were worked at a cost of $8,610.
– Actual variable manufacturing overhead incurred was $3,200.
The materials price variance for March is:
A) $860 unfavorable
B) $860 favorable
C) $281 unfavorable
D) $281 favorable
Answer:
Reference: 8-38
The Thompson Company uses standard costing and has established the following direct
material and direct labor standards for each unit of Lept.
Direct materials: 2 gallons at $4 per gallon
Direct labor: 0.5 hours at $8 per hour
During September, the company made 6,000 Lepts and incurred the following costs:
Direct materials purchased: 13,400 gallons at $4.10 per gallon
Direct materials used: 12,600 gallons
Direct labor used: 2,800 hours at $7.65 per hour
The materials price variance for September was:
A) $1,340 favorable
B) $1,260 favorable
C) $1,260 unfavorable
D) $1,340 unfavorable
Answer:
Megna Company’s net income last year was $143,000. Changes in the company’s
balance sheet accounts for the year appear below:
The company paid a cash dividend and it did not dispose of any long-term investments
or property, plant, and equipment. The company did not issue any bonds payable or
repurchase any of its own common stock. The following question pertain to the
company’s statement of cash flows.
The free cash flow for the year was:
A. $142,000
B. $148,000
C. $301,000
D. $93,000
Answer:
Saffer Corporation keeps careful track of the time required to fill orders. Data
concerning a particular order appear below:
The throughput time was:
A. 9.3 hours
B. 4.9 hours
C. 30.9 hours
D. 26 hours
Answer:
At the end of the year, a company’s Manufacturing Overhead account contained the
following data:
If the denominator activity for the year was 40,000 machine-hours, and if 36,400
machine-hours were allowed for the year’s production, then the predetermined overhead
rate per machine-hour was:
A. $2.15
B. $1.96
C. $2.26
D. $2.05
Answer:
Data from Kooistra Corporation’s most recent balance sheet appear below:
Sales on account in Year 2 amounted to $1,270 and the cost of goods sold was $770.
The current ratio at the end of Year 2 is closest to:
A. 0.96
B. 0.30
C. 0.31
D. 1.61
Answer:
Vanstee Corporation manufactures a variety of products. Variable costing net operating
income last year was $60,000 and this year was $67,000. Last year, $37,000 in fixed
manufacturing overhead costs were deferred in inventory under absorption costing. This
year, $8,000 in fixed manufacturing overhead costs were released from inventory under
absorption costing.
What was the absorption costing net operating income this year?
A. $38,000
B. $96,000
C. $75,000
D. $59,000
Answer:
The Odle Company makes and sells a single product called a Kitt. Odle uses a standard
costing system. Each Kitt has a standard cost of 5 pounds of material at $12 per pound
and 0.9 direct labor-hours at $15 per hour. There were no inventories of any kind on
June 1. During June, the following events occurred:
– Purchased 17,000 pounds of material at a total cost of $190,000.
– Used 15,000 pounds of material to produce 2,400 Kitts.
– Used 1,900 hours of direct labor time at a total cost of $38,000.
To record the use of direct materials in production, the general ledger would include
what kind of entry to the Materials Quantity Variance Account?
A. $46,000 debit
B. $60,000 credit
C. $60,000 debit
D. $36,000 debit
Answer:
Threets Corporation’s most recent comparative balance sheet appears below:
The company’s net income for the year was $109 and it paid a cash dividend. It did not
dispose of any property, plant, and equipment during the year. The company did not
issue any bonds payable or repurchase any of its own common stock.
The free cash flow for the year was:
A. $38
B. $71
C. $285
D. $11
Answer:
The operations of the Kerry Company resulted in underapplied overhead of $5,000. The
entry to close out this balance to Cost of Goods Sold and the effect of the underapplied
overhead on Cost of Goods Sold would be:
A. Option A
B. Option B
C. Option C
D. Option D
Answer:
When computing standard cost variances, the difference between actual and standard
price multiplied by actual quantity yields a(n):
A) combined price and quantity variance.
B) efficiency variance.
C) price variance.
D) quantity variance.
Answer:
Kuhner Corporation produces and sells two products. Data concerning those products
for the most recent month appear below:
Fixed expenses for the entire company were $33,100.
The break-even point for the entire company is closest to:
A. $48,676
B. $33,100
C. $22,900
D. $51,020
Answer:
Hartzog Corporation’s most recent balance sheet and income statement appear below:
Dividends on common stock during Year 2 totaled $60 thousand. Dividends on
preferred stock totaled $5 thousand. The market price of common stock at the end of
Year 2 was $7.04 per share.
The price-earnings ratio for Year 2 is closest to:
A. 9.64
B. 16.37
C. 11.54
D. 17.60
Answer:
Whit Catering uses two measures of activity, jobs and meals, in the cost formulas in its
flexible budgets. The cost formula for catering supplies is $380 per month plus $94 per
job plus $11 per meal. A typical job involves serving a number of meals to guests at a
corporate function or at a hosts home. The company expected its activity in October to
be 20 jobs and 216 meals, but the actual activity was 19 jobs and 221 meals. The actual
cost for catering supplies in October was $4,790. The catering supplies in the flexible
budget for October would be closest to:
A) $4,404
B) $4,790
C) $4,636
D) $4,597
Answer:
Excerpts from Goodrow Corporation’s most recent balance sheet and income statement
appear below:
Dividends on common stock during Year 2 totaled $20 thousand. Dividends on
preferred stock totaled $10 thousand. The market price of common stock at the end of
Year 2 was $5.34 per share.
The dividend payout ratio for Year 2 is closest to:
A. 50.0%
B. 28.6%
C. 33.3%
D. 3333.3%
Answer:
A general rule in relevant cost analysis is:
A. variable costs are always relevant.
B. fixed costs are always irrelevant.
C. differential future costs and revenues are always relevant.
D. depreciation is always irrelevant.
Answer:
Lothian Corporation uses the weighted-average method in its process costing system.
Data concerning the first processing department for the most recent month are listed
below:
Note: Your answers may differ from those offered below due to rounding error. In all
cases, select the answer that is the closest to the answer you computed. To reduce
rounding error, carry out all computations to at least three decimal places.
The cost of ending work in process inventory in the first processing department
according to the company’s cost system is closest to:
A. $8,919
B. $15,405
C. $5,925
D. $23,700
Answer:
A manufacturer of playground equipment uses a standard costing system in which
standard machine-hours (MHs) is the measure of activity. Data from the company’s
flexible budget for manufacturing overhead are given below:
The following data pertain to operations for the most recent period:
What was the fixed manufacturing overhead budget variance for the period to the
nearest dollar?
A. $881 U
B. $484 U
C. $395 U
D. $1,500 F
Answer:
Kelson Company applies overhead to jobs on the basis of 60% of direct labor cost. If
Job 201 shows $27,000 of manufacturing overhead applied, the direct labor cost on the
job was:
A. $16,200
B. $27,000
C. $37,800
D. $45,000
Answer:
Morvan Corporation uses the FIFO method in its process costing system. Data
concerning the first processing department for the most recent month are listed below:
Note: Your answers may differ from those offered below due to rounding error. In all
cases, select the answer that is the closest to the answer you computed.
What are the equivalent units for conversion costs for the month in the first processing
department?
A. 9,000
B. 8,500
C. 8,300
D. 150
Answer:
Elard Company uses the FIFO method in its process costing system. The first
processing department, the Welding Department, started the month with 17,000 units in
its beginning work in process inventory that were 70% complete with respect to
conversion costs. The conversion cost in this beginning work in process inventory was
$101,150. An additional 68,000 units were started into production during the month.
There were 23,000 units in the ending work in process inventory of the Welding
Department that were 80% complete with respect to conversion costs. A total of
$565,125 in conversion costs were incurred in the department during the month.
The cost per equivalent unit for conversion costs is closest to:
A. $8.50
B. $8.31
C. $8.25
D. $7.84
Answer:
Fiene Sales, Inc., a merchandising company, reported sales of 2,200 units in June at a
selling price of $600 per unit. Cost of goods sold, which is a variable cost, was $364 per
unit. Variable selling expenses were $23 per unit and variable administrative expenses
were $33 per unit. The total fixed selling expenses were $30,500 and the total
administrative expenses were $55,300.
The gross margin for June was:
A. $310,200
B. $1,234,200
C. $396,000
D. $519,200
Answer:
Erastic Company has $14,000 in cash, $8,000 in marketable securities, $34,000 in
account receivable, $40,000 in inventories, and $42,000 in current liabilities. The
company’s current assets consist of cash, marketable securities, accounts receivable, and
inventory. The company’s acid-test ratio is closest to:
A. 1.33
B. 0.81
C. 2.29
D. 1.14
Answer:
Acitelli Corporation, which applies manufacturing overhead on the basis of
machine-hours, has provided the following data for its most recent year of operations.
The estimates of the manufacturing overhead and of machine-hours were made at the
beginning of the year for the purpose of computing the company’s predetermined
overhead rate for the year.
The overhead for the year was:
A. $1,520 underapplied
B. $2,520 overapplied
C. $1,520 overapplied
D. $2,520 underapplied
Answer:
Cindy, Inc. sells a product for $10 per unit. The variable expenses are $6 per unit, and
the fixed expenses total $35,000 per period. By how much will net operating income
change if sales are expected to increase by $40,000?
A. $16,000 increase
B. $5,000 increase
C. $24,000 increase
D. $11,000 decrease
Answer:
Reference: 8-39
The Geurtz Company uses standard costing. The company makes and sells a single
product called a Roff. The following data are for the month of August:
– Actual cost of direct material purchased and used: $65,560
– Material price variance: $5,960 unfavorable
– Total materials variance: $22,360 unfavorable
– Standard cost per pound of material: $4
– Standard cost per direct labor-hour: $5
– Actual direct labor-hours: 6,500 hours
– Labor efficiency variance: $3,500 favorable
– Standard number of direct labor-hours per unit of Roff: 2 hours
– Total labor variance: $400 unfavorable
The actual direct labor rate per hour was:
A) $5.60
B) $5.00
C) $10.00
D) $4.40
Answer:
The information below was obtained from the records of one of the departments of
Cushing Company for the month of August. The company uses the FIFO method in its
process costing system.
All materials are added at the beginning of the process.
The equivalent units for materials for the month of August are:
A. 75,000 units
B. 85,000 units
C. 87,500 units
D. 95,000 units
Answer:
The following cost data pertain to the operations of Mancia Department Stores, Inc., for
the month of February.
The Brentwood Store is just one of many stores owned and operated by the company.
The Shoe Department is one of many departments at the Brentwood Store. The central
warehouse serves all of the company’s stores.
What is the total amount of the costs listed above that are NOT direct costs of the
Brentwood Store?
A. $152,000
B. $92,000
C. $79,000
D. $38,000
Answer:
A manufacturer of playground equipment uses a standard costing system in which
standard machine-hours (MHs) is the measure of activity. Data from the company’s
flexible budget for manufacturing overhead are given below:
The following data pertain to operations for the most recent period:
What is the predetermined fixed manufacturing overhead rate to the nearest cent?
A. $11.05 per MH
B. $11.19 per MH
C. $11.00 per MH
D. $10.86 per MH
Answer:
Reference: 8-22
Friou Corporation manufactures and sells a single product. The company uses units as
the measure of activity in its flexible budgets. During July, the company budgeted for
6,300 units, but its actual level of activity was 6,250 units. The company has provided
the following data concerning the formulas used in its budgeting and its actual results
for July:
Data used in budgeting:
Actual results for July:
The net operating income in the flexible budget for July would be closest to:
A) $19,050
B) $28,279
C) $18,475
D) $27,832
Answer:
Brarin Corporation is a small wholesaler of gourmet food products. Data regarding the
store’s operations follow:
o Sales are budgeted at $340,000 for November, $360,000 for December, and $350,000
for January.
o Collections are expected to be 55% in the month of sale, 44% in the month following
the sale, and 1% uncollectible.
o The cost of goods sold is 80% of sales.
o The company would like to maintain ending merchandise inventories equal to 70% of
the next month’s cost of goods sold. Payment for merchandise is made in the month
following the purchase.
o Other monthly expenses to be paid in cash are $23,100.
o Monthly depreciation is $21,000.
o Ignore taxes.
Expected cash collections in December are:
A. $360,000
B. $149,600
C. $198,000
D. $347,600
Answer:
The following partially completed T-accounts summarize transactions for Fabatz
Company during the year:
The direct labor cost was:
A. $8,700
B. $12,000
C. $11,700
D. $14,200
Answer:
Reference: 8-58
Schuetz Corporation makes a product whose variable overhead standards are based on
direct labor-hours. The quantity standard is 0.4 hours per unit. The variable overhead
rate standard is $5.00 per hour. In July the company produced 7,500 units using 2,740
direct labor-hours. The actual variable overhead rate was $5.20 per hour.
The variable overhead rate variance for July is:
A) $600 F
B) $600 U
C) $548 F
D) $548 U
Answer:
The following data have been provided by Spraglin Corporation, a company that
produces forklift trucks:
Supplies cost is an element of variable manufacturing overhead. The variable overhead
efficiency variance for supplies cost is:
A) $484 U
B) $2,643 U
C) $484 F
D) $2,643 F
Answer:
The Chase Company has a standard cost system in which manufacturing overhead is
applied on the basis of standard direct labor-hours (DLHs). The company recorded the
following activity and cost data relating to manufacturing overhead for October:
The amount of fixed manufacturing overhead cost applied to work in process during
September was:
A. $47,832
B. $26,520
C. $42,432
D. $43,605
Answer:
During February, the following transactions were recorded at Ferrington Corporation.
The company uses process costing.
(1) Raw materials that cost $42,400 are withdrawn from the storeroom for use in the
Assembly Department. All of these raw materials are classified as direct materials.
(2) Direct labor costs of $16,100 are incurred, but not yet paid, in the Assembly
Department.
(3) Manufacturing overhead of $30,200 is applied in the Assembly Department using
the department’s predetermined overhead rate.
(4) Units with a carrying cost of $76,500 finish processing in the Assembly Department
and are transferred to the Painting Department for further processing.
(5) Units with a carrying cost of $97,200 finish processing in the Painting Department,
the final step in the production process, and are transferred to the finished goods
warehouse.
(6) Finished goods with a carrying cost of $92,800 are sold.
Prepare journal entries for each of the transactions listed above.
Answer:
Hernande Urban Diner is a charity supported by donations that provides free meals to
the homeless. The diners budget for October was based on 2,800 meals. The diners
director has provided the following cost data to use in the budget: groceries, $2.45 per
meal; kitchen operations, $5,200 per month plus $1.70 per meal; administrative
expenses, $2,600 per month plus $0.65 per meal; and fundraising expenses, $1,100 per
month. The director has also provided the diners statement of actual expenses for the
month:
Required:
Prepare a report showing the diners spending variances for each of the expenses and for
total expenses for October. Label each variance as favorable (F) or unfavorable (U).
Answer:
Poch Memorial Diner is a charity supported by donations that provides free meals to the
homeless. The diners budget for September is to be based on 2,700 meals. The diners
director has provided the following cost formulas to use in the budget:
Required:
Prepare the diners budget for the month of September. The budget will only contain the
costs listed above; no revenues will be on the budget.
Answer:
The management of Therriault Corporation is considering dropping product U51Y. Data
from the company’s accounting system appear below:
All fixed expenses of the company are fully allocated to products in the company’s
accounting system. Further investigation has revealed that $280,000 of the fixed
manufacturing expenses and $140,000 of the fixed selling and administrative expenses
are avoidable if product U51Y is discontinued.
What would be the effect on the company’s overall net operating income if product
U51Y were dropped? Should the product be dropped? Show your work!
Answer:
Data concerning Goulbourne Corporation’s single product appear below:
Fixed expenses are $444,000 per month. The company is currently selling 7,000 units
per month.
Management is considering using a new component that would increase the unit
variable cost by $2. Since the new component would improve the company’s product,
the marketing manager predicts that monthly sales would increase by 200 units. What
should be the overall effect on the company’s monthly net operating income of this
change if fixed expenses are unaffected? Show your work!
Answer:
Data concerning Maline Corporation’s single product appear below:
Fixed expenses are $55,000 per month. The company is currently selling 1,000 units per
month.
The marketing manager would like to cut the selling price by $6 and increase the
advertising budget by $2,700 per month. The marketing manager predicts that these two
changes would increase monthly sales by 100 units. What should be the overall effect
on the company’s monthly net operating income of this change? Show your work!
Answer:
Millage Corporation has provided the following data:
Compute the accounts receivable turnover for this year. Show your work!
Answer:
Prevatte Corporation purchases potatoes from farmers. The potatoes are then peeled,
producing two intermediate products-peels and depeeled spuds. The peels can then be
processed further to make a cocktail of organic nutrients. And the depeeled spuds can
be processed further to make frozen french fries. A batch of potatoes costs $45 to buy
from farmers and $11 to peel in the company’s plant. The peels produced from a batch
can be sold as is for animal feed for $27 or processed further for $16 to make the
cocktail of nutrients that are sold for $47. The depeeled spuds can be sold as is for $38
or processed further for $27 to make frozen french fries that are sold for $59.
a. Assuming that no other costs are involved in processing potatoes or in selling
products, how much money does the company make from processing one batch of
potatoes into the cocktail of organic nutrients and frozen french fries? Show your work!
b. Should each of the intermediate products, peels and depeeled spuds, be sold as is or
processed further into an end product? Explain.
Answer:
Nygaard Corporation uses the weighted-average method in its process costing. The
following data pertain to its Assembly Department for September.
Compute the equivalent units of production for both materials and conversion costs for
the Assembly Department for September using the weighted-average method.
Answer:
Jumonville Company produces a single product. The cost of producing and selling a
single unit of this product at the company’s normal activity level of 70,000 units per
month is as follows:
The normal selling price of the product is $56.70 per unit.
An order has been received from an overseas customer for 2,000 units to be delivered
this month at a special discounted price. This order would have no effect on the
company’s normal sales and would not change the total amount of the company’s fixed
costs. The variable selling and administrative expense would be $0.70 less per unit on
this order than on normal sales.
Direct labor is a variable cost in this company.
a. Suppose there is ample idle capacity to produce the units required by the overseas
customer and the special discounted price on the special order is $51.20 per unit. By
how much would this special order increase (decrease) the company’s net operating
income for the month?
b. Suppose the company is already operating at capacity when the special order is
received from the overseas customer. What would be the opportunity cost of each unit
delivered to the overseas customer?
c. Suppose there is not enough idle capacity to produce all of the units for the overseas
customer and accepting the special order would require cutting back on production of
700 units for regular customers. What would be the minimum acceptable price per unit
for the special order?
Answer:
During October, Keliihoomalu Clinic budgeted for 2,700 patient-visits, but its actual
level of activity was 2,200 patient-visits. Revenue should be $27.30 per patient-visit.
Personnel expenses should be $21,100 per month plus $6.80 per patient-visit. Medical
supplies should be $500 per month plus $4.90 per patient-visit. Occupancy expenses
should be $5,700 per month plus $0.90 per patient-visit. Administrative expenses
should be $3,700 per month plus $0.40 per patient-visit.
Required:
Prepare the clinics flexible budget for October based on the actual level of activity for
the month.
Answer:
Krouse Corporation’s manufacturing overhead includes $14.70 per machine-hour for
variable manufacturing overhead and $191,580 per period for fixed manufacturing
overhead.
Determine the predetermined overhead rate for the denominator level of activity of
3,100 machine-hours.
Answer:
Packer Company, which has only one product, has provided the following data
concerning its most recent month of operations:
The company produces the same number of units every month, although the sales in
units vary from month to month. The company’s variable costs per unit and total fixed
costs have been constant from month to month.
a. What is the unit product cost for the month under variable costing?
b. Prepare a contribution format income statement for the month using variable costing.
c. Without preparing an income statement, determine the absorption costing net
operating income for the month. (Hint: Use the reconciliation method.)
Answer:
Cavett Company’s comparative balance sheet and income statement for last year appear
below:
The following additional information is available for the year:
* During the year, the company sold long-term investments with a cost of $38,000
when purchased for $33,000 in cash.
* All sales were on credit.
* The company paid a cash dividend of $25,000.
* The company did not dispose of any property, plant, and equipment, issue any bonds
payable, or repurchase any of its own common stock during the year.
a. Using the direct method, determine the net cash provided by operating activities for
the year.
b. Using the indirect method, determine the net cash provided by operating activities for
the year.
c. Using the net cash provided by operating activities figure from either part a or b,
prepare a statement of cash flows for the year.
Answer:
Barsoux Inc. uses the weighted-average method in its process costing system. The
following data concern the operations of the company’s first processing department for
a recent month.
Using the weighted-average method:
a. Determine the equivalent units of production for materials and conversion costs.
b. Determine the cost per equivalent unit for materials and conversion costs.
c. Determine the cost of units transferred out of the department during the month.
d. Determine the cost of ending work in process inventory in the department.
Answer:
