A job order costing system is used by companies that manufacture large amounts of
similar products or liquid products.
The taking of a physical inventory is an example of periodic independent verification.
The purchasing process begins with a request for indirect materials, whereas the
manufacturing process begins with a request for direct materials.
Interim financial statements are not subject to a full audit by an independent auditor.
In a diversified company, segments may be represented by different industries,
geographical markets, and major customers.
Gross margin and contribution margin are always equal.
Overhead costs are traced to products in the same way that direct materials and direct
labor are traced.
Annual financial statements are subjected to a full audit by an independent auditor.
The matching rule is most closely related to the cash basis of accounting.
Supporting poor-return proposals that fall below the minimum rate of return eventually
lowers the entire company’s profitability.
An understated ending inventory will produce an overstated cost of goods sold.
To form a corporation, most states require persons called underwriters to sign and file it
with proper state official. This application contains the articles of incorporation.
Conversion costs consist of
A.direct materials costs and direct labor costs.
B.direct labor costs and overhead costs.
C.direct materials costs and overhead costs.
D.direct labor costs and indirect labor costs.
Information for the current month for the Polishing Department is shown below.
Direct materials are added at the beginning of the process. Beginning work in process is
30 percent complete as to conversion costs; ending work in process inventory is 80
percent complete. Determine the cost of ending work in process inventory.
A.$7,200
B.$3,552
C.$5,760
D.$6,288
Conrad Corporation has the following information. Calculate the payables turnover and
days’ payable. Round answers to two decimal places.
a. Payables turnover
b. Days’ payable
Use this information to answer the following question.
What amount must be deposited today so that $1,200 may be withdrawn at the end of
each year for three years, assuming an APR of 7 percent?
A.$3,148.80
B.$3,148.80
C.$3,366.00
D.$3,850.28
Ronald Company has a standard costing system and keeps all its costs up to date. The
company specializes in producing herbal medicines. The standard variable costs for
producing 1 liter herbal oil are as follows:
The company’s normal capacity is 15,000 direct labor hours. Its budgeted fixed
overhead costs for the year were $27,000. During the year, it produced and sold 22,000
liters and it purchased 51,250 units of direct materials; the purchase cost was $1.50 per
unit. The average labor rate was $4.90 per hour, and 15,500 direct labor hours were
worked. The company’s actual variable overhead costs for the year were $50,100, and
its fixed costs were $25,500.
Using the data given, compute the following using formulas or diagram form:
1>Direct materials cost variances:
a. Direct materials price variance
b. Direct materials quantity variance
c. Total direct materials cost variance
2> Direct labor cost variances:
a. Direct labor rate variance
b. Direct labor efficiency variance
c. Total direct labor cost variance
3> Variable overhead variances:
a. Variable overhead spending variance
b. Variable overhead efficiency variance
c. Total variable overhead variance
4> Fixed overhead variances:
a. Fixed overhead budget variance
b. Fixed overhead volume variance
c. Total fixed overhead variance
An $800 debit item is accidentally posted as a credit. The trial balance column totals
will therefore differ by
A.$0
B.$400
C.$800
D.$1,600
A retail store has goods available for sale of $2 million at retail and $1,100,000 at cost,
and ending inventory of $160,000 at retail. What is the estimated cost of ending
inventory?
A.$128,000
B.$160,000
C.$110,000
D.$88,000
Which of the following accounts could increase as a result of adjusting entries?
A.Prepaid Insurance.
B.Accounts Receivable.
C.Unearned Fees.
D.Office Equipment.
Which of the following describes the return on assets ratio?
A.Average total assets divided by sales
B.Net sales divided by net income
C.Net income divided by average total assets
D.Average total assets divided by net income
Which of the following is an example of off-balance-sheet financing?
A.Leases
B.Bonds
C.Dividends
D.Notes
Ad-on International is an advertising company. It estimated the overhead costs for
March, 2014, to be $950,000 and direct labor hours to be 5,000 hours. In March, it
incurred overhead costs of $1,150,000 and 5,100 labor hours.
The amount of overhead costs applied by the company in March, 2014, is:
A.$969,000.
B.$1,150,000.
C.$950,000.
D.$1,173,000.
Financial statements are audited by outside accountants
A.because it is a requirement stated in the Internal Revenue Code.
B.only when fraudulent financial reporting is suspected.
C.who then report on whether or not the company is a good investment.
D.to increase the users’ confidence in the statements’ reliability.
Jackson Electronics Inc. manufactures a variety of microelectronic component parts and
utilizes a process costing system. The following information was provided by the
accounting department as of July 31, 2014:
a. Units started during the month of July totaled 118,200.
b. Units partially complete as of July 31 equaled 7,400.
c. Ending work in process inventory as of July 31, 2014, was 70 percent complete.
d. Direct materials are added at the beginning of the process, and conversion costs are
incurred uniformly throughout the process.
e. Units in process on July 1, 2014’”8,200 units.
Using the information provided, compute the equivalent units of production for direct
materials and conversion costs for July using the average costing method.
Which of the following is the major objective of the just-in-time operating
environment?
A.To create push-through production
B.To develop a multiskilled work force
C.To substitute automation for manual operations
D.To reduce waste and improve quality and productivity
Plum Corporation issues $400,000 of 7 percent, five-year bonds on January 1, 20×5,
when the market rate of interest is 8 percent. The bond indenture states that interest is to
be paid on January 1 and July 1 of each year. The entry to record the issuance includes
A.a credit to Cash.
B.a debit to Bonds Payable.
C.a debit to Unamortized Bond Discount.
D.All of these choices.
All of the following are ways one corporation could affect the operating and financial
policies of another corporation except
A)analysis of data regarding profitability.
B)material transactions between the companies.
C)representation on the board of directors.
D)exchange of managerial personnel.
The golden globe used to identify the publisher of a textbook is an example of a
A.franchise.
B.patent.
C.trademark.
D.copyright.
Partners April, Melissa, and Valerie share profits and losses in a 3:1:2 ratio,
respectively. Melissa wishes to leave the partnership, so the assets are revalued and are
found to be overvalued by $60,000. If each partner had a capital balance of $100,000
prior to Melissa’s notification of withdrawal, the entry to record the Melissa’s
withdrawal is:
Compute the dollar amount of each item indicated by a letter in the following table.
Treat each horizontal row of numbers as a separate problem.
Reynaldo Company has current assets of $115,000 and current liabilities of $75,000 of
which accounts payable are $65,000. Reynaldo’s cost of goods sold is $420,000, its
merchandise inventory increased by $20,000, and accounts payable were $45,000 the
prior year. Calculate Reynaldo’s working capital, payables turnover, and days’ payable.
Waves International manufactures surfboards. Production has just been completed for
March 2014. The beginning balances in Work in Process Inventory were direct
materials costs, $32,800, and conversion costs, $18,400. Cost of direct materials used in
March was $394,800, and March’s conversion costs were $598,400. A schedule of
equivalent production for March has already been prepared. It shows a total of 12,200
equivalent units as to direct materials and 9,200 equivalent units as to conversion costs.
From this information, compute the cost per equivalent unit for March. Use the FIFO
costing method and round answers to one decimal point.
Using the information below from the Income Statement and Balance Sheet columns of
Mesquite Company’s work sheet for the month ended April 30, 20×5, prepare the
income statement, statement of owner’s equity, and balance sheet.
For each description, provide the letter of the intangible asset that is being described.
Explain the similarities and differences between job order costing and process costing.
Focus on the characteristics of each system.