1) Property taxes on a factory building would be included as part of the cost of products
manufactured under the absorption costing concept.
2) Standard costs serve as a device for measuring efficiency.
3) If ending inventory for the year is overstated, owner’s equity reported on the balance
sheet at the end of the year is understated.
4) Period costs include direct materials and direct labor.
5) Under the negotiated price approach, the transfer price is the price at which the
product or service transferred could be sold to outside buyers.
6) A job order cost accounting system provides for a separate record of the cost of each
particular quantity of product that passes through the factory.
7) In the short run, the selling price of a product should normally not be less than the
variable costs and expenses of making and selling it.
8) In horizontal analysis, the current year is the base year.
9) Operating expenses directly traceable to or incurred for the sole benefit of a specific
department and usually subject to the control of the department manager are termed
direct expenses.
10) A low operating leverage is normal for highly automated industries.
11) A non-financial measure is operating information that has not been translated into
dollars.
12) Distinguish preventive controls from detective controls and give examples of each
as they relate to cash.
13) Prepare an income statement and a retained earnings statement for the month ended
August 31, 2014, from the following T accounts of Marley Company.
14) Complete the following table using the perpetual FIFO method of inventory flow.
15) The records of Nevada Co. indicated that $420,000 of merchandise should be on
hand on December 31, 2010. The physical inventory indicates that $370,000 of
merchandise is actually on hand. Journalize the adjusting entry for the inventory
shrinkage for the year ended December 31, 2010.
16) The Creative Division of the Barry Company reported the following results for
December 2012:
Required: Based on this information, what were the sales?