22) During 2015, Fly High Corporation incurred manufacturing expenses of $200,000 to produce 40,000 finished units. It was determined that 35,000 units were sold by November end while 5,000 units remained in ending inventory. The storage cost for December is $0.5 per unit. Required:
a. What is the cost of producing one unit?
b. What is the amount that will be reported on the income statement for cost of goods sold? c. What is the cost incurred for storing the inventory? Answer:
a. $2000,000 / 40,000 = $5
b. 35,000 units × $5 = $175,000 c. 5,000 units × $0.5 = $2,500
Diff: 2
Objective: 4
AACSB: Application of knowledge
Objective 2.5
1) Pederson Company reported the following: Manufacturing costs $2,000,000 Units manufactured 50,000 Units sold 47,000 units sold for $75 per unit Beginning inventory 0 units
What is the amount of gross profit margin? A) $1,750,000 B) $3,525,000 C) $5,405,000 D) $1,645,000 Answer: D
Explanation: D) 47,000 × ($75 - ($2,000,000 / $50,000)) = $1,645,000
Diff: 3
Objective: 5
AACSB: Application of knowledge
2) ________ sector companies purchase materials and components and convert them into finished goods. A) Merchandising B) Service
C) Manufacturing D) Professional Answer: C
Diff: 1
Objective: 5
AACSB: Analytical thinking
26
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3) Merchandising-sectors ________.
A) purchase and then sell tangible products without changing their basic form B) provide intangible products
C) purchase materials and components and convert them into finished goods D) purchase and then sell tangible products by changing their basic form Answer: A
Diff: 1
Objective: 5
AACSB: Analytical thinking
4) Service-sector companies ________. A) provide intangible products
B) purchase and then sell tangible products without changing their basic form C) purchase and then sell tangible products by changing their basic form
D) purchase materials and components and convert them into finished goods Answer: A
Diff: 1
Objective: 5
AACSB: Analytical thinking
5) Wages paid to machine operators on an assembly line are classified as a ________. A) direct material cost
B) direct manufacturing labor cost C) manufacturing overhead cost D) period cost Answer: B
Diff: 1
Objective: 5
AACSB: Analytical thinking
6) The following information pertains to Alleigh's Mannequins: Manufacturing costs $1,500,000 Units manufactured 30,000 Units sold 29,500 units sold for $85 per unit Beginning inventory 0 units
What is the amount of gross margin? A) $1,475,000 B) $1,500,000 C) $2,507,500 D) $1,032,500 Answer: D
Explanation: D) 29,500 × ($85 - ($1,500,000 / $30,000)) = $1,032,500
Diff: 3
Objective: 5
AACSB: Analytical thinking
27
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7) Which of the following companies is part of the service sector of our economy? A) Target
B) Ernst & Young C) Nokia
D) Amazon.com Answer: B
Diff: 1
Objective: 5
AACSB: Application of knowledge
8) Which of the following companies is part of the merchandising sector of our economy? A) Jaguar
B) Hewlett Packard C) Arrow Electronics
D) Michael Toback Accounting Firm Answer: C
Diff: 1
Objective: 5
AACSB: Application of knowledge
9) Which of the following companies is part of the manufacturing sector of our economy? A) Nike
B) Barnes & Noble C) Corvette Law Firm
D) Sears, Roebuck, and Company Answer: A
Diff: 1
Objective: 5
AACSB: Application of knowledge
10) Yahoo, an Internet search firm, would be classified as a(n) ________. A) manufacturing-sector company B) merchandising-sector company C) service-sector company D) financial services Answer: C
Diff: 1
Objective: 5
AACSB: Application of knowledge
11) Service-sector companies report ________.
A) work-in-process inventory, and finished goods inventory accounts B) only finished goods inventory
C) direct materials inventory, work-in-process inventory, and finished goods inventory accounts D) no inventory accounts Answer: D
Diff: 1
Objective: 5
AACSB: Analytical thinking
28
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12) Manufacturing-sector companies report ________. A) only merchandise inventory B) only finished goods inventory
C) direct materials inventory, work-in-process inventory, and finished goods inventory accounts D) direct materials inventory and finished goods inventory accounts only Answer: C
Diff: 1
Objective: 5
AACSB: Analytical thinking
13) For a manufacturing company, direct material costs may be included in ________. A) direct materials inventory only B) merchandise inventory only
C) both work-in-process inventory and finished goods inventory
D) direct materials inventory, work-in-process inventory, and finished goods inventory accounts Answer: D
Diff: 1
Objective: 5
AACSB: Analytical thinking
14) For a manufacturing company, direct labor costs may be included in ________. A) direct materials inventory only B) merchandise inventory only
C) both work-in-process inventory and finished goods inventory
D) direct materials inventory, work-in-process inventory, and finished goods inventory accounts Answer: C
Diff: 3
Objective: 5
AACSB: Analytical thinking
15) For a manufacturing company, indirect manufacturing costs may be included in ________. A) direct materials inventory only B) merchandise inventory only
C) both work-in-process inventory and finished goods inventory
D) direct materials inventory, work-in-process inventory, and finished goods inventory accounts Answer: C
Diff: 3
Objective: 5
AACSB: Analytical thinking
16) For a manufacturing-sector company, the cost of factory depreciation is classified as a ________. A) direct material cost
B) direct manufacturing labor cost C) manufacturing overhead cost D) period cost Answer: C
Diff: 1
Objective: 5
AACSB: Analytical thinking
29
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17) Which of the following cost is included in cost of goods sold? A) customer service cost B) manufacturing labor cost C) distribution cost D) marketing cost Answer: B
Diff: 1
Objective: 5
AACSB: Application of knowledge
18) Manufacturing overhead costs in an automobile manufacturing plant most likely include ________. A) labor costs of the painting department B) indirect material costs such as lubricants C) leather seat costs D) tyre costs Answer: B
Diff: 1
Objective: 5
AACSB: Analytical thinking
19) Manufacturing overhead costs are also referred to as ________. A) indirect manufacturing costs B) prime costs
C) direct manufacturing costs D) direct material Answer: A
Diff: 1
Objective: 5
AACSB: Analytical thinking
20) Target reports ________. A) only merchandise inventory B) only finished goods inventory
C) direct materials inventory, work-in-process inventory, and finished goods inventory accounts D) no inventory accounts Answer: A
Diff: 1
Objective: 5
AACSB: Analytical thinking
21) Direct materials inventory would normally include ________.
A) direct materials in stock and awaiting use in the manufacturing process B) goods partially worked on but not yet fully completed C) goods fully completed but not yet sold
D) products in their original form intended to be sold without changing their basic form Answer: A
Diff: 1
Objective: 5
AACSB: Analytical thinking
30
Copyright ? 2015 Pearson Education, Inc.