Ch 2 - Practice Quizzes

Ch 2 - Practice Quizzes - Ch 2 #6 Consider the following...

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Ch 2 #6 Consider the following taken from a schedule of cost of goods manufactured : Raw-material inventory, beginning $45,000 Purchases of raw materials $280,000 Raw material used $225,000 Direct labor $300,000 Total manufacturing overhead $450,000 Total manufacturing costs $975,000 What was the amount of the ending raw-material inventor y ? A) $55,000 B) $65,000 C) $15,000 D) $100,000 E) None of the above Explanation: Raw materials used = Beginning raw-material inventory + Purchases of raw material - Ending raw-material inventory. $45,000 + $280,000 - X = $225,000, where X is the ending raw-material inventory. The ending raw materials inventory is $100,000 (= $325,000 - $225,000). Raw-material inventory, beginning $45,000 Add: Purchases of raw material 280,000 Raw material available for use $325,000 Deduct: Raw-material inventory, ending (100,000) Raw material used $225,000 Ch 2 #7 Activity CostA CostB CostC Inunits Total PerUnit Total PerUnit Total PerUnit 100,000 $50,000 $0.50 $50,000 $0.50 $45,000 $0.45 200,000 100,000 $0.50 50,000 $0.25 60,000 $0.30 300,000 150,000 $0.50 50,000 $0.167 75,000 $0.25 Which of the costs, A, B, or C, is a variable cost ? A) Cost A B) Cost B C) Cost C D) Cost A and C E) None of the aboveFeedback: LO 8 A variable cost changes in total in direct proportion to a change in the level of activity (or cost driver) and remains unchanged per unit of activity. Cost B is a fixed cost— it remained unchanged in total at different levels of activity and varied inversely per unit with increases in activity levels. Cost C is neither a variable cost nor a fixed cost. Ch 2 #10
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You recently made the following expenditures on your 2002 model car: New tires $160 Dent repairs 240 Engine tune up 300 New paint 360 Battery replacement 50 Total expenses $1,110 You have been offered an $800 trade-in allowance on the purchase of a different automobile that is priced at $10,500. If you decide to make the trade-in and purchase the new car, which of the following will occur? A) You will lose $310. B) You will lose $1,110. C) You will gain $310. D) The amount you paid to refurbish you old car is irrelevant to the decision. E) None of the above will occur.Feedback: LO 10 The amount you paid to refurbish the car, $1,110 is a sunk cost , and irrelevant to making the decision of whether to purchase the new car. A sunk cost is a cost that has been incurred in the past and cannot be altered by any current or future decision. Your cost for the new car will be $9,700 ($10,500 - $800). If the value of the beginning work-in-process and the ending work-in-process are equal, the cost of goods manufactured will be equal to total manufacturing costs. A) TRUE LO 06 Total manufacturing costs are the total cost of raw materials used, direct labor, and manufacturing overhead. The cost of goods manufactured is equal to the beginning work-in- process, plus total manufacturing costs, less the ending work-in-process inventory. If beginning
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This note was uploaded on 10/20/2011 for the course ACC 312 taught by Professor Welsh during the Summer '08 term at University of Texas at Austin.

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Ch 2 - Practice Quizzes - Ch 2 #6 Consider the following...

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