Answers_Practice_Exam1_Fall11

Answers_Practice_Exam1_Fall11 - Practice Exam Exam 1 1....

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Practice Exam Exam 1
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1. During its first year of operations, Beta Company paid $15,000 for direct material , $16,000 in wages for production workers , and $20,000 wages for administrative and sales personnel. Lease payments and utilities on the administrative building and production facilities amounted to $5,000 and $7,000 , respectively. General, selling, and administrative expenses were $6,000. The company owns a delivery car and manufacturing equipment . The annual depreciation on the car is $ 1,000. The original cost of the equipment is $10,000 and has a salvage value of $2,000 after 4 years. The company produced 5,000 units and sold 4,000 units at a price of $15.00 a unit. The average cost to produce one unit is which of the following amounts? A. $8.00 B. $10.00 C. $9.20 D. $11.50 Depreciation on Equipment= (10,000 – 2,000) / 4 = 2,000 Product cost = 15,000 + 16,000 + 7000 + 2,000 = $ 40,000 Average product cost = $40,000 / 5,000 units = $ 8 COGS = $8 x 4,000 units = $ 32,000 End Inv = $8 x 1,000 units = $ 8,000
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Chapter 1 2. During 2010, Eddy Co. paid $16,000 for direct material, $ 17,000 in wages for production workers, and $24,000 in wages for sales personnel. Lease payments and utilities on the production facilities amounted to $7,000 . General, selling, and administrative expenses were $6,000. The company owns a manufacturing equipment. The original cost of the equipment is $30,000 and has a salvage value of $5,000 after 5 years. Depreciation on sales car equals $6,000. The company produced 5,000 units and sold 3,000 units at a price of $10.00 a unit. The cost of goods sold is which of the following amounts? A. $64,000 B. $32,000 C. $27,000 D. $45,000 Equipment Depreciation = (30,000 – 5,000) / 5 = 5,000 Product cost = 16,000 + 17,000 + 7000 + 5000 = $ 45,000 Average product cost = $45,000 / 5,000 units = $ 9 COGS = 3000 units x $9 = 27,000
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Relevant Information for Special Decisions 3. What is the effect on the financial statements of recording a $10,000 payment for sales personnel in cash? Assets = Liab. + Equity Rev. - Exp. = Net Inc. A) +- / n/a n/a n/a + - B) - n/a - n/a + - C) - n/a - n/a n/a n/a D) + / - n/a n/a n/a n/a n/a Chapter 1 Period Cost: Expense Immediately on IS IS + Expenses & - NI BS - Cash & - Equity (RE)
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4. What is the effect on the financial statements of recording a $100 purchase of raw materials?
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This note was uploaded on 02/22/2012 for the course BUAD 2050 taught by Professor Nicholasw.schroeder during the Spring '09 term at Toledo.

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Answers_Practice_Exam1_Fall11 - Practice Exam Exam 1 1....

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