1. Litton Industries uses a perpetual inventory system. The company began its fiscal year with inventory of
$267,000. Purchases of merchandise on account during the year totaled $845,000. Merchandise costing $902,000
was sold on account for $1,420,000.
Mixed costs have both a fixed component and a variable component
To isolate the variable component, we can use the high low method.
Variable Cost =
Purposes of cost classification: pricing, profitability assessment, control costs.
Cost Object : anything that managers wants to collect costs on.
e.g. single product, a division, a department, a subsidiary, entire organization
In 2013, the Westgate Construction Company entered into a contract to construct a road for Santa Clara County for
$10,000,000. The road was completed in 2015. Information related to the contract is as follows:
1. On December 28, 2013, Tristar Communications sold 10 units of its new satellite uplink system to various
customers for $25,000 each. The terms of each sale were 1/10, n/30. Tristar uses the gross method to account for
In what year will
1. Fran Smith has two investment opportunities. The interest rate for both investments is 8%. Interest on the first
investment will compound annually while interest on the second will compound quarterly.
Which investment opportunity should Fran choose? (F
1. On July 1, 2013, Apache Company sold a parcel of undeveloped land to a construction company for $3,000,000.
The book value of the land on Apaches books was $1,200,000. Terms of the sale required a down payment of
$150,000 and 19 annual payments of $150
1. Today Thomas deposited $100,000 in a three-year, 12% CD that compounds quarterly. What is the maturity
value of the CD?
FV = $100,000 x 1.42576* = $142,576
*FV of $1: n = 12; i = 3%
2. Carol wants to invest money
1. The balance in accounts receivable at the beginning of 2011 was $300. During 2011, $1,600 of credit sales
were recorded. If the ending balance in accounts receivable was $250 and $100 in accounts receivable were
written off during the year, the amount