Acc/531 Week 4
MTT (Set 5 with answer)
1) The following is selected information from the records of Ray, Inc.:
Purchases of raw materials $ 6,000
Raw materials, beginning 500
Raw materials, ending 800
Work-in-process, beginning 0
Work-in-process, ending 0
Cost of goods sold 12,000
Finished goods, beginning 1,200
Finished goods, ending 1,400
What is the total amount of conversion costs?
a. $5,500
b. $5,900
c. $6,100
d. $6,500
ANSWER:
Choice "d" is correct. Conversion costs (labor and overhead) are equal to $6,500 and are derived from the relationship between the finished goods and work in process inventory.
1. Beginning ($1,200) and ending ($1,400) finished goods inventory and cost of goods sold ($12,000) are used to squeeze costs of …show more content…
Cost of goods manufactured ($12,200) is then used in combination with beginning and ending WIP inventories of $0 to derive total costs incurred ($12,200) and then, in combination with materials ($5,700) the conversion costs of $6,500
2) Which of the following non value-added costs associated with manufactured work in process inventory is most significant?
a. The cost of materials that cannot be traced to any individual product.
b. The cost of labor that cannot be traced to any individual product.
c. The cost of moving, handling, and storing any individual product.
d. The cost of additional resources consumed to produce any individual product.
ANSWER:
Choice "c" is correct. Value added costs are those resource uses that provide value to the consumer. The cost of inventorying products, generally moving, handling and storing them, does not add value to the product and is generally considered one of the most significant non-value activities/costs that a manufacturer should reduce because it can be controlled.
Choice "a" is incorrect. Costs of materials that cannot be traced to an individual product are often not controllable and are thus less manageable than inventory costs.
Choice "b" is incorrect. Costs of labor that cannot be traced to an individual product are often not controllable and are thus less manageable than inventory
1) The following is selected information from the records of Ray, Inc.:
Purchases of raw materials $ 6,000
Raw materials, beginning 500
Raw materials, ending 800
Work-in-process, beginning 0
Work-in-process, ending 0
Cost of goods sold 12,000
Finished goods, beginning 1,200
Finished goods, ending 1,400
What is the total amount of conversion costs?
a. $5,500
b. $5,900
c. $6,100
d. $6,500
ANSWER:
Choice "d" is correct. Conversion costs (labor and overhead) are equal to $6,500 and are derived from the relationship between the finished goods and work in process inventory.
1. Beginning ($1,200) and ending ($1,400) finished goods inventory and cost of goods sold ($12,000) are used to squeeze costs of …show more content…
Cost of goods manufactured ($12,200) is then used in combination with beginning and ending WIP inventories of $0 to derive total costs incurred ($12,200) and then, in combination with materials ($5,700) the conversion costs of $6,500
2) Which of the following non value-added costs associated with manufactured work in process inventory is most significant?
a. The cost of materials that cannot be traced to any individual product.
b. The cost of labor that cannot be traced to any individual product.
c. The cost of moving, handling, and storing any individual product.
d. The cost of additional resources consumed to produce any individual product.
ANSWER:
Choice "c" is correct. Value added costs are those resource uses that provide value to the consumer. The cost of inventorying products, generally moving, handling and storing them, does not add value to the product and is generally considered one of the most significant non-value activities/costs that a manufacturer should reduce because it can be controlled.
Choice "a" is incorrect. Costs of materials that cannot be traced to an individual product are often not controllable and are thus less manageable than inventory costs.
Choice "b" is incorrect. Costs of labor that cannot be traced to an individual product are often not controllable and are thus less manageable than inventory