Exercise Solutions

1. Haar Inc. is a merchandising company. Last month the company's cost of goods sold was $61,000. The company's beginning merchandise inventory was $11,000 and its ending merchandise inventory was $21,000. What was the total amount of the company's merchandise purchases for the month?
A. $61,000
B. $51,000
C. $71,000
D. $93,000
Purchases = Cost of goods sold + Ending merchandise inventory - Beginning merchandise inventory
= $61,000 + $21,000 - $11,000
= $71,000
2. Gabruk Inc. is a merchandising company. Last month the company's merchandise purchases totaled $88,000. The company's beginning merchandise inventory was $15,000 and its ending merchandise inventory was $13,000. What was the company's cost of goods sold for the month?
A. $88,000
B. $90,000
C. $86,000
D. $116,000
Cost of goods sold = Beginning merchandise inventory + purchases - Ending merchandise inventory
= $15,000 + $88,000 - $13,000
= $90,000
3. A partial listing of costs incurred during December at Gagnier Corporation appears below:

The total of the period costs listed above for December is:
A. $89,000
B. $310,000
C. $325,000
D. $399,000
Period costs = Administrative wages and salaries + Sales staff salaries + Corporate headquarters building rent + Marketing
= $105,000 + $68,000 + $34,000 + $103,000
= $310,000
The total of the manufacturing overhead costs listed above for December is:
A. $325,000
B. $635,000
C. $89,000
D. $40,000
Manufacturing overhead costs = Factory supplies + Factory depreciation + Indirect labor
= $8,000 + $49,000 + $32,000
= $89,000 The total of the product costs listed above for December is:
A. $310,000
B. $89,000
C. $635,000
D. $325,000
Product costs = Direct materials + Direct labor + Manufacturing overhead
= $153,000 + $83,000 + $89,000
= $325,000

4. Dickison Corporation reported the following data for the month of December:

The conversion cost for December was:
A. $107,000
B. $142,000
C. $111,000
D. $178,000
Conversion cost = Direct labor +