COST ACCOUNTING
16th Edition
ISBN: 9781323169261
Author: Horngren
Publisher: PEARSON C
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Textbook Question
Chapter 11, Problem 11.9Q
“Managers should always buy inventory in quantities that result in the lowest purchase cost per unit.” Do you agree? Why?
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2. Shepherd Cycles does not expect prices to change dramatically and wants
to use a method that averages price changes.
B. Which inventory method would best meet Shepherd's goal?
Enter answer here.
C. What if Shepherd wanted to expense out the newer purchases of goods
instead? Which inventory would best meet that need?
Enter answer here.
Which of the following performance measures will increase if inventory decreases and all else remains the same?
Return on
Residual
Investment
Income
A)
B)
Yes
Yes
No
Yes
Yes
No
D)
No
No
Multiple Choice
Choice C
Choice D
Choice A
Which of the following is NOT an assumption of cost-volume-profit analysis?
Question 10 options:
Inventory levels will change as production levels vary.
Managers can classify each cost as either variable or fixed, and mixed costs can be broken down into their variable or fixed component.
Revenues are linear throughout the relevant range of volume.
The sales mix remains constant.
Chapter 11 Solutions
COST ACCOUNTING
Ch. 11 - Prob. 11.1QCh. 11 - Define relevant costs. Why are historical costs...Ch. 11 - All future costs are relevant. Do you agree? Why?Ch. 11 - Distinguish between quantitative and qualitative...Ch. 11 - Describe two potential problems that should be...Ch. 11 - Variable costs are always relevant, and fixed...Ch. 11 - A component part should be purchased whenever the...Ch. 11 - Prob. 11.8QCh. 11 - Managers should always buy inventory in quantities...Ch. 11 - Management should always maximize sales of the...
Ch. 11 - Prob. 11.11QCh. 11 - Cost written off as depreciation on equipment...Ch. 11 - Managers will always choose the alternative that...Ch. 11 - Prob. 11.14QCh. 11 - Prob. 11.15QCh. 11 - Qualitative and quantitative factors. Which of the...Ch. 11 - Special order, opportunity cost. Chade Corp. is...Ch. 11 - Prob. 11.18MCQCh. 11 - Keep or drop a business segment. Lees Corp. is...Ch. 11 - Relevant costs. Ace Cleaning Service is...Ch. 11 - Disposal of assets. Answer the following...Ch. 11 - Relevant and irrelevant costs. Answer the...Ch. 11 - Multiple choice. (CPA) Choose the best answer. 1....Ch. 11 - Special order, activity-based costing. (CMA,...Ch. 11 - Make versus buy, activity-based costing. The...Ch. 11 - Inventory decision, opportunity costs. Best Trim,...Ch. 11 - Relevant costs, contribution margin, product...Ch. 11 - Selection of most profitable product. Body Image,...Ch. 11 - Theory of constraints, throughput margin, relevant...Ch. 11 - Closing and opening stores. Sanchez Corporation...Ch. 11 - Prob. 11.31ECh. 11 - Relevance of equipment costs. Janets Bakery is...Ch. 11 - Equipment upgrade versus replacement. (A. Spero,...Ch. 11 - Special order, short-run pricing. Diamond...Ch. 11 - Short-run pricing, capacity constraints. Fashion...Ch. 11 - International outsourcing. Riverside Clippers Corp...Ch. 11 - Relevant costs, opportunity costs. Gavin Martin,...Ch. 11 - Opportunity costs and relevant costs. Jason Wu...Ch. 11 - Opportunity costs. (H. Schaefer, adapted) The Wild...Ch. 11 - Make or buy, unknown level of volume. (A....Ch. 11 - Make versus buy, activity-based costing,...Ch. 11 - Prob. 11.42PCh. 11 - Product mix, special order. (N. Melumad, adapted)...Ch. 11 - Theory of constraints, throughput margin, and...Ch. 11 - Theory of constraints, contribution margin,...Ch. 11 - Closing down divisions. Ainsley Corporation has...Ch. 11 - Dropping a product line, selling more tours....Ch. 11 - Prob. 11.48PCh. 11 - Dropping a customer, activity-based costing,...Ch. 11 - Equipment replacement decisions and performance...
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- Which of the following performance measures will increase if inventory decreases and all else remains the same? Return on Investment Residual Income A) Yes Yes B) No Yes C) Yes No D) No No Multiple Choice Choice A Choice B Choice C Choice Darrow_forwardA firm that uses LIFO accounting for inventory in times of rising investory costs will always report lower profit margins than if it used FIFO. Is this correct?arrow_forwardWhy are perpetual inventory systems more expensive to operate than periodic inventory systems? What conditions justify the additional cost of a perpetual inventory system?arrow_forward
- Explain how lowering inventory produces better products, lower prices, and better responsiveness to customer needs.arrow_forwardDuring a period of rising inventory costs and stable output prices, describe how net income and total assets would differ depending upon whether LIFO or FIFO is applied. Explain how your answer would change if the company is experiencing declining inventory costs and stable output prices.arrow_forwardVery high inventory turnover ratio relative to industry norms could possibly indicate the company does not carry adequate inventory, so shortages could potentialy hurt reverue. Select one: True Falsearrow_forward
- Production exceeds sales. i.e. there is closing stock or closing inventory is increasing Absorption costing will produce a higher profit Why?arrow_forwardWhich of the following is not an underlying assumption of a conventional CVP analysis? Multiple Choice Selling price per unit is unrelated to assumed sales volume. Inputs to the profit-planning model are known with certainty. Learning-curve effects (i.e., productivity gains with experience). Fixed costs, in total, do not change as sales mix or total sales volume change. Variable costs per unit are unrelated to changes in volume.arrow_forwardCVP analysis makes all of the following assumptions except a change in volume is the only factor that affects costs. revenues are linear throughout the relevant range. the mix of products will not change. inventory levels will increase.arrow_forward
- Q: Management is considering taking a special order. The numbers have been crunched and it make sense to take the order at less than the standard selling price. What are some other considerations management should include in their analysis when determining if they will accept the special order?arrow_forwardTh e Industry and Business Risk excerpt states that, “Increased competition may lead tolower unit sales and excess production capacity and excess inventory. Th is may result in afurther downward price pressure.” Th e downward price pressure could lead to inventorythat is valued above current market prices or net realizable value. Any write-downs ofinventory are least likely to have a significant eff ect on the inventory valued using:A. weighted average cost.B. first-in, first-out (FIFO).C. last-in, first-out (LIFO).arrow_forward19. Which of the following is not considered a disadvantage of LIFO?Select one:A. LIFO matches more recent costs against revenues providing better matching.B. LIFO may have a distorting effect on a company's balance sheet.C. LIFO does not usually approximate physical flow of inventory.D. LIFO can lead to poor buying habits to manipulate expenses.arrow_forward
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