Accounting Information Systems
11th Edition
ISBN: 9781337676557
Author: Ulric J. Gelinas; Richard B. Dull; Patrick Wheeler
Publisher: Cengage Learning US
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Textbook Question
Chapter 15, Problem 10DQ
A main goal of JIT is zero inventories.
- a. Assume your company does not aspire to JIT and has $3,000,000 in raw materials in stock. Identify costs that may be incurred to maintain the inventory level.
- b. Now assume that you implement JIT, and your raw materials in stock drop to zero. Explain how you expect this change to impact your income statement and
balance sheet .
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Students have asked these similar questions
Assume that the ending inventory of a merchandising firm is overstated by $40,000.
a. By how much and in what direction (overstated or understated) will the firms cost of goods be misstated?
b. If this error is not corrected, what effect will it have on the subsequent period's operating income?
c. If this error is not corrected, what effect will it have on the total operating income of the two periods (the period in which there is an error and the subsequent period) combined?
The management of Milque Corp. is considering the effects of inventory-costing methods on its financial statements and its income tax
expense. Assuming that the cost the company pays for inventory is increasing, which method will:
(a)
(b)
(c)
Provide the highest net income?
Provide the highest ending inventory?
Result in the lowest income tax expense?
10
When a company's days of inventory on hand are increasing, this might indicate that:
O The company is overstating inventory to reduce profits.
O The company is expanding.
O The company's inventory is obsolete.
Chapter 15 Solutions
Accounting Information Systems
Ch. 15 - Prob. 1RQCh. 15 - Explain the three key drivers of complexity in...Ch. 15 - Describe the three key characteristics of...Ch. 15 - Prob. 4RQCh. 15 - Prob. 5RQCh. 15 - Prob. 6RQCh. 15 - Prob. 7RQCh. 15 - Prob. 8RQCh. 15 - Prob. 9RQCh. 15 - Prob. 10RQ
Ch. 15 - Prob. 11RQCh. 15 - Prob. 12RQCh. 15 - a. How are a bill of materials (BOM) and a routing...Ch. 15 - Prob. 14RQCh. 15 - Prob. 15RQCh. 15 - Prob. 16RQCh. 15 - Prob. 17RQCh. 15 - Prob. 18RQCh. 15 - Why is inventory management and control important...Ch. 15 - Prob. 21RQCh. 15 - Prob. 1DQCh. 15 - Prob. 3DQCh. 15 - What industry do you believe is a leader in...Ch. 15 - Prob. 5DQCh. 15 - Prob. 6DQCh. 15 - Prob. 7DQCh. 15 - Prob. 8DQCh. 15 - In addition to the industries mentioned in...Ch. 15 - A main goal of JIT is zero inventories. a. Assume...Ch. 15 - Prob. 11DQCh. 15 - Discuss how the inventory process supports the...Ch. 15 - Prob. 13DQCh. 15 - Prob. 14DQCh. 15 - Prob. 1SPCh. 15 - Prob. 2SPCh. 15 - Prob. 3SPCh. 15 - Prob. 4SPCh. 15 - Prob. 5SPCh. 15 - Study Figure 15.8, showing the level 0 DFD of the...Ch. 15 - Prob. 3PCh. 15 - Prob. 4PCh. 15 - Prob. 5PCh. 15 - Prob. 6PCh. 15 - Prob. 7P
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Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Similar questions
- Identify the correct statement from the following if, cóst of inventory is greater than its net releasable value? The firm will not incur losses due to this situation. There is higher demand for the inventory in the market. Inventory value in the balance sheet shall decrease. Inventory value in the balance sheet shall increase. Penner LLC imported a packing machine from London. Penner LLC incurred the following costs: Chapter 5 - IAS 16..pdf A Chapter 4 - IAS 2 i.pdf ENarrow_forward1. In a period of rising prices, the inventory reported in Huang Company's balance sheet is close to the replacement cost of the inventory. Gajurel Company's inventory is considerably below its current cost. Identify the inventory cost flow method being used by each company. Which company has probably been reporting the higher gross profit? 2. Identify and explain two ratios that help management determine whether or not there is sufficient inventory on hand.arrow_forwardThe management of Milque Corp. is considering the effects of various inventory-costing methods on its financial statements and its income tax expense. Assuming that the price the company pays for inventory is increasing, which method will: (a) provide the highest net income? (b) provide the highest ending inventory? |(c) result in the lowest income tax expense? (d) result in the most stable earnings over a number of years?arrow_forward
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- 1. Swing Ltd uses FIFO for its inventory, which is valued at $21,000. It is considering a change to moving weighted average, which would change the valuation of inventory to $22,500. Which of the following would be decreased by the change? a. Cost of goods sold b. Sales c. Liabilities d. Withdrawals 2. Which of the following is NOT an accounting method that could be chosen by a company to increase reported profits in a particular year? a. Understating allowance for doubtful debts b. Classifying longer-term receivables as current assets c. Changing estimates of the useful life of plant and equipment d. Changing inventory valuation method 3. Which of the following statements about the use of the FIFO assumption is NOT true? a. The FIFO assumption assigns the more recent purchase costs to the balance sheet inventory asset account. b. The FIFO assumption is not affected by the inventory control method. c. In periods of rising prices it produces a higher profit than…arrow_forwardIf prices are rising and a company is using LIFO, large purchases of inventory near the end of the year will: O increase income taxes paid. A O decrease income taxes paid. not change the amount of income taxes paid. either increase or decrease income taxes paid based on the sales price of the inventory. O There is not enough information to answer the question.arrow_forward3. YOZECH Enterprise is frequently losing sales due to stock-outs. To avoid this problem, the owner likes to implement a new system of maintaining an inventory level which will include a safety stock. After looking into the past records of the company, it was determined that the normal usage during the lead time of 12 days is 120 units while the maximum usage is 150 units for 15 days. Based on the given information, what should be the safety stock of YOZECH Enterprise? What is the ROP (Re-order point)?arrow_forward
- A company has the following information in its records. Certain data have been intentionally omitted ($ in thousands). Required: Determine the missing numbers. Note: Enter all amounts as positive numbers. Enter your answers in thousands. Do not give answer in imagearrow_forwardHubble Space Incorporated has the following data which includes inventory conversion period or ICP of the firms against which it benchmarks. The firm's new manager is looking into the company on how he could reduce its inventory enough to reduce its ICP to the benchmarks' average. If this were done, by how much would inventories decrease? Assume a 365-day year. Cost of goods sold =P85,000; Inventory =P20,000; Inventory conversion period (ICP) =85.88; Benchmark inventory conversion period (ICP) =38.00 * P 7,316 P11,151 P 9,032 P10,036 O P 8,129arrow_forwardi need the answer quicklyarrow_forward
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