FINANCIAL ACCOUNTING 9TH
16th Edition
ISBN: 9781308821672
Author: Libby
Publisher: MCG/CREATE
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Textbook Question
Chapter 7, Problem 7.8ME
Determining the Effects of Inventory Management Changes on Inventory Turnover Ratio
LO7-5 Indicate the most likely effect of the following changes in inventory management on the inventory turnover ratio (use + for increase, − for decrease, and NE for no effect).
- a. Have parts inventory delivered daily by suppliers instead of weekly.
- b. Extend payments for inventory purchases from 15 days to 30 days.
- c. Shorten production process from 10 days to 8 days.
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Palladium, Incorporated recently lost a portion of its records in an office fire. The following information was salvaged from the accounting records.
Cost of Goods Sold
$ 67,000
Work-in-Process Inventory, Beginning
11,300
Work-in-Process Inventory, Ending
9,400
Selling and Administrative Expense
16,000
Finished Goods Inventory, Ending
16,100
Finished Goods Inventory, Beginning
?question mark
Direct Materials Used
?question mark
Factory Overhead Applied
12,400
Operating Income
14,220
Direct Materials Inventory, Beginning
11,180
Direct Materials Inventory, Ending
6,140
Cost of Goods Manufactured
61,880
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What is the amount in the finished goods inventory at the beginning of the year?
Which of the following statements is incorrect regarding manufacturing overhead?
Multiple Choice
Manufacturing overhead includes both fixed and variable costs.
Manufacturing overhead is an indirect cost to units or products.
Actual overhead costs are used in the cost accounting process.
Actual overhead costs tend to remain relatively constant over various output levels.
Palladium, Incorporated recently lost a portion of its records in an office fire. The following information was salvaged from the accounting records.
Cost of Goods Sold
$ 72,500
Work-in-Process Inventory, Beginning
13,500
Work-in-Process Inventory, Ending
10,500
Selling and Administrative Expense
18,750
Finished Goods Inventory, Ending
19,125
Finished Goods Inventory, Beginning
?question mark
Direct Materials Used
?question mark
Factory Overhead Applied
13,500
Operating Income
14,825
Direct Materials Inventory, Beginning
11,675
Direct Materials Inventory, Ending
6,525
Cost of Goods Manufactured
67,050
Direct labor cost incurred during the period amounted to 1.5 times the factory overhead. The Chief Financial Officer of Palladium, Incorporated has asked you to recalculate the following accounts and to report to him by the end of the day.
What is the amount of direct materials purchased?
Chapter 7 Solutions
FINANCIAL ACCOUNTING 9TH
Ch. 7 - Why is inventory an important item to both...Ch. 7 - Prob. 2QCh. 7 - Prob. 3QCh. 7 - Prob. 4QCh. 7 - Prob. 5QCh. 7 - The chapter discussed tour inventory costing...Ch. 7 - Prob. 7QCh. 7 - Contrast the effects of LIFO versus FIFO on...Ch. 7 - Contrast the income statement effect of LIFO...Ch. 7 - Prob. 10Q
Ch. 7 - Explain briefly the application of the LCM concept...Ch. 7 - Prob. 12QCh. 7 - Consider the following information: ending...Ch. 7 - The inventory costing method selected by a company...Ch. 7 - Which of the following is not a component of the...Ch. 7 - Consider the following information: beginning...Ch. 7 - Consider the following information: beginning...Ch. 7 - An increasing inventory turnover ratio a....Ch. 7 - If the ending balance in accounts payable...Ch. 7 - Which of the following regarding the lower of cost...Ch. 7 - Which inventory method provides a better matching...Ch. 7 - Which of the following is false regarding a...Ch. 7 - Prob. 7.1MECh. 7 - Recording the Cost of Purchases for a Merchandiser...Ch. 7 - Identifying the Cost of Inventories for a...Ch. 7 - Inferring Purchases Using the Cost of Goods Sold...Ch. 7 - Prob. 7.5MECh. 7 - Matching Inventory Costing Method Choices to...Ch. 7 - Reporting Inventory under Lower of Cost or Market...Ch. 7 - Determining the Effects of Inventory Management...Ch. 7 - Prob. 7.9MECh. 7 - Prob. 7.1ECh. 7 - Inferring Missing Amounts Based on Income...Ch. 7 - Prob. 7.3ECh. 7 - Inferring Merchandise Purchases Abercrombie and...Ch. 7 - Calculating Ending Inventory and Cost of Goods...Ch. 7 - Calculating Ending Inventory and Cost of Goods...Ch. 7 - Analyzing and Interpreting the Financial Statement...Ch. 7 - Analyzing and Interpreting the Financial Statement...Ch. 7 - Evaluating the Choice among Three Alternative...Ch. 7 - Evaluating the Choice among Three Alternative...Ch. 7 - Prob. 7.11ECh. 7 - Reporting Inventory at Lower of Cost or Market...Ch. 7 - Prob. 7.13ECh. 7 - Prob. 7.14ECh. 7 - Prob. 7.15ECh. 7 - Prob. 7.16ECh. 7 - Prob. 7.17ECh. 7 - Prob. 7.18ECh. 7 - Prob. 7.19ECh. 7 - Prob. 7.20ECh. 7 - (Chapter Supplement A) Analyzing the Effects of a...Ch. 7 - (Chapter Supplement B) FIFO and LIFO Cost of Goods...Ch. 7 - (Chapter Supplement C) Recording Sales and...Ch. 7 - Analyzing Items to Be Included in Inventory Travis...Ch. 7 - Prob. 7.2PCh. 7 - Evaluating Four Alternative Inventory Methods...Ch. 7 - Prob. 7.4PCh. 7 - Evaluating the LIFO and FIFO Choice When Costs Are...Ch. 7 - Evaluating the Income Statement and Cash Flow...Ch. 7 - Evaluating the Effects of Manufacturing Changes on...Ch. 7 - Evaluating the Choice between LIFO and FIFO Based...Ch. 7 - Prob. 7.9PCh. 7 - (Chapter Supplement A) Analyzing LIFO and FIFO...Ch. 7 - Prob. 7.1APCh. 7 - Evaluating Four Alternative Inventory Methods...Ch. 7 - Evaluating the UFO and FIFO Choice When Costs Are...Ch. 7 - Prob. 7.4APCh. 7 - Prob. 7.1CONCh. 7 - Finding Financial Information Refer to the...Ch. 7 - Finding Financial Information Refer to the...Ch. 7 - Comparing Companies within an Industry Refer to...Ch. 7 - Prob. 7.4CPCh. 7 - Using Financial Reports: Interpreting Effects of...Ch. 7 - Making a Decision as a Financial Analyst: Analysis...Ch. 7 - Evaluating an Ethical Dilemma: Earnings, Inventory...
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