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Exam 2: Accounting for Materials

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Question 41

Multiple Choice

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Marley Company hired a consultant to help improve its operations.The consultant's report stated that Marley's inventory levels are excessive and cited several negative consequences to Marley as a result.Which of the following consequences was not cited in the report?

A) Possible other uses for working capital now tied up in inventory
B) Production stoppages due to parts not being available
C) Higher property taxes and insurance costs
D) Large quantities of obsolete materials

E) A) and C)
F) B) and C)

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Question 42

Multiple Choice

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The duties of the purchasing agent would include all of the following except:

A) Placing purchase orders.
B) Counting and identifying materials received.
C) Compiling information that identifies vendors and prices.
D) Verifying invoices and approving them for payment.

E) All of the above
F) None of the above

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Question 43

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The general ledger entry to record the purchase of materials is:

Order costs would include all of the following except:

Inventory levels for firms using JIT inventory systems compared to firms not using JIT will be:

In a backflush accounting system,a single account is used for the following:

Rowe Co.'s Job 401 for the manufacture of 2,200 wagons was completed during August at the unit costs presented below. Final inspection of Job 401 disclosed 200 spoiled wagons that were sold to a jobber for $6,000. ​ Assume that spoilage loss is attributable to the exacting specifications of Job 401 and is charged to this specific job.What would be the unit cost of the good wagons produced on Job 401?

The following decisions and transactions were made for the Sanders Company in May: May 1 The production manager informed the storeroom keeper that the forecasted usage of Component X is 3,000 units.There are 1,500 units on hand,each having a unit cost of $20.The company maintains a minimum stock of 1,000 units.The storeroom keeper notifies the purchasing agent that the company will need 2,500 units of X to meet May's production needs and maintain a minimum inventory of 1,200 units. May 3 The purchasing agent checks with a number of vendors and orders 2,500 units of Component X.Unfortunately,the price has gone up to $25. May 7 The shipment of Component X is received and inspected.The units are in good condition and the company received the number of units it ordered. May 9 The invoice covering Component X is received from the vendor and approved for payment. May 21 The May 9 invoice is paid in full. May 31 During the month,2,950 units of Component X are issued to production.The company uses FIFO costing and a job order cost system. May 31 An inventory of the storeroom is taken at the end of the day and there are 1,040 units of Component X on hand. (a)Prepare a table to answer the following questions: (1)What forms,if any,were used? (2)What entry,if any,was recorded? (b)Calculate the balance in the Materials account at May 31.

Just-in-time production techniques:

Polk,Inc.produces 3,000 hammers each day.The average number of units in work in process is 4,500,having an average cost of $10,000.The annual carrying costs relating to inventory are 15%. ​ Consultants have determined that the work in process could be reduced by as much as a third by rearranging the factory floor.What is the current throughput time?

For the following materials control forms,please indicate the following: a.who prepares the form; b.who receives the form;and c.the form's intended purpose.1.Purchase Requisition 2.Materials Requisition 3.Receiving Report 4.Purchase Order 5.Debit/Credit Memo

The Outdoor Manufacturing Company produces sporting equipment.The company maintains a single raw materials inventory account for both direct and indirect materials.The following information came from the factory ledger accounts for December: Compute the cost of direct materials used during the month of December.

Murphy Company uses 3,000 yards of material each day to make hats.It usually takes five days from the time Murphy orders the material to when it is received.If Murphy's desired safety stock is 6,000 yards,what is Murphy's order point?

The materials account of the Herbert Company reflected the following changes during August: Assuming that Herbert Company maintains perpetual inventory records,calculate the cost of the ending inventory at August 31 and the cost of the units issued in August using the moving average method.

The Benchley Company uses metal grates when assembling appliances.Information as to balances on hand,purchases,and requisitions of the grates is given in the following table. If a perpetual inventory record of the metal grates is maintained on a FIFO basis,what costs are assigned to the 150 units in ending inventory?