The ending merchandise inventory for the current year is overstated by $25,000. What effect will this error have on the following year's net income?
A) The net income will be overstated by $50,000.
B) The net income will be overstated by $25,000.
C) The net income will be understated by $25,000.
D) The net income will be understated by $50,000.
C) The net income will be understated by $25,000.
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Magnolia Company has identified seven activities as part of its manufacturing process and chosen corresponding activity drivers for each activity. The chart below lists the total cost of each activity, the amount of activity driver used for each of Magnolia's two products, the activity rate, and the activity cost assigned to each product. Fill in the blanks below:ActivityCostActivity DriverDriver UsageActivity RateActivity Cost: Prod. 1Activity Cost: Prod. 2???Prod. 1Prod. 2???Design$60,000Design time800 hours1,200 hoursa.b.c.Preparation$18,000Labor hours3,000 hoursd.e.$9,000f.Machining$90,000Machine
hoursg.h.$18.00/hour$27,000i.Finishingj.Batches200300$50/batchk.l.Inspectionm.Unitsn.o.$6/unit$3,000$6,000Packagingp.Ordersq.50$300/order$13,500r.Shipping$17,000Packages70s.t.u.$3,000 What will be an ideal response?
The three primary inventory accounts in a manufacturing company are
a. Merchandise Inventory, Supplies Inventory, and Finished Goods Inventory. b. Merchandise Inventory, Work in Process Inventory, and Finished Goods Inventory. c. Supplies Inventory, Work in Process Inventory, and Finished Goods Inventory. d. Raw Material Inventory, Work in Process Inventory, and Finished Goods Inventory.
When a customer's account is identified as uncollectible using the allowance for doubtful accounts method, which of the following is the correct entry to record the write-off?
a. debit Uncollectible Accounts Expense, credit Accounts Receivable (customer name) b. debit Accounts Receivable (customer name), credit Allowance for Doubtful Accounts c. debit Allowance for Doubtful Accounts, credit Accounts Receivable (customer name) d. debit Accounts Receivable (customer name), credit Uncollectible Accounts Expense
The selling price of a product is originally greater than the variable cost of producing it. Assume that the selling price and the variable cost per unit both increase 20% and fixed costs do not change. What is the effect of this change on the contribution margin per unit and the contribution margin ratio?
a. Contribution margin per unit and the contribution margin ratio both remain unchanged. b. Contribution margin per unit and the contribution margin ratio both increase. c. Contribution margin per unit increases and the contribution margin ratio remains unchanged. d. Contribution margin per unit decreases and the contribution margin ratio remains unchanged.