Review Session 2 Merch and Manu
Review Session 2 Merch and Manu
Review Session 2 Merch and Manu
THEORIES - MERCH
1. Which of the following appears in the income statement of a merchandising business, but not in
the income statement of a business that renders only services?
2. When goods are shipped FOB destination and the seller pays the transportation charges, the buyer
(M)
3. The company purchases goods with the terms 1/15, n/45. What do the terms mean?
A. A 1% discount is available for 45 days; otherwise, the invoice must be paid in 15 days.
B. A 1% discount is available for 15 days after the invoice date; otherwise, the invoice must be paid
in 45 days.
4. Yeonjun Coffee sold merchandise inventory costing $2,000 for $3,500 in cash. As the accountant,
you would tell the bookkeeper to:
a. debit Cash for $3,500, credit Sales for $2,500, and credit Merchandise Inventory for $2,000
b. debit Cash for $3,500, debit Cost of Goods Sold for $2,000, credit Sales for $3,500, and credit
Merchandise Inventory for $2,000
c. debit Cash for $3,500, debit Merchandise Inventory for $2,000, credit Sales for $3,500, and
credit Cost of Goods Sold for $2,000
d. debit Sales for $3,500, debit Merchandise Inventory for $2,000, credit Cash for $3,500, and
credit Cost of Goods Sold for $2,000
e. debit Sales for $3,500, debit Cost of Goods Sold for $2,000, credit Cash for $3,500, and credit
Merchandise Inventory for $2,000
5. Which of the following credit terms is the most advantageous to the purchaser of merchandise?
PROBLEMS – MERCH
A. $131,000 C. $144,000
B. $137,000 D. $169,000
SOL:
2.The gross profit amount shown on the company’s income statement would be
A. $54,000 C. $73,000
B. $61,000 D. $76,000
SOL:
A. $54,000 C. $28,000
B. $47,000 D. $9,000
SOL:
4. Chris uses its periodic inventory system and the following information is available:
• Sales $ 43,400
• Inventory – Beginning 11,200
• Inventory – Ending 9,800
• Purchases 32,200
Calculate the cost of goods sold (E)
A. $ 77,000. D. $32,200.
B. $33,600. E. $43,400.
C. 11,200.
SOL:
= 33,600
5.
a. P1,074,600
b. P1,085,400
c. P1,009,800
d. P1,080,900
SOL:
All titles that involve cash via sales: Trade A/R, Sales, Accounts written off.
= 1,074,600
MANUFACTURING – THEORIES
5. A good description of “cost of goods manufactured” is the recorded cost of the: (M)
A. units completed during the period.
B. work done on all units during the period.
C. units started and completed during the period.
D. work done this period on units completed this period
MANUFACTURING – PROBLEMS
1. If the beginning balance for May of the materials inventory account was $27,500, the ending
balance for May is $28,750, and $128,900 of materials were used during the month, the materials
purchased during the month cost (E)
A. $101,400 C. $130,150
B. $127,650 D. $157,650
SOL:
Materials used + materials ending inventory - materials beginning inventory = Materials purchased
128900 + 28750 - 27500 = 130150
2.
No. 46 choices:
A. $16,000.
B. $19,000.
C. $23,000.
D. $27,000.
SOL: Raw materials, Beg. + Raw Materials Purchased - Raw Materials, End. = Direct Materials Used or
DMU
DISREGARD OTHERS
A. $50 D. $200
B. $60 E. $40
C. $70
SOL: To arrive at Cost of goods manufactured: Total manufacturing cost + WIP, Beg. - WIP, End
Total manufacturing cost = Direct materials used + Direct Labor + Factory Overhead
$200 (COGM) + $40 (WIP, end) - $30 (WIP, beg) - $90 (FO) - $60 (DL) = $60 (DMU)
To check:
4. Given the following data for Bbokkie Company, what is the cost of goods sold?
A. $500,000
B. $600,000
C. $800,000
D. $950,000
Remember the formula, and don’t get distracted with the “flower-flower” stuffs.
5. During the month of May, Minsung Manufacturing Company purchased $43,000 of raw materials.
The manufacturing overhead totaled $27,000 and the total manufacturing costs were $106,000.
Assuming a beginning inventory of raw materials of $8,000 and an ending inventory of raw
materials of $6,000, direct labor must have totaled: (E)
A. $34,000.
B. $38,000.
C. $36,000.
D. $45,000
SOL: Total manufacturing cost = Direct materials used + Direct Labor + Factory Overhead
A. $44 D. $40
B. $114 E. $110
C. $28
Total manufacturing cost = Direct materials used + Direct Labor + Factory Overhead
$150 (COGM) + $28 (WIP, end) - $24 (WIP, beg.) - $80 (DL) - $30 (DMU) = $44 (Factory Overhead)
7. Guk Manufacturing Corp. shows the following cost pertaining to RM’s order:
A. P 8,800 C. P10,300
B. P 9,600 D. P11,100
SOL:
8. During the month of May, JinHit Manufacturers incurred $30,000, $40,000 and $20,000 of direct
material, direct labor and manufacturing overhead costs respectively. If the cost of goods
manufactured was $95,000 and the ending work in process inventory was $15,000, the beginning
inventory of work in process must have been: (E)
A. $ 10,000. C. $110,000.
B. $ 20,000. D. $ 5,000
95,000 (COGM) + 15,000 (WIP, end) - 90,000 (DMU; the sum of 30,000, 40,000 and 20,000) = 20,000
(WIP, beg)
To check:
90,000 (DMU) + 20,000 (WIP, beg) - 15,000 (WIP, end) = 95,000 (COGM)
9. Assume the following data for Soyeon n’ Soojin Company for December:
a. $235,000 d. $215,000
b. $230,000 e. $210,000
c. $250,000
SOL:
DISREGARD THE FINISHED GOODS BEG AND END INVENTORY, because those are used for COGS
computation
11. The information below relates to Binnie Manufacturing Company's operations for a recent month.
(Assume that all raw materials are direct materials.):
A. $545,000 C. $568,000
B. $560,000 D. $587,000
SOL:
First: Raw materials, beginning + Purchases of raw materials - Raw materials, ending = Direct materials
used
A. 1,000
B. 900
C. 2,400
D. 2,300
E. 100
SOL: Cost of goods available for sale = COGM + Finished goods inventory, Beg.
First, find COGM: 1,000 + 800 - 900 = 900 (TMC + WIP Beg. - WIP End)
13.
a. 111,875,000
b. 113,750,000
c. 118,750,000
d. 119,375,000
Sol:
Total Cost of Manufacturing + Decrease in Raw Materials – Increase in Finished Good = 113,750,000
APPLICATION: A decrease in raw materials means that those materials were used to make more finished
goods, which may be part of the cost of the goods sold, so we increase it. However, an increase in
finished goods means that those finished goods were sold (notice in merchandising, all goods beg and
end are finished goods, and an ending inventory signifies inventory that was not sold), so we shall deduct
it from cost of goods sold.
14.
a. 108,000
b. 214,600
c. 217,200
d. 219,600
15. The gross profit of Brian Company for 2010 is $300,000, cost of goods manufactured is $400,000,
the beginning inventories of goods in process and finished goods are $28,000 and $35,000,
respectively, and the ending inventories of goods in process and finished goods are $50,000 and
$70,000, respectively. The cost of goods sold of Brian Company for 2010 must have been
a. $378,000
b. $265,000
c. $278,000
d. $365,000
SOL: COGS = COGM + Finished Goods, beg. - Finished goods, end
16. The following cost data were taken from the records of a Hwasa’s manufacturing company:
Advertising 7,000
Based upon this information, the total manufacturing cost incurred during the year was (M)
a. $78,500
b. $80,500
c. $80,000
d. $83,000
SOL: Manufacturing costs include direct labor, direct materials, and any other indirect costs (overhead)
connected with production. Selling and administrative costs (e.g., depreciation on sales office, freight-
out, sales salaries, and commission, advertising, and administrative salaries) are not included. Thus, total
manufacturing costs is $80,000.
$28,000 (Production wages) + 47,000 (Raw materials) + 2,000 (Factory rent) + 500 (Factory
insurance) + 1,000 (Factory depreciation) + 1,500 (Materials handling) = $80,000
17.
For the year 19x7, the cost of goods manufactured and gross profit were P10,000,000 and P1,500,000,
respectively. Sales for the year was (E)
a. P10,200,000 c. P11,725,000
b. P11,700,000 d. P11,925,000
First, we must find COGS: 10,000,000 + 750,000 - 550,000 = 10,200,000 (COGM + Finished goods Beg -
Finished goods end)
Second, we work back using the given: 1,500,000 + 10,200,000 = 11,700,000 (Gross profit + COGS =
Sales)
18. Based on the following data, what is the gross profit for Hoshi company on July 20x1?
Sales $ 1,000,000
SOL:
First, find COGS: COGM + Finished goods, beg - Finished goods, end
COGS= 400,000
= 1,000,000 - 400,000
GP = 600,000
19.
a. P167,150
b. P76,950
c. P126,150
d. P177,300
SOL:
Step 1. Direct materials, Beg. + Direct materials purchased - Direct materials, End = Direct Materials
Used (DMU)
22. For the month of March 2012, cost of goods manufactured was
A. $236,000 C. $230,000
B. $224,000 D. $218,000
SOL:
TMC + Work in process, Beg. - Work in process, End = Cost of Goods Manufactured (COGM)
Note: This service is not intended for secure transactions such as banking, social media, email, or purchasing. Use at your own risk. We assume no liability whatsoever for broken pages.
Alternative Proxies: