The amount of raw material purchased in a period may be different than the amount of material used that period because finished goods inventory may fluctuate during the period. the number of units sold may be different from the number of units produced. the raw material inventory may increase/decrease during the period. companies often pay for material in the period after it is purchased.

The amount of raw material purchased in a period may be different than the amount of material used that period because finished goods inventory may fluctuate during the period. the number of units sold may be different from the number of units produced. the raw material inventory may increase/decrease during the period. companies often pay for material in the period after it is purchased.

Principles of Cost Accounting

17th Edition

ISBN:9781305087408

Author:Edward J. Vanderbeck, Maria R. Mitchell

Publisher:Edward J. Vanderbeck, Maria R. Mitchell

Chapter2: Accounting For Materials

Section: Chapter Questions

Problem 10E

See similar textbooks

Similar questions

Inventory Costing When Inventory Quantities Are Small A number of companies have adopted a just-in-time procedure for acquiring inventory. These companies have arrangements with their suppliers that require the supplier to deliver inventory just as the company needs the goods. As a result, just-in-time companies keep very little inventory on hand. Required: Once a company has switched to the just-in-time procedure and has little inventory, should the inventory costing method (LIFO or FIFO) affect cost of goods sold?
It’s common in the electronics industry for unit costs of raw materials inventories to decline over time. In this environment, explain the difference between LIFO and FIFO in terms of the effect on cost of goods sold and ending inventory. Assume that inventory quantities remain the same for the period.
Which of these occur when the costs of goods sold exceeds the costs of goods manufactured? Group of answer choices The finished goods inventory decreases over the period. The work-in-process inventory increases over the period. The finished goods inventory increases over the period. The work-in-process inventory decreases over the period.
If a company incurred a significant repairs and maintenance expense for a plant equipment ( used in production ), what is the effect on inventory ? A) finished goods will increase B) work -in - process inventory will decrease. C) finished goods inventory will decrease D) raw materials inventory will increase
Here are the opinions in the drop down Administrative expenses Beginning merchandise inventory Cost of goods sold Direct labor Direct materials Ending merchandise inventory Fixed manufacturing overhead Indirect labor Indirect materials Manufacturing overhead Purchases Sales Selling expenses Variable manufacturing overhead
When the sale of finished goods is recorded, the balance in which of the following accounts will decrease? None of the listed choices are correct Work-in-Process Sales Revenue Cost of Goods Sold Raw Materials Inventory Factory Overhead Finished Goods Inventory
In the immediate write-off approach, under-applied overhead is regarded as: a. an increase in current income b. an increase in the cost of inventory c. a decrease in cost of goods sold d. an increase in cost of goods sold
Samsung Electronics reports the following regarding its accounting for inventories. Inventories are stated at the lower of cost or net realizable value. Cost is determined using the average cost method, except for materials-in-transit. Inventories are reduced for the estimated losses arising from excess, obsolescence, and decline in value. This reduction is determined by estimating market value based on future customer demand. The losses on inventory obsolescence are recorded as a part of cost of sales. 1. What cost flow assumption(s) does Samsung apply in assigning costs to its inventories? 2. If at the current year-end there was an increase in the value of its inventories such that there was a reversal of W550 (W is Korean won) million for the write-down recorded in the prior year, how would Samsung account for this under IFRS? Would Samsung’s accounting be different for this reversal if it reported under U.S. GAAP? Explain.
L. What is the ending balance in Finished Goods ? (Show T-Account ) M. Assuming that the company closes its underapplied or overapplied overhead to Cost of Goods Sold, what is the adjusted cost of goods sold for the year? N. What is the gross margin for the year ? O. What is the net operating income for the year ?
Interpretation of the inventory holding period depends on the industry in which a business operates. An increase in inventory days might be explained by which of the following? a) Seasonal variations in demand leading to a dramatic increase in the volume of sales of finished goods b) Supply problems arising from difficulties in purchasing raw materials from suppliers c) A new policy to reduce the level of inventory to reduce the associated costs of storage and insurance d) A business deliberately building up inventories prior to a large order
Sales commissions incurred based on units of product sold during a given period is an example of a product cost true or false
The cost of inventories does not include Salaries of factory staff. Irrecoverable purchase taxes. Abnormal amounts of wasted materials and  distribution costs. Storage costs necessary in the production process  before a further production stage.