Pkg Acc Infor Systems MS VISIO CD
10th Edition
ISBN: 9781133935940
Author: Ulric J. Gelinas
Publisher: CENGAGE L
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Textbook Question
Chapter 15, Problem 8DQ
A main goal of JIT is zero inventories.
- a. Assume your company does not aspire to JIT and has $3,000,000 in raw materials in stock. Identify costs that may be incurred to maintain the inventory level.
- b. Now assume that you implement JIT, and your raw materials in stock drop to zero. Explain how you expect this change to impact your income statement and balance sheet.
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Students have asked these similar questions
Assume that the ending inventory of a merchandising firm is overstated by $40,000.
a. By how much and in what direction (overstated or understated) will the firms cost of goods be misstated?
b. If this error is not corrected, what effect will it have on the subsequent period's operating income?
c. If this error is not corrected, what effect will it have on the total operating income of the two periods (the period in which there is an error and the subsequent period) combined?
If the ending inventory of a firm is overstated by $49,000, by how much and in what direction (overstated or understated) will the firm's operating income be misstated? (Hint: Use the cost of goods sold model, enter hypothetically "correct" data, and then reflect the effects of the ending inventory error and determine the effect on cost of goods sold.)
operating income ?
By ?
A firm recorded it's ending inventory for the previous year at $40,000. It realized at the end of the first quarter of the current year that the number was misstated and should actually be $30,000. What corrective entries need to occur to ensure net income is not affected at the end of the current year?
There are no corrections to be made.
The firm should account for the misstated inventory in a separate cost of goods sold entry.
There is no way to fix the entry and the net income will remain affected.
The firm should account for the misstated inventory at the end of the current year.
Chapter 15 Solutions
Pkg Acc Infor Systems MS VISIO CD
Ch. 15 - Prob. 1RQCh. 15 - Explain the three key drivers of complexity in...Ch. 15 - Describe the three key characteristics of...Ch. 15 - Prob. 4RQCh. 15 - Prob. 5RQCh. 15 - Prob. 6RQCh. 15 - Prob. 7RQCh. 15 - Prob. 8RQCh. 15 - Prob. 9RQCh. 15 - Prob. 10RQ
Ch. 15 - Prob. 11RQCh. 15 - Prob. 12RQCh. 15 - a. How are a bill of materials (BOM) and a routing...Ch. 15 - Prob. 14RQCh. 15 - Prob. 15RQCh. 15 - Prob. 16RQCh. 15 - Prob. 17RQCh. 15 - Prob. 18RQCh. 15 - Why is inventory management and control important...Ch. 15 - Prob. 21RQCh. 15 - Prob. 1DQCh. 15 - What industry do you believe is a leader in...Ch. 15 - Prob. 3DQCh. 15 - Prob. 4DQCh. 15 - Prob. 5DQCh. 15 - Prob. 6DQCh. 15 - In addition to the industries mentioned in...Ch. 15 - A main goal of JIT is zero inventories. a. Assume...Ch. 15 - Prob. 9DQCh. 15 - Discuss how the inventory process supports the...Ch. 15 - Prob. 11DQCh. 15 - Prob. 1SPCh. 15 - Prob. 2SPCh. 15 - Prob. 3SPCh. 15 - Prob. 4SPCh. 15 - Prob. 5SPCh. 15 - Study Figure 15.8, showing the level 0 DFD of the...Ch. 15 - Prob. 3PCh. 15 - Prob. 4PCh. 15 - Prob. 5PCh. 15 - Prob. 6PCh. 15 - Prob. 7P
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- A company has an inventory of 1,000 assorted parts for a tool that has been discontinued. The inventory cost is $78,000. The parts can be either (a) remachined at total additional costs of $24,500 and thensold for $33,000 or (b) sold as scrap for $6,500. Based only on quantitative data, which action should be taken? Remachine since the difference in favor of remachining is $2000 b. Remachine since the difference in favor of remachining is $8500 c. Sell as scrap since the difference in favor of selling is $6500 d. Sell as scrap since the difference in favor of selling is $2000 Clear my choicearrow_forwardJack Jones, the materials manager at Precision Enterprises,is beginning to look for ways to reduce inventories. A re-cent accounting statement shows the following inventoryinvestment by category: raw materials, $3,129,500; work-in-process, $6,237,000; and finished goods, $2,686,500.This year’s cost of goods sold will be about $32.5 mil-lion. Assuming 52 business weeks per year, express totalinventory asa. Weeks of supplyb. Inventory turnsarrow_forwardA company has five product lines, one of which has Fixed expenses of $173,657 and a Net loss of $40,203. If this product line is eliminated, 48% of the fixed expenses can be eliminated and the remainder will be allocated to other product lines. If management decides to eliminate this product line, the amount the company's net income will increase or decrease(-) is? Round to the nearest dollar and put a negative sign - before a decrease. Do not type the dollar sign.arrow_forward
- Hubble Space Incorporated has the following data which includes inventory conversion period or ICP of the firms against which it benchmarks. The firm's new manager is looking into the company on how he could reduce its inventory enough to reduce its ICP to the benchmarks’ average. If this were done, by how much would inventories decrease? Assume a 365-day year. Cost of goods sold =P85,000; Inventory =P20,000; Inventory conversion period (ICP) =85.88; Benchmark inventory conversion period (ICP) =38.00 *arrow_forwardHubble Space Incorporated has the following data which includes inventory conversion period or ICP of the firms against which it benchmarks. The firm's new manager is looking into the company on how he could reduce its inventory enough to reduce its ICP to the benchmarks’ average. If this were done, by how much would inventories decrease? Assume a 365-day year. Cost of goods sold =P85,000; Inventory =P20,000; Inventory conversion period (ICP) =85.88; Benchmark inventory conversion period (ICP) =38.00 * A. P 8,129 B. P 7,316 C. P 9,032 D. P11,151 E. P10,036arrow_forwardThe net realizable value of Lake Corporation’s inventory has declined below its cost.Allyn Conan, the controller, wants to use the loss method to write down inventory because itmore clearly discloses the decline in the net realizable value and does not distort the cost ofgoods sold. His supervisor, financial vice president Bill Ortiz, prefers the cost-of-goods-soldmethod to write down inventory because it does not call attention to the decline in net realizablevalue.Instructions Answer the following questions:(a) What, if any, is the ethical issue involved?(b) Is any stakeholder harmed if Bill Ortiz’s preference is used?(c) What should Allyn Conan do?arrow_forward
- Malcolm Lee Industries reported the following amounts in its December 31st financial statements: 2020 2021 Cost of Goods sold $270,100 $288,600 Ending Inventory 55,600 55,600 Errors were made in each year as follows: in 2020, ending inventory was overstated by $10,600 while in 2021, ending inventory was understated by $6,600. Explain the impact of these errors for 2021 profit and owners’ equity. Profits will be by $ . Owners’ equity will be by $ . Save for Later Last saved 1 day ago. Saved work will be auto-submitted on the due date. Attempts: 0 of 1 used Submit Answerarrow_forwardMalcolm Lee Industries reported the following amounts in its December 31st financial statements: 2020 2021 Cost of Goods sold $280,000 $287,900 Ending Inventory 55,700 55,700 Errors were made in each year as follows: in 2020, ending inventory was overstated by $10,600 while in 2021, ending inventory was understated by $6,700. Explain the impact of these errors for 2021 profit and owners’ equity. Profits will be by $ . Owners’ equity will be by $ .arrow_forwardTristan, Inc., uses the LIFO cost-flow assumption to value inventory. It began the current year with 2,000 units of inventory carried at LIFO cost of $20 per unit. During the first quarter, it purchased 8,000 units at an average cost of $40 per unit and sold 9,500 units at $60 per unit.Assume the company does not expect to replace the units of beginning inventory sold; it plans to reduce inventory by year-end to 500 units. What amount of cost of goods sold should be recorded for the quarter ended March 31?a. $335,000b. $350,000c. $380,000d. $387,500arrow_forward
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