QUESTION 30 How does overstated ending inventory lead to overstated eamings? By

ID: 2395837 • Letter: Q

Question

QUESTION 30 How does overstated ending inventory lead to overstated eamings? By underststng cost of good sold. By overa:ating revenue. By underatating contributon margin. By underatating groas margin. QUESTION 31 Project A has an expected ossh flow of S500 000 at the end of year 5 Project B h35 an expected casn flow of $100.000 to be reoe' ved at the end of each year for ???e next five years what can be ssd of the net present value of project A compared to proiect B? O Thay are the same becauze boch cash ows total $500,CO0 over the lives of the projects O Project A ispreferred becuze of the largest lump sum payment in year5. O Project B is preferred becuse of the peniodic payments made consistently throughout the year and ar made carlier. O The boon have the same internal rate of turn and ether should be aooepted. QUESTION 32 Gem Systems Gem Systems uses an actvity-based costng system. The company has gathered the following information conceming various oost poos and aotivty drivers Activity e4 eal Material Handling Machine setups Normal Ces 525.000 S25,000 $5,000 15,000 Number of moves Number of setups Numbar ot Inspaccions 5.000 10.000 2,500 5,000 Elactricty Costs The fallowing data was collected and is speaific to Jab 150 Total Direct Material Cost Total Direct Labor Cost Number of machine setups Number of matenial moves 40,000 525.000 3.000 1.000 100 1,000 5.000 Kilowatt hours of elecoricity used Units produced Refe to Gem Systems Caleulate the product cost of one unit of Job 150 $11.74 O $13.00 O s8.74 O $18.74 QUESTION 33 Safy V sual Wors no est sted its overhead costs or ne current year to be ? ollows units. Caloulate the rate to be used to apply manufacturing averhead costs to products xed. $175.000: vanable $4 per unit Safe expected to produce 350 000 units dur the year, Dur g the year, the company incurred ove esd costs of $1.800.000 and produced 400 000 $3.50 $4.50 $5.50

Explanation / Answer

Q:30

how does overstated ending inventory lead to overstated earning

Answer:

By understating cost of goods sold

Explanation:

If the ending inventory are overstated ending then it means cost of goods are understated because cost of goods sold(COGS) is affected by the overstatement for ending inventory and COGS is deducted from the revnue so earning will be overstated

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Q:31

Project A has an expected cash flow of $500,000 at the end of year 5. Project B has an expected cash flow of $100,000 to be received at the end of each year for the next five years. What can be said of the net present value of project A compared to project B

Answer:

C). Project B is preferred because of the periodic payments made consistently throughout the years and are made earlier.

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Q:32

The product cost of one unit of Job 150=$16.74

Working notes for the above answer is as under

Direct materials

$40,000

Direct labor

$25,000

Material Moves

$ 5,000 (($25,000/5,000) x 1,000)

Machine Set ups

$10,500 ((35,000/10,000) x 3,000)

Inspections

$ 200 (($5,000/2,500) x 100)

Electricity

$ 3,000 (($15,000/5,000) x 1,000

$83,700/5,000 units produced
= $16.74 per unit

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Q:33

Rate to be used to apply manufacturing overhead cost to product=$4.5

Working notes for the above answer is as under

Fixed cost per unit
=175000/350,000

0.5

Variable cost

Total Overhead cost (4+0.5)

4.5