1- Identify the correct statement with respect to manufacturing and merchandising companies in general and how their accounting systems differ.

A.Manufacturing is the sale of goods purchased at wholesale prices. Merchandising is the production of goods using raw materials purchased at resale prices. Both companies show inventories at the cost they pay to acquire them.

B.Manufacturing is the transformation of materials into other goods through the use of labor and factory facilities. Merchandising companies sell goods without changing their basic forms. Merchandising companies show inventories at the cost they pay to acquire them. Manufacturing companies classify production costs as either direct material, direct labor, or indirect production costs, and they use the accounting system to determine how much cost of each type should be assigned to product inventories.

C.Manufacturing is the transformation of materials into other goods through the use of labor and factory facilities. Merchandising is the transformation of materials into other goods using outside vendors. Both companies classify production costs as either direct material, direct labor, or indirect production costs, and they use the accounting system to determine how much cost of each type should be assigned to product inventories.

D.Merchandising companies transform materials into other goods through the use of labor and factory facilities. Manufacturing companies sell goods without changing their basic forms. Manufacturing companies show inventories at the cost they pay to acquire them. Merchandising companies classify production costs as either direct material, direct labor, or indirect production costs, and they use the accounting system to determine how much cost of each type should be assigned to product inventories.

2- Distinguish between job costing and process costing.

A.Process costing deals with broad averages and great masses of like units. The job-cost method is the attempt to apply costs to specific jobs that may consist of either a single physical unit or a few like units in a distinct batch or job lot.

B.The unit cost used for inventory purposes is the result of taking some accumulated cost of production and dividing it by some measure of production.

C.The basic distinction between job-order costing and process costing is the size of the denominator for the unit cost calculation. In process costing, the denominator is small and in job-order costing, the denominator is large.

D.Process costing distributes the exact cost of a small quantity of similar units. The job-cost method is the attempt to apply costs to specific jobs that consists of a large quantity of units that can be similar or different.

3- There are five key steps in process-cost accounting." What are they?

A.Summarize the flow of physical units, calculate output in terms of equivalent units, summarize the total costs to account for, calculate unit costs and apply costs to units completed and to units in ending work in process.

B.Summarize the flow of physical units, summarize the direct costs to account for, verify product count, record total unit cost going to WIP, and apply costs to units completed to finished goods.

C.Summarize the flow of physical units, calculate unit costs, allocate overhead costs, verify product count, and apply costs to units completed and to units in ending work in process.

D.Summarize the flow of physical units, detail only direct costs, count the numbers produced, calculate unit costs, and apply costs to units completed and to units in ending finished goods.