If the operating activities section of a companys statement of cash flows includes an addition of $15 related to accounts receivable, then it means that:

Multiple Choice

• The cash paid for inventory purchases was $15 less than the cost of goods sold.

• The cash paid for inventory purchases was $15 greater than the cost of goods sold.

• The cash collections from customers were $15 less than the credit sales.

• The cash collections from customers were $15 greater than the credit sales.

19Assume a merchandising company reported cost of goods sold of $100,000. Its inventory account balance decreased by $12,000 during the period and its accounts payable balance decreased by $5,000 during the period. The cash paid inventory purchases would be:

Garrison 17e Rechecks 2020-10-02

Multiple Choice

• $107,000.

• $93,000.

• $117,000.

• $83,000.

20

The Foundational 15 (Algo) [LO1-1, LO1-2, LO1-3, LO1-4, LO1-5, LO1-6]

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Martinez Companys relevant range of production is 7,500 units to 12,500 units. When it produces and sells 10,000 units, its average costs per unit are as follows:

	Average Cost Per Unit
Direct materials	$	6.60
Direct labor	$	4.10
Variable manufacturing overhead	$	1.50
Fixed manufacturing overhead	$	4.00
Fixed selling expense	$	3.60
Fixed administrative expense	$	2.00
Sales commissions	$	1.00
Variable administrative expense	$	0.50

Foundational 1-1 (Algo)

Required:

1. For financial accounting purposes, what is the total amount of product costs incurred to make 10,000 units? (Do not round intermediate calculations.)