Note:

Questions (l) through (n) are based on the following information pertaining to Haileys manufacturing operations:

Inventories January 1, 2019 December 31, 2020

Direct materials 30,000 20,000

Work in progress 30,000 25,000

Finished goods 28,000 35,000

Additional information for 2019:

Direct materials purchased 110,000

Direct manufacturing labour payroll 90,000

Direct manufacturing labour rate per hour 10

Factory overhead rate per direct manufacturing labour-hour 7

l. For 2019, what was the prime cost?

1) 90,000

2) 120,000

3) 170,000

4) 210,000

m. For 2020, what was the conversion cost?

1) 90,000

2) 153,000

3) 183,000

4) 200,000

n. For 2019, what was the cost of goods manufactured?

1) 35,000

2) 268,000

3) 273,000

4) 278,000

o. In the preparation of the schedule of cost of goods manufactured, the accountant incorrectly excluded as part of manufacturing overhead the janitorial expense of the firms factory. What impact will this error have on the financial statements?

1) It will overstate period expenses on the income statement.

2) It will overstate the cost of goods sold on the income statement.

3) It will understate the cost of goods manufactured.

4) It will have no effect on the cost of goods manufactured.