On June 1, a firm purchased 40 units of materials at a unit price of $1.42. On June 15, the firm purchased 45 units with a unit price of $1.18. If the firm uses the LIFO method of inventory pricing, the total cost of 65 units issued on June 20 would be:

Multiple Choice

• $92.30.

• $86.30.

• $84.50.

• $81.50.

Under the direct method, what impact does an increase in finished goods inventory have on the amount of fixed costs expenses?

Multiple Choice

• The amount of fixed costs expensed increases.

• The amount of fixed costs expensed decreases.

• The amount of fixed costs expensed is unchanged.

• The amount of fixed costs expensed could either increase or decrease.

If total merchandise available for sale is 80 percent of net sales and ending inventory is 26 percent of net sales, gross profit on sales is:

Multiple Choice

• 20 percent of net sales.

• 74 percent of net sales.

• 26 percent of net sales.

• 46 percent of net sales.

The acid-test ratio is computed by dividing ____________________ by current liabilities.

Multiple Choice

• current assets

• quick assets

• long-term liabilities

• stockholders equity

_____________ are the two principal cost accounting systems for capturing and reporting manufacturing costs.

Multiple Choice

• job order cost and process cost

• standard cost and indirect cost

• just-in-time and perpetual inventory

• work in process and manufacturing overhead

On a statement of cash flows, depreciation expense is:

Multiple Choice

• subtracted from net income in the computation of the net cash provided by operating activities.

• added to net income in the computation of the net cash provided by operating activities.

• treated as a cash outflow in the computation of the net cash used in investing activities.

• treated as a cash inflow in the computation of the net cash used in investing activities.

In its first year of operations, a company has sales of $162,000, ending finished goods inventory of $9,000, variable manufacturing costs of $55,000, and fixed manufacturing costs of $32,000 for the year. The company pays 12% commission to its sales force and has fixed selling and administrative expenses of $25,000 annually. The company has no other variable expenses. Assuming the company uses direct costing, the marginal income on sales is

Multiple Choice

• $96,560.

• $87,560.

• $71,560.

• $107,000.