Question 1. Delphi Switch and Signal sold equipment to a Canadian transportation company at a price of 150,000 Canadian dollars with
payment due in 60 days. On the date of sale the exchange rate was 1.50 Canadian dollars per U.S. dollar. Delphi decided to hedge the
risk of currency fluctuations by purchasing 150,000 Canadian dollars with payment due in 60 days. If the exchange rate in 60 days is 1.25 Canadian dollars per U.S. dollar, Delphi Switch and Signal will:
a. Recognize a net gain of $20,000 on the two transactions.
b. Recognize a $20,000 gain when it collects the receivable and incur a $20,000 loss when it pays the liability.
c. Incur a $20,000 loss when it collects the receivable and recognize a $20,000 gain when it pays the liability.
d. Incur a net loss of $20,000 on the two transactions.
Question 2. Precision Instruments sold equipment to a British research group at a price of 50,000 British pounds on December 1, 2000, with payment due in 90 days. Using the following exchange rates, compute the gain or loss from currency fluctuations that Precision Instruments should recognize in 2000 and 2001.
Dec. 1, 2000 $1.75 per British pound
Dec. 31, 2000 $1.80 per British pound
Mar. 1, 2001 $1.76 per British pound
a. $2,500 loss in 2000; $2,000 gain in 2001.
b. No gain or loss in 2000; $500 loss in 2001.
c. $2,500 gain in 2000; $2,000 loss in 2001.
d. No gain or loss in 2000; $500 gain in 2001
Use the following to answer questions.
The following information has been taken from the perpetual inventory system of Dart Mfg. Co. for the month ended July 31:
Purchases of direct materials $27,000
Direct materials used 30,000
Wages paid to direct workers during the month 8,000
Direct labor costs assigned to production 10,000
Manufacturing overhead costs incurred (and applied) 20,000
Balances in inventory July 31 July 1
Materials $ ? $43,000
Work in Process 13,000 10,000
Finished Goods 85,000 80,000
Question 3. Refer to the above data. The total amount of inventory to be included in Dart's July 31 balance sheet amounts to:
a. $138,000.
b. $98,000.
c. $85,000.
d. Some other amount.
Question 4. Refer to the above data. The overhead application rate, assuming that overhead is applied to production as a percentage of direct labor costs, is:
a. 250%.
b. 200%.
c. 50%.
d. 40%.
Question 5. If estimated manufacturing overhead costs are $450,000 and estimated direct labor hours, which have a causal effect on
manufacturing overhead costs, are 90,000, what is the overhead application rate?
a. $5 per labor hour
b. $9 per labor hour
c. $5 per hour of manufacturing overhead
d. None of the above
Question 6. Which of the following do not represent a type of inventory to General Motors?
a. Completed automobiles awaiting sale
b. Raw materials and component parts awaiting use in the manufacturing process.
c. Automobiles that are only partially completed at the end of the accounting period
d. None of the above
Question 7. The "net purchases" acquired by a merchandising company correspond most closely to which of the following items applicable to
a manufacturing company?
a. Cost of goods available for sale.
b. Cost of finished goods manufactured.
c. Cost of goods sold.
d. Total manufacturing costs incurred during the production process.