Question 1. 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 2. 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.
Question 3. A well-designed cost accounting system would alert management to each of the following situations except:
a. A shortage of a particular material has caused the Purchasing Department to stock a more expensive component.
b. Because of a number of rush jobs, many of the employees are working overtime at time-and-one-half pay rates.
c. Because of the incidence of crime in the area, the cost of security for the manufacturing plant has doubled in the past few months.
d. The state in which the corporation is located has increased the corporate income tax rates from 8% to 12%.
Question 4. Manufacturing overhead is considered an indirect cost, since overhead costs generally cannot be traced conveniently and directly to specific units of product.
a. True
b. False