Managerial Accounting
3rd Edition
ISBN: 9780077826482
Author: Stacey M Whitecotton Associate Professor, Robert Libby, Fred Phillips Associate Professor
Publisher: McGraw-Hill Education
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Question
Chapter 1, Problem 4.3GAP
To determine
Concept introduction:
Period Cost cannot be assigned to the products or to the cost of inventory. The period cost is just related to the selling of product or it’s related to general administration. So the assignment of period cost as product cost is totally incorrect.
To identify:
The impact on financial statement if period cost assigned as product cost.
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Check out a sample textbook solutionStudents have asked these similar questions
Requirement 3. Classify each of the cost items
(A-I)
as an inventoriable cost or a period cost. Explain your answers.
a. Lumber at Home Depot is a(n)
▼
inventoriable cost
period cost
since the lumber is
▼
an asset (inventory) held to sale to customers.
presumed not to benefit future periods.
The cost of lumber becomes part of
▼
cost of goods sold
manufacturing overhead
operating expenses
when it is sold to customers.
b. Electricity in an Apple manufacturing plant is a(n)
▼
inventoriable cost
period cost
.
It is
▼
a direct cost
an indirect cost
of the product being produced.
c. Depreciation on the shelving at Home Depot is a(n)
▼
inventoriable cost
period cost
.
It is
▼
a cost of selling their products
a cost of the products
,
not
▼
a cost of selling their products
a cost of the products
.
d. Mileage for Rent a Nanny is a(n)
▼
inventoriable cost
period cost
since
▼
it has no inventory.
it is a…
) Olson Corporation, a retailer and wholesaler of national brand-name household lighting fixtures, purchases its inventories from various suppliers.
Instructions
a. 1. What criteria should be used to determine which of Olson’s costs are inventoriable?
2. Are Olson’s administrative costs inventoriable? Defend your answer.
b. 1. Olson uses LIFO and the lower-of-cost-or-market rule for its wholesale inventories. What are the theoretical arguments for that rule?
2. The replacement cost of the inventories is below the net realizable value less a normal profit margin, which, in turn, is below the original cost. What amount should be used to value the inventories? Why?
c. Assume instead that Olson calculates the estimated cost of its ending inventories held for sale at retail using the conventional retail inventory method. How would Olson treat the beginning inventories and net markdowns in calculating the cost ratio used to determine its ending inventories? Why?
Which of the following is NOT a period cost?
Select one:
O a.
manufacturing costs.
Ob general and administrative costs.
Oc marketing costs.
Od. research and development costs.
Which of the following is NOT one of the questions management accountants might attempt to help answer in
the formulation of strategy?
Select one:
a.
What substitute products exist in the marketplace?
Ob. Who are our most important customers?
Does the strategy comply with GAAP (Generally Accepted Accounting Principles)?
Od.
Will adequate cash be available to implement the strategy?
Chapter 1 Solutions
Managerial Accounting
Ch. 1 - What is the primary difference between financial...Ch. 1 - Prob. 2QCh. 1 - Why are traditional, GAAP-based financial...Ch. 1 - Prob. 4QCh. 1 - consider the area within a 3-mile radius of your...Ch. 1 - What are the three basic functions of management?Ch. 1 - How are the three basic management functions...Ch. 1 - What are ethics and why is ethical behavior...Ch. 1 - Prob. 9QCh. 1 - Prob. 10Q
Ch. 1 - Prob. 11QCh. 1 - Prob. 12QCh. 1 - Why are businesses starting to incorporate...Ch. 1 - What factors does sustainability accounting...Ch. 1 - Think about your activities over the last week....Ch. 1 - Prob. 16QCh. 1 - Why is it important for managers to be able to...Ch. 1 - Prob. 18QCh. 1 - Prob. 19QCh. 1 - Explain the difference between relevant and...Ch. 1 - Prob. 21QCh. 1 - What are prime costs? Why have they decreased in...Ch. 1 - Prob. 23QCh. 1 - Why can't prime cost and conversion cost be added...Ch. 1 - Prob. 25QCh. 1 - Prob. 26QCh. 1 - Prob. 27QCh. 1 - Prob. 28QCh. 1 - Prob. 29QCh. 1 - Prob. 1MCCh. 1 - Prob. 2MCCh. 1 - Prob. 3MCCh. 1 - Prob. 4MCCh. 1 - Prob. 5MCCh. 1 - What is Garcia's total manufacturing cost? a....Ch. 1 - Prob. 7MCCh. 1 - What is Garcia's manufacturing overhead? a....Ch. 1 - Prob. 9MCCh. 1 - Which of the following would not be treated as a...Ch. 1 - MINI-EXERCISES Comparing Financial and Managerial...Ch. 1 - Prob. 4MECh. 1 - Prob. 5MECh. 1 - Prob. 6MECh. 1 - Prob. 8MECh. 1 - Prob. 9MECh. 1 - Prob. 10MECh. 1 - Identifying Direct and Indirect Costs for a...Ch. 1 - Prob. 12MECh. 1 - Identify sustainability issues affecting the...Ch. 1 - Classifying Costs Seth's Skateboard Company incurs...Ch. 1 - Calculation Costs Cotton White, Inc., makes...Ch. 1 - Prob. 7ECh. 1 - Prob. 8ECh. 1 - Classifying Costs Blockett Company makes...Ch. 1 - Prob. 10ECh. 1 - Prob. 12ECh. 1 - Prob. 13ECh. 1 - Explaining Effects of Cost Misclassification Donna...Ch. 1 - Prob. 4.1GAPCh. 1 - Prob. 4.2GAPCh. 1 - Prob. 4.3GAPCh. 1 - Prob. 3.1GBPCh. 1 - Prob. 3.2GBPCh. 1 - Classifying Costs, Calculating Total Costs, and...Ch. 1 - Prob. 4.2GBPCh. 1 - Classifying Costs, Calculating Total Costs, and...
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