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For inventoriable costs to become expenses under the matching principle, 

a. all accounts payable must be settled.

b. the products to which they attach must be sold.

c. the product must be finished and in stock.

d. the product must be expensed based on its percentage-of-completion.

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Egie Boy Cauba
Egie Boy CaubaLv5
19 Jan 2021
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Related questions

The plant manager of Spectra Products Manufacturing Plant has just reviewed a draft of his year-end financial statements. The plant manager receives a year-end bonus of 8% of the plant's operating income before tax. The year-end income statement provided by the controller was disappointing to say the least. After reviewing the numbers, the plant manager demanded that his controller go back and "work the numbers" again. He insisted that if he didn't see a better operating income number the next time around he would be forced to look for a new controller.

Spectra Products classifies all costs directly related to the manufacturing of its product as product costs. These costs are inventoried and later expensed as costs of goods sold when the product is sold. All other expenses, including finished goods warehousing costs of $3,570,000, are classified as period expenses. The plant manager suggested that warehousing costs be included as product costs because they are "definitely related to our product". The company produced 210,000 units during the period and sold 190,000 units.

1. If the controller reworks the numbers and reclassifies the warehouse costs as product costs, how much would operating income improve? Show all calculations.

2. Is the plant manager correct in saying the warehouse costs should be reclassified because they "definitely relate to our product"? Explain your answers.

3. How much will the plant manager benefit by this decision? Should the controller reclassify the costs? Explain why or why not.

On its 2016 income statement, AbbottLaboratories reported research and development expense of$1,422,000,000.

Whichof the following statements must be true?

A) Abbott Laboratories spent$1,422,000,000 in cash to develop new products and improve oldproducts.

B) Research and development expensereduced Abbott Laboratories 2016 net income by $1,422,000,000.

C) Abbott Laboratories capitalized atleast $1,422,000,000 of research and development costs in 2016.

D) The $1,422,000,000 includedamortized research and development costs from prior years that werenot previously expensed, because Abbott Laboratories incurs suchexpenses each year.

E) None of the above

1. A cost pool is :

A. a collection of homogeneous cost to be assigned.

B. almost always the combined result of decision made bydifferent responsibility center manager.

C. The primary function of a responsibility accountingsystem.

D. the amount of cost that has been allocated say, 10% to a userdepartment.

E. The tool used to allocate cost dollars to userdepartments.

2.Variable costs are those costs that:

A. vary (in total ) inversely with changes in activity.

B. vary (in totals) directly with in activity.

C. remain constant (in total) as activity changes.

D. Decrease on a per unit basis as activity increase.

E. Increase on a per unit basis as activity increases.

3. When comparing EOQ and JIT inventory system, which of thefollowing statement is false?

A. The EOQ approach takes the viewpoint that some inventory isnecessary.

B. The EOQ system assumes a constant order quantity.

C. JIT argues that inventory investments should beminimized.

D. The EOQ system focuse on acquistion and holding costs.

E. JIT argues that safety stocks are necessary to reduce theprobability of a stock shortage.

4. Procust costing in manufacturing firm is the process of:

A. Accumulating the company 's period costs

B. Allocating costs among the firm departments.

C. Placing a value on the company's fixed assets.

D. Assigning cost to the firm's inventory.

E. Assinging costs to the comapny's managers.

5.Decentralized firms can delegate authority by structuring anorganization into responsibility centers. Which of the followingorganizational segments is most like a totally independent,standalone business where managers are expected to "make it on theown?

A. Cost center

B. Revenue Center

C. Profit Center

D. Investment center

E. Contribution center

6. Costs that are expensed when incurred are called:

A. Product costs

B. Direct Costs

C. Inventoriable Cost

D. Period Cost

E. Indirect costs

7. A budget serves as a benchmark against which:

A. Actual result can be compared

B. Allocated results can be compared

C. actual result be inconsequential

D. Alloated results become inconsequential.

E. Cash balances can be compared to expense totals.

8. Activity based costing system.

A. use a single volume based cost driver.

B. Assign overhead to product based on the products' relativeusage of direct labor.

C. often reveal products that were under or over costed bytraditional costing.

D. Typically use fewer cost driver than more traditional costingsystem.

E . Have a tendency to distort product costs/

9.The point in a joint production process where each individualproduct becomes separately identifiable is commonly called the:

A. Decision point

B. Separation point

C. Individual product point

D. Split-off point

E. Joint product point.

10.The RIO calculation will indicate:

A. the percentage of each sale dollar that is invested inassets.

B. The sale dollars generated from each dollar of income.

C.How effectively a company used its invested capital

D. the invested capital generated from each dollar of income

E. the overall quality of the company's earnings.

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