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3
Troy Corporation purchased bicycles from a British manufacturer at a price of 35,000 British
pounds on November 15, 2005, with payment due in 60 days. Using the following exchange
rates, compute the gain or loss from currency fluctuations that Troy should recognize in 2005
and 2006.
Nov. 15, 2005$1.70 per British pound
Dec. 31, 2005$1.75 per British pound
Jan. 15, 2006$1.73 per British pound
$1,750 loss in 2005; $700 gain in 2006
No gain or loss in 2005; $1,050 loss in 2006
$1,750 gain in 2005; $700 loss in 2006
No gain or loss in 2005; $1,050 gain in 2006

Packard Construction applies overhead to its projects at a rate of $100 per direct labor hour.
Laborers are paid an average rate of $25 per hour. The Seaside Apartments project was charged a
total of $450,000 in direct materials and $150,000 in direct labor costs.

Refer to the information above. The journal entry to transfer the completed Seaside Apartments
project to Packard's finished goods inventory would include:

A debit to the Finished Goods Inventory account of $600,000.

A debit to the Finished Goods Inventory account of $1,200,000.
A debit to the Finished Goods Inventory account of $750,000.
A credit to the Work in Process Inventory account of $750,000.

Amounts debited to the Work in Process Inventory account may best be described as:

direct materials purchased, direct labor costs paid, and payments for items classified as
manufacturing overhead.
the cost of finished goods manufactured during the period.
total manufacturing costs charged to production.
the cost of goods sold.
7

The following information has been taken from the perpetual inventory system of Regal Mfg.
Co. for the month ended September 30:

Purchases of direct materials $67,000

Direct materials used 65,000
Direct labor costs assigned to production 35,000
Manufacturing overhead costs incurred 55,000

Balances in inventory Sept 30 Sept 1

Materials $? $55,000
Work in Process 30,000 40,000
Finished Goods 83,000 71,000

Refer to the above data. The cost of goods sold in September is:

$165,000
$140,000
$153,000
Some other amount

The account Work-in-Process Inventory:

consists of completed goods that have not yet been sold.

consists of goods being manufactured that are incomplete.
consists of materials to be used in the production process.
consists of the cost of new materials used, labor but not overhead.

10

In a recent financial journal, the exchange rate between the dollar and the British pound was
quoted in two ways:
Exchange rate (in dollars) $1.60
Exchange rate (in pounds) £0.625

Refer to the above data. The number of dollars equivalent to £30,000 on this date is:

$18,750
$48,000
Some other amount
Depends upon whether the item is a receivable or a payable

11
An international joint venture involves the creation of a new company that is owned by two or
more firms from different countries.
True
False

14

Packard Construction applies overhead to its projects at a rate of $100 per direct labor hour.
Laborers are paid an average rate of $25 per hour. The Seaside Apartments project was charged a
total of $450,000 in direct materials and $150,000 in direct labor costs.

Refer to the information above. The journal entry made by Packard to record the sale of the
Seaside Apartments project to Tessa Development Company for $3,200,000 would include:

A debit to Sales of $1,200,000.

A debit to Cost of Goods Sold of $1,200,000.
A credit to Finished Goods Inventory of $600,000.
A debit to Finished Goods Inventory of $600,000.

15

An activity base is said to be a "driver" of overhead costs when the activity base:

is independent of the amount of overhead cost incurred.

results in an overhead application rate greater than 100%.
 is a causal factor in the amount of overhead cost incurred.
is the largest of the various types of expenditures classified as manufacturing overhead.

16
The set of linked activities and resources needed to create and deliver a product or service to the
customer is referred to as
The budget
The value chain
The operating cycle
The production process

17

Accounting practices are affected by all of the following except:

political systems.
economic systems.
technology and infrastructure.
all of the above affect accounting systems.

19

Red Rose, Inc. sold American fashions to a Japanese company at a price of 3 million yen. On the
sale date, the exchange rate was $.0100 per Japanese yen, but when Red Rose received payment
form its customer, the exchange rate was $.0103 per Japanese yen. When the foreign receivable
was collected, Red Rose:

credited sales for $900.

debited cash for $30,000.
credited gain on Fluctuation of Foreign Currency for $900.
debited loss on Fluctuation of Foreign Currency for $900.

21
A job cost sheet should:
contain information that summarizes all jobs finished.
contain information on each individual job in process.
 contain only the direct costs of a particular job.
only be used for jobs that have been completed.

24
The price of one currency stated in terms of another currency is the
Current ratio
International clearing price
Facilitating payment
Exchange rate

25
Which of the following is not a product cost?
Depreciation on a raw materials warehouse
An employee working directly on assembling a car
The leather seats of a motorcycle
The real estate tax of the showroom

26

The following information has been taken from the perpetual inventory system of Regal Mfg.
Co. for the month ended September 30:

Purchases of direct materials $67,000

Direct materials used 65,000
Direct labor costs assigned to production 35,000
Manufacturing overhead costs incurred 55,000

Balances in inventory Sept 30 Sept 1

Materials $? $55,000
Work in Process 30,000 40,000
Finished Goods 83,000 71,000

Refer to the above data. The cost of finished goods manufactured in September is:
 $138,000
$165,000
$140,000
Some other amount

30

Determine the amount of manufacturing overhead given the following information:

Depreciation on a factory building $1,200

Telephone expense in factory office 375
Telephone expense in sales showroom 425
Factory foreman's salary 2,500
Maintenance for factory 400
Maintenance for sales showroom 340

$2,005
$4,900
$4,475
$5,270

32

In a recent financial journal, the exchange rate between the dollar and the British pound was
quoted in two ways:

Exchange rate (in dollars) $1.60

Exchange rate (in pounds) £0.625

Refer to the above data. The number of pounds equal to $30,000 on this date is:

£18,750
£48,000
Some other amount
Depends upon whether the item is a receivable or a payable
34
The principal difference between managerial accounting and financial accounting is that
managerial accounting information is
Prepared by managers
Intended primarily for use by decision makers inside the business organization
Prepared in accordance with a set of accounting principles developed by the Institute of
Certified Managerial Accountants
Oriented toward measuring solvency rather than profitability

35
Which of the following is true about foreign trade zones?
They are illegal in the United States
Goods imported into these designated U.S. areas are duty free until they leave the zone
They have a special excise tax
They are areas outside the United States that offer special tax treatments

38

The following information has been taken from the perpetual inventory system of Regal Mfg.
Co. for the month ended September 30:

Purchases of direct materials $67,000

Direct materials used 65,000
Direct labor costs assigned to production 35,000
Manufacturing overhead costs incurred 55,000

Balances in inventory Sept 30 Sept 1

Materials $? $55,000
Work in Process 30,000 40,000
Finished Goods 83,000 71,000

Refer to the above data. The total amount of inventory to be included in Regal's September 30
balance sheet amounts to:

$215,000
 $122,000
$170,000
Some other amount

41

If the exchange rate for a foreign currency (stated in dollars) has risen, a dollar will purchase:

an increased amount of that foreign currency.

an unchanged amount of that foreign currency.
a smaller amount of that foreign currency.
an undetermined amount of that foreign currency.

42

Of the following globalization strategies, which would be least demanding in terms of the
quantity and variety of accounting information required?

Joint ventures
International licensing
Exporting
Establishing a wholly owned foreign subsidiary

43

In a recent financial journal, the exchange rate between the dollar and the Japanese yen ¥ was
quoted in two ways:

Exchange rate (in dollars)$.00764

Exchange rate (in yen)¥130.89

Refer to the above data. The number of Japanese yen equivalent to $60,000 on this date is
(rounded to whole ¥):

¥6,000,000
¥7,853,400
Some other amount
 Depends upon whether the item is a receivable or a payable

44

Packard Construction applies overhead to its projects at a rate of $100 per direct labor hour.
Laborers are paid an average rate of $25 per hour. The Seaside Apartments project was charged a
total of $450,000 in direct materials and $150,000 in direct labor costs.

Refer to the information above. Overhead applied to the Seaside Apartments project amounted
to:

$1,500,000
$1,200,000
$600,000
Some other amount

45

In a recent financial journal, the exchange rate between the dollar and the Japanese yen ¥ was
quoted in two ways:

Exchange rate (in dollars) $.00764

Exchange rate (in yen) ¥130.89

Refer to the above data. The number of dollars equivalent to ¥6,000,000 on this date is:

$45,840.00
$67,500.00
Some other amount
Depends upon whether the item is a receivable or a payable

46

Quintal imports a desk from a French manufacturer for sale in its chain of U.S. stores. The cost
of a desk to Quintal is 2,000 Euros. What is the dollar cost of one of these desks if the exchange
rate is currently 1.117 Euros per U.S. dollar? (round to nearest cent)

$1,117.00
$1,254.46
 $1790.51
Some other amount

47

Gains and losses from fluctuations in exchange rates should be shown on the:

balance sheet.
income statement.
statement of changes to owners equity.
cash flow statement.

49

The following information has been taken from the perpetual inventory system of Regal Mfg.
Co. for the month ended September 30:

Purchases of direct materials $67,000

Direct materials used 65,000
Direct labor costs assigned to production 35,000
Manufacturing overhead costs incurred 55,000

Balances in inventory Sept 30 Sept 1

Materials $? $55,000
Work in Process 30,000 40,000
Finished Goods 83,000 71,000

Refer to the above data. Total manufacturing costs charged (debited) to work in process during
September amount to:

$195,000
$155,000
$165,000
Some other amount