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    General Motors, a merchandising company and a well-designed cost accounting system...

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    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
    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.
    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%.
    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

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    Solution Preview

    . Which of the following do not represent a type of inventory to
    General Motors?
    d. None of the above

    Completed automobiles awaiting sale - This is finished goods inventory
    Raw materials and component parts awaiting use in the manufacturing process ...

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