Business Analysis/Accounting

1.Delphi Switch and Signal sold equipment to a Canadian
transportation company at a price of 150,000 Canadian dollars with
payment due in 60 days. On the date of sale the exchange rate was
1.50 Canadian dollars per U.S. dollar. Delphi decided to hedge the
risk of currency fluctuations by purchasing 150,000 Canadian
dollars with payment due in 60 days. If the exchange rate in 60
days is 1.25 Canadian dollars per U.S. dollar, Delphi Switch and
Signal will:
a. Recognize a net gain of $20,000 on the two transactions.
b. Recognize a $20,000 gain when it collects the receivable and
incur a $20,000 loss when it pays the liability.
c. Incur a $20,000 loss when it collects the receivable and
recognize a $20,000 gain when it pays the liability.
d. Incur a net loss of $20,000 on the two transactions.
2.Precision Instruments sold equipment to a British research group at
a price of 50,000 British pounds on December 1, 2000, with payment
due in 90 days. Using the following exchange rates, compute the
gain or loss from currency fluctuations that Precision Instruments
should recognize in 2000 and 2001.

Dec. 1, 2000 $1.75 per British pound
Dec. 31, 2000 $1.80 per British pound
Mar. 1, 2001 $1.76 per British pound

a. $2,500 loss in 2000; $2,000 gain in 2001.
b. No gain or loss in 2000; $500 loss in 2001.
c. $2,500 gain in 2000; $2,000 loss in 2001.
d. No gain or loss in 2000; $500 gain in 2001

Use the following to answer questions 28-29.
The following information has been taken from the perpetual
inventory system of Dart Mfg. Co. for the month ended July 31:

Purchases of direct materials $27,000
Direct materials used 30,000
Wages paid to direct workers during the month 8,000
Direct labor costs assigned to production 10,000
Manufacturing overhead costs incurred (and applied) 20,000

Balances in inventory July 31 July 1
Materials $ ? $43,000
Work in Process 13,000 10,000
Finished Goods 85,000 80,000

3. Refer to the above data. The total amount of inventory to be
included in Dart's July 31 balance sheet amounts to:
a. $138,000.
b. $98,000.
c. $85,000.
d. Some other amount.
4. Refer to the above data. The overhead application rate, assuming
that overhead is applied to production as a percentage of direct labor
costs, is:
a. 250%.
b. 200%.
c. 50%.
d. 40%.
5. If estimated manufacturing overhead costs are $450,000 and
estimated direct labor hours, which have a causal effect on
manufacturing overhead costs, are 90,000, what is the overhead
application rate?
a. $5 per labor hour
b. $9 per labor hour
c. $5 per hour of manufacturing overhead
d. None of the above
6.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
7. 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.