Cost of Goods Sold, Cost of Goods Manufactured

Glenville Company has the following information for April:

a. For April, determine the cost of goods manufactured.

Using the data given, prepare a statement of Cost of Goods Manufactured.

b. For April, determine the cost of goods sold.

Using the data given, prepare a statement of Cost of Goods Sold.

Suppose an economy produces capital goods and consumer goods. According to the production possibilities model, which of the following statements is (are) correct?

(x)   In general, an economy will usually accelerate economic growth in the future if it chooses to produce much more consumer goods and much less capital goods in the current period.

(y)   In general, an economy chooses to produce less capital goods when it chooses to spend more on consumer goods.

(z)   A choice for less consumer goods and, therefore, more capital goods in the current period may provide increased production possibilities for all goods in future periods.

Which of the following statements is (are) correct about opportunity cost?

(x) The opportunity cost of going to college is zero for students who are fortunate enough to have all of their college expenses paid by someone else.

(y) Jane decides to spend an hour playing basketball rather than working at $12 per hour. Her opportunity cost is zero, because she enjoys playing basketball more than working.

(z) The opportunity cost of the U.S. “homeland security” program is whatever other goods and services could have been produced with the resources devoted to the homeland security program.

Select one:

A. (x), (y) and (z)

B. (x) and (y) only

C. (x) and (z) only

D. (y) and (z) only

E. (z) only

For a given production possibilities frontier, points G and K are on the PPF, while point H is inside the PPF and point F is outside the PPF. Which of the following statements is (are) correct?

(x) A reduction in unemployment would allow the economy to move from point H towards point K.

(y) Although it is not feasible for the economy to move from point G to F given the current PPF, an increase in available resources could cause an outward shift of the PPF and point F could be reached with the new PPF.

(z) A movement from point G on the PPF to point H inside the PPF could be caused by an advance in technology that affects only one of the two goods.

Select one:

A. (x), (y) and (z)

B. (x) and (y) only

C. (x) and (z) only

D. (y) and (z) only

E. (x) only

Businesses hold inventories of goods, partly as finished products and partly as goods-in-process and raw materials. Suppose that we think of inventories as a type of capital, which enters into the production function. Then changes in these stocks represent investment in inventories. (Typically, economists assume that the rate of depreciation on inventories is near zero.)

1. How does an increase in the real interest rate affect the quantity of inventories that businesses want to hold? What happens, therefore, to inventory investment?

2. Consider temporary adverse shock to the production function. What happens to the amount of inventory investment?

You are a consumer who consumes goods X (education) and goods Y (recreation), where the price of good X is PX and the price of Y is Py. Your income that can be allocated to purchase these two items is M.

Question

a. What happens if the price of education rises? Describe the substitution effect and the income effect.
b. Derive the demand curve for education.

1.

Use the following data to determine the cost of goods manufactured:

2.

Current information for the Healey Company follows:

All raw materials used were traceable to specific units of product. Healey Company's cost of goods manufactured for the year is:

• $171,000.

• $176,600.

• $173,800.

• $179,400.

• $185,000.

Barbara purchases only two goods, salads, and notepads. Both are normal goods for Barbara. Suppose the price of salad decreases. Barbara’s consumption of notepads will most likely

Select one:

a. be unchanged as the two goods are not substitutes.

b. increase due to the substitution effect.

c. decrease since she will spend more of her budget on salads

d. increase due to the income effect.

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2. There are only two brands of tennis balls Tom purchases: “Wilson” and “Penn.” The more he purchases of a ball, the lower the marginal utility of that ball. He spends all of his income and his marginal utility of a “Wilson” is 6 and his marginal utility of an “Penn” is 12. The price of a “Wilson” ball is $1 and the price of an “Penn” is $2. Which of the statements is true based on the above information?

Select one:

a. Tom would be willing to give up two “Penn” balls for one “Wilson” ball.

b. Tom can increase his satisfaction by doing nothing.

c. In equilibrium, Tom must give up three “Penn” balls for two “Wilson” balls.

d. Tom could increase his satisfaction by trading “Wilson” for “Penn.”

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3. Consider peanut butter as a normal good and answer the questions of what would happen if a decrease in income occurred?

Select one:

a. It would cause the quantity consumed of peanut butter to remain the same.

..b. The quantity of jelly consumed would also decrease.

c. It would cause the quantity consumed of peanut butter to increase.

d. It would cause the quantity consumed of peanut butter to decrease.

You are a consumer who consumes goods X (education) and goods Y (recreation), where the price of good X is PX and the price of Y is Py. Your income that can be allocated to purchase these two items is M.

Questions
a. What happens if the price of education rises? Describe the substitution effect and the income effect.
b. Derive the demand curve for education.

DEF Manufacturing Company presented the following data:

• Cost of goods manufactured and cost of goods sold were P375,000 and P300,000, respectively.
• Purchases of raw materials amounted to twice as much as the net income before tax.
• Gross margin based on sales was 40%. There were no purchase returns but the sales returns amounted to P10,000.
• Inventory valuations were as follows:

1. Raw materials on hand at the end of the period was 1/3 as much as much as at start.
2. Work in process – no beginning inventory but P25,000 was on hand at the end of the period.
3. Finished goods end of the period was four times as larges as at start.

• Breakdown of cost incurred in manufacturing was as follows:

Raw materials                                                    50%

Direct labor                                                         30%

Factory Overhead                                            20%

• Selling expenses amounted to four times as as as general expenses
• Net income after taxes amounted to P52,000. Income tax rate is 35%.

1-A. Raw materials beginning? ________

1-B. Raw materials Purchases? _______

1-C Total direct materials used? _______

1-D Total factory overhead applied? ______

1-E Finished Goods ending? _________

Jenkins agreed to purchase goods from Smith, F.O.B. Smith’s plant. The goods in Smith’s plant are separated and stenciled with Jenkins’ name. Jenkins then telephones Smith and repudiates. The goods are subsequently destroyed by fire. Assume that Smith had no insurance on the goods. If Smith sues Jenkins for the purchase price, what is the result? Use UCC provisions to support your answer/analysis. Cite the specific sections of the UCC that support your argument.

1. Consider a country's production possibility frontier with machinery (capital goods) on one axis and consumer goods on the other axis. Tell me a story about how the rate at which the PPF shifts outward over time might be related to the current position on the PPF. Also relate that choice (about the current position on the PPF) to choices about savings and consumption.