Multiple Choice Answers

Conversion cost is the combination of direct materials cost and factory overhead cost.


Based on the following data, what is the amount of quick assets?

Account payable $32,000
Accoutns receivable 64,000
Accrued liabilities 7,000
Cash 20,000
Intangible assets 40,000
Inventory 72,000
Long-term investments 100,000
Long-term liabilities 75,000
Marketable securities 35,000
Notes payable (short-term) 20,000
Property, plant, and equipment 625,000
Prepaid expenses 2,000

a. $161,000
b. $193,000
c. $119,000
d. $55,000

If the cost of employee wages is not a significant portion of the total product cost, the wages are classified as direct materials cost.


A 90-day, 12% note for $10,000 dated May 1 is received from a customer on account. The maturity value of the note is:

a. $10,000
b. $10,300
c. $450
d. $9,550

For which of the following businesses would the job order cost system be appropriate?

a. Meat processor
b. Automobile manufacturer
c. Oil refinery
d. Construction contractor