Stephenson Company's Computer System Recently Crashed, Erasing Much of the Company's

question 3

Multiple Choice

Stephenson Company's computer system recently crashed, erasing much of the company's financial data. The following accounting information was discovered soon afterwards on the CFO's back-up computer data. $\begin{array}{lr}\text { Cost of Goods Sold } & \$ 380,000 \\\text { Work-in-Process Inventory, Beginning } & 30,000 \\\text { Work-in-Process Inventory, Ending } & 40,000 \\\text { Selling and Administrative Expense } & 50,000 \\\text { Finished Goods Inventory, Ending } & 15,000 \\\text { Finished Goods Inventory, Beginning } & ?\\\text { Direct Materials Purchased } & 171,000 \\\text { Factory Overhead Applied } & 112,000 \\\text { Operating Income } & 22,000 \\\text { Direct Materials Inventory, Beginning } & 18,000 \\\text { Direct Materials Inventory, Ending } & 6,000 \\\text { Cost of Goods Manufactured } & 340,000 \\\text { Direct Labor } & 55,000\end{array}$
The CFO of Stephenson Company has asked you to recalculate the following accounts and report to him by week's end.
What should be the amount of direct materials used?

• A)$112,000.
• B)$183,000.
• C)$189,000.
• D)$204,000.

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Definitions:

Regression Toward the Mean

The statistical phenomenon that if a variable is extreme on its first measurement, it will tend to be closer to the average on its second measurement, and vice versa.

Regression Toward the Mean

The statistical phenomenon that if a variable is extreme on its first measurement, it will tend to be closer to the average on its second measurement.

Midterm Exam

A form of assessment taking place midway through the course of study, often used to measure students' understanding and progress in the subject matter.

Psychological Disorders

Mental disorders characterized by patterns of behavior or thought that are significant enough to interfere with a person's daily life and well-being.