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

question 9

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 backup computer disk.
Direct labor cost incurred during the period amounted to 1.5 times the factory overhead.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 in the finished goods inventory at December 31,2010?

• A)$42,000.
• B)$47,000.
• C)$40,000.
• D)$51,000. $47,000 = $126,000 + $41,000 - $120,000

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Definitions:

Negligent

Failing to exercise the care that a reasonably prudent person would exhibit under similar circumstances.

Foreseen Users

Individuals who are reasonably anticipated to use a product or service, considered by manufacturers and service providers in liability assessments.

Near Privity

A legal doctrine that expands the scope of who can sue for breach of contract to include parties with a close enough relationship to the transaction, though not directly involved.

Negligent

The failure to take reasonable care to avoid causing injury or loss to another person, resulting in legal liability for the resulting damages.