Mobley Company Purchased an Asset with a List Price of $35,000

question 96

Multiple Choice

Mobley Company purchased an asset with a list price of $35,000. Mobley received a 2% cash discount. The asset was delivered under terms FOB shipping point, and freight costs amounted to $700. Mobley paid $1,500 to have the asset installed. Insurance costs to protect the asset from fire and theft amounted to $400 for the first year of operations. Based on this information, the cost recorded in the asset account would be

• A) $36,500.
• B) $36,900.
• C) $35,000.
• D) $35,800.

Recognize the categorization of costs as period or product costs and their implications on financial statements.

Understand the purpose and functionality of a job order costing system in various organizational settings.

Distinguish between job order costing and process costing systems and their appropriate application contexts.

Identify the flow of manufacturing costs from raw materials to cost of goods sold.

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Definitions:

Control Coil

An electromagnetic coil used in electrical engineering to control the operation of devices, typically in relays or contactors.

Relay Contact

A component in a relay that opens or closes the electrical circuit it controls, acting as the switching element triggered by the relay.

Ice-cube Relays

Small, plug-in electromechanical relays that resemble the size and shape of an ice cube, used for various control applications.

Arc Chutes

Protective devices designed to extinguish electrical arcs that can occur in switchgear or circuit breakers, by dividing and cooling the arc.