Cowles Corporation Inc

question 155

Multiple Choice

Cowles Corporation Inc., makes and sells a single product, Product R. Three yards of Material K are needed to make one unit of Product R. Budgeted production of Product R for the next five months is as follows: The company wants to maintain monthly ending inventories of Material K equal to 30% of the following month's production needs. On July 31, this requirement was not met because only 3,500 yards of Material K were on hand. The cost of Material K is $0.80 per yard. The company wants to prepare a Direct Materials Purchase Budget for the rest of the year. The desired ending inventory of Material K for September is:

• A)12,750 yards
• B)12,500 yards
• C)13,050 yards
• D)12,150 yards

Understand the purpose and effects of adjustments in the worksheet.

Determine the effects of specific accounting entries on the determination of net income.

Differentiate between temporary and permanent accounts and their roles in the financial statements.

Understand the impact of errors in extending account balances on financial statements.

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Definitions:

Pretax Income

The amount of income earned by a business before any taxes are deducted.