12. Core Company has 40,000 pounds of krypton in inventory on August Ist. The co

Question

12. Core Company has 40,000 pounds of krypton in inventory on August Ist. The company plans to produce 6,000 widgets in August. Each widget requires 30 pounds of krypton. If Core wants 50,000 pounds of krypton in inventory at the end of the month, how many pounds of krypton should the company plan to purchase during August? A. 190,000 B. 210,000 C. 170,000 D. 180,000 E. 250,000 13. Which of the following statement(s) is/are not true? i. Return On Investment (ROI) as a performance measure may discourage managers of divisions with high ROIs to invest in projects with lower ROIs that are acceptable to the organization as a whole. ü. ROI incorporates the firm's opportunity cost of acquiring investment capital. iji. Under Residual Income (RI), rates of return can be adjusted to take into account differences in risks for different investment assets. iv. Both ROI and RI use a percentage measure. v. RI, instead of ROI, should be used to evaluate performance of divisions or subunits of differing sizes A. i only B. i and ii C. i, ii and iii D. ii, iii and iv E. ii, iv and v 14. Which of the following statement(s) is/are true regarding standard costs and cost variances? i. they can be used in performance evaluation of managers and divisions. ii. management by exception is used by managers in deciding whether to investigate cost variances. iji. recurring high amounts of favourable cost variances do not require further investigation. iv. shorter product life cycles mean that standard cost data are only relevant for a shorter time period. v. Using unskilled workers may result in a favourable labour efficiency variance. A. i only B. i and ii C. i, ii and iv D. i, ii, iii and iv E. i, ii, iii, iv and v

Explanation / Answer

12)

Dear student, only one question is allowed at a time. I am answering the first question

Opening Inventory = 40,000 pounds

Material consumed = Production x Material required per unit

= 6,000 x 30

= 180,000 pounds

Closing Inventory = 50,000 pounds

Purchases = Consumption + Closing Inventory – Opening Inventory

= 180,000 + 50,000 – 40,000

= 190,000 pounds

So, as per above calculations, option A is the correct option

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