3. GoFly Company manufactures kites and has the following information available for the month of April (A+)

GoFly Company manufactures kites and has the following information available for the month of April:

Work in process, April 1

(100% complete for materials, 40% for conversion) 32,000 units

Direct materials $38,000

Conversion cost $49,000

Number of units started 88,000

April costs

Direct materials $116,000

Conversion cost $168,000

Work in process, April 30

(100% complete for materials, 23% for conversion) 39,000 units

Required:

Using the weighted average method, complete each of the following steps:

(a) Reconcile the number of physical units worked on during the period.

(b) Calculate the number of equivalent units.

(c) Calculate the cost per equivalent unit.

(d) Reconcile the total cost of work in process.

Click here for the SOLUTION

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2. Neechi Company adds all materials at the beginning of its manufacturing process (A+)

Neechi Company adds all materials at the beginning of its manufacturing process. Production information for the third quarter of the year follows:

Requirement 1:

Calculate the number of units started during each month.

Beginning Work in Process

Ending Work in Process

Month

Units

Number of Units Started

Units Transferred Out

Units

Conversion Complete

( Percent)

July

0

?

70,000

30,400

71

August

?

?

109,500

22,000

60

September

?

?

78,500

22,200

28

Requirement 2:

Calculate the number of equivalent units for both materials and conversion for each month.

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3. Hunter Company adds all materials at the beginning of its manufacturing process (A+)

Hunter Company adds all materials at the beginning of its manufacturing process. Production information for selected months of the year follows:

Requirement 1:

Reconcile the number of physical units worked on during the period.

Months

Beginning Work in Process

Ending Work in Process

Units

Conversion Complete (Percent)

Units Started

Units Transferred out

Units

Conversion Complete (Percent)

February

2,000

45

?

19,500

6,800

27

June

5,000

73

24,100

?

3,700

35

September

?

23

25,700

25,500

3,100

54

December

3,500

34

22,900

21,400

?

79

Requirement 2:

Calculate the number of equivalent units for both materials and conversion for each month

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2. Seemore Company makes camping lanterns using a single production process (A+)

Seemore Company makes camping lanterns using a single production process. All direct materials are added at the beginning of the manufacturing process. Information for the month of March follows:

Beginning work in process (24% complete) 64,900 units

Direct materials $103,000

Conversion cost $174,000

Total cost of beginning work in process $277,000

Number of units started 126,500

Number of units completed and transferred to finished goods 167,400

Ending work in process (63% complete)

Direct materials cost incurred $255,700

Conversion cost applied $315,000

Total cost added $570,700

Required:

Using the weighted average method of process costing, complete each of the following steps:

(a) Reconcile the number of physical units worked on during the period.

(b) Calculate the number of equivalent units.

(c) Calculate the cost per equivalent unit.

(d) Reconcile the total cost of work in process.

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ECON 2200 Final Exam – Historical evidence for the U.S. economy indicates that

Question 1
1.
Historical evidence for the U.S. economy indicates that

recessions have occurred roughly once every six years since the 1960s.

the unemployment rate usually decreases during a recession and increases shortly after the recession ends.

real GDP usually remains roughly constant during a recession and decreases shortly after the recession ends.

changes in real GDP over the business cycle are largely attributable to changes in investment over the business cycle.

Question 2
1.
Which of the following is most commonly used to monitor short-run changes in economic activity?

the inflation rate

real GDP

aggregate demand

aggregate supply

Question 3
1.
During recessions investment

falls by a larger percentage than GDP.

falls by about the same percentage as GDP.

falls by a smaller percentage than GDP.

falls but the percentage change is sometimes much larger and sometimes much smaller.

Question 4
1.
The classical model is appropriate for analysis of the economy in the

long run, since evidence indicates that money is not neutral in the long run.

long run, since real and nominal variables are essentially determined separately in the long run.

short run, provided money is not neutral.

short run, provided real and nominal variables are highly intertwined.

Question 5
1.
Real and nominal variables are highly intertwined, and changes in the money supply change real GDP. Most economists would agree that this statement accurately describes

both the short run and the long run.

the short run, but not the long run.

the long run, but not the short run.

neither the long run nor the short run.

Question 6
1.
Aggregate demand includes

the quantity of goods and services both the government and customers abroad want to buy.

the quantity of goods and services neither the government nor customers abroad want to buy.

the quantity of goods and service the government wants to buy, but not the quantity of goods and services customers abroad want to buy.

the quantity of goods and services customers abroad want to buy, but not the quantity of goods and services the government wants to buy.

Question 7
1.
The model of aggregate demand and aggregate supply

is different from the model of supply and demand for a particular market, in that we cannot focus on the substitution of resources between markets to explain aggregate relationships.

is different from the model of supply and demand for a particular market, in that we have to separate real and nominal variables in the aggregate model.

is a straightforward extension of the model of supply and demand for a particular market, in which substitution of resources between markets is highlighted.

is a straightforward extension of the model of supply and demand for a particular market, in which the interaction between real and nominal variables is highlighted.

Question 8
1.
When the price level falls the quantity of

consumption goods demanded rises, while the quantity of net exports demanded falls.

consumption goods demanded and the quantity of net exports demanded both rise.

consumption goods demanded and the quantity of net exports demanded both fall.

consumption goods demanded falls, while the quantity of net exports demand rises.

Question 9
1.
When the price level changes, which of the following variables will change and thereby cause a change in the aggregate quantity of goods and services demanded?

the real value of wealth

the interest rate

the value of currency in the market for foreign exchange

All of the above are correct.

Question 10
1.
Other things the same, a decrease in the price level makes the dollars people hold worth

more, so they can buy more.

more, so they can buy less.

less, so they can buy more.

less, so they can buy less.

Question 11
1.
When the price level falls

households want to lend more, so the interest rate rises making the quantity of goods and services demanded rise.

households want to lend more, so the interest rate falls, making the quantity of goods and services demanded rise.

households want to lend more, so the interest rate rises, making the quantity of goods and services demanded fall.

None of the above are correct.

Question 12
1.
Other things the same, if the U.S. price level falls, then

the supply of dollars in the market for foreign-currency exchange increases, so the exchange rate rises.

the supply of dollars in the market for foreign-currency exchange increases, so the exchange rate falls.

the supply of dollars in the market for foreign-currency exchange decreases, so the exchange rate rises.

the supply of dollars in the market for foreign-currency exchange decreases, so the exchange rate falls.

Question 13
1.
As the price level rises,

the exchange rate falls, so net exports fall.

the exchange rate falls, so net exports rise.

the exchange rate rises, so net exports fall.

the exchange rate rises, so net exports rise.

Question 14
1.
Other things the same, as the price level rises, the real value of a dollar

rises, and interest rates rise.

rises, and interest rates fall.

falls, and interest rates rise.

falls, and interest rates fall.

Question 15
1.
Other things the same, as the price level falls, a country’s exchange rate

and interest rates rise.

and interest rates fall.

falls and interest rates rise.

rises and interest rates fall.

Question 16
1.
Suppose a fall in stock prices makes people feel poorer. The decrease in wealth would induce people to desire

decreased consumption, shown as a movement to the left along a given aggregate-demand curve.

increase consumption, shown as a movement to the right along a given aggregate-demand curve.

decreased consumption, shifting the aggregate-demand curve to the left.

increased consumption, shifting the aggregate-demand curve to the right.

Question 17
1.
Which of the following both shift aggregate demand left?

a decrease in taxes and at a given price level consumers feel more wealthy

a decrease in taxes and at a given price level consumers feel less wealthy

an increase in taxes and at a given price level consumers feel more wealthy

an increase in taxes and at a given price level consumers feel less wealthy

Question 18
1.
If speculators bid up the value of the U.S. dollar in the market for foreign exchange, then

U.S. goods become more expensive relative to foreign goods so aggregate demand shifts right.

U.S. goods become less expensive relative to foreign goods so aggregate demand shifts right.

U.S. goods become more expensive relative to foreign goods so aggregate demand shifts left.

U.S. goods become less expensive relative to foreign goods so aggregate demand shifts left.

Question 19
1.
The long-run aggregate supply curve shows that by itself a permanent change in aggregate demand would lead to a long-run change
Answer

in the price level and output.

in the price level, but not output.

in output, but not the price level.

in neither the price level nor output.

Question 20
1.
The long-run aggregate supply curve shifts right if

immigration from abroad increases.

the capital stock increases.

technology advances.

All of the above are correct.

Question 21
1.
According to the aggregate demand and aggregate supply model, in the long run an increase in the money supply leads to

increases in both the price level and real GDP.

an increase in real GDP but does not change the price level.

an increase in the price level but does not change real GDP.

no change in either the price level or real GDP.

Question 22
1.
In the long run, technological progress

and increases in the money supply both make the price level rise.

and increases in the money supply both make the price level fall.

makes the price level rise, while increases in the money supply make prices fall.

makes the price level fall, while increases in the money supply make prices rise.

Question 23
1.
If the price level rises above what was expected and nominal wages are fixed, then

production becomes less profitable so firms will hire fewer workers.

production becomes less profitable so firms will hire more workers.

production becomes more profitable so firms will hire fewer workers.

production become more profitable so firms will hire more workers.

Question 24
1.
Other things the same, when the price level rises more than expected, some firms will have

higher than desired prices which increases their sales.

higher than desired prices which depresses their sales.

lower than desired prices which increases their sales.

lower than desired prices which depresses their sales.

Question 25
1.
According to the misperceptions theory of aggregate supply, if a firm thought that inflation was going to be 5 percent and actual inflation was 6 percent, then the firm would believe that the relative price of what they produce had

increased, so they would increase production.

increased, so they would decrease production.

decreased, so they would increase production.

decreased, so they would decrease production.

Question 26
1.
The effects of a higher than expected price level are shown by

shifting the short-run aggregate supply curve right.

shifting the short-run aggregate supply curve left.

moving to the right along a given aggregate supply curve.

moving to the left along a given aggregate supply curve.

Question 27
1.
A decrease in the expected price level shifts

only the long-run aggregate supply curve right.

only the short-run aggregate supply curve right.

both the short-run and the long-run aggregate supply curve right.

Neither the short-run nor the long-run aggregate supply curve right.

Question 28
1.
Which of the following shifts short-run, but not long-run aggregate supply right?

a decrease in the actual price level

a decrease in the expected price level

a decrease in the capital stock

an increase in the money supply

Question 29
1.
In 1986, OPEC countries increased their production of oil. This caused

the price level to rise.

aggregate supply to shift right.

unemployment to rise.

None of the above is correct.

Question 30
1.
Keynes believed that economies experiencing high unemployment should adopt policies to

reduce the money supply.

reduce government expenditures.

increase aggregate demand.

increase aggregate supply.

Question 31
1.
The interest-rate effect

depends on the idea that increases in interest rates decrease the quantity of goods and services demanded.

depends on the idea that increases in interest rates decrease the quantity of goods and services supplied.

is responsible for the downward slope of the money-demand curve.

is the least important reason, in the case of the United States, for the downward slope of the aggregate-demand curve.

Question 32
1.
The wealth effect stems from the idea that a higher price level

increases the real value of households’ money holdings.

decreases the real value of households’ money holdings.

increases the real value of the domestic currency in foreign-exchange markets.

decreases the real value of the domestic currency in foreign-exchange markets.

Question 33
1.
According to John Maynard Keynes,

the demand for money in a country is determined entirely by that nation’s central bank.

the supply of money in a country is determined by the overall wealth of the citizens of that country.

the interest rate adjusts to balance the supply of, and demand for, money.

the interest rate adjusts to balance the supply of, and demand for, goods and services.

Question 34
1.
While a television news reporter might state that “Today the Fed lowered the federal funds rate from 5.5 percent to 5.25 percent,” a more precise account of the Fed’s action would be as follows:

“Today the Fed told its bond traders to conduct open-market operations in such a way that the equilibrium federal funds rate would decrease to 5.25 percent.”

“Today the Fed lowered the discount rate by a quarter of a percentage point, and this action will force the federal funds rate to drop by the same amount.”

“Today the Fed took steps to decrease the money supply by an amount that is sufficient to decrease the federal funds rate to 5.25 percent.”

“Today the Fed took a step toward contracting aggregate demand, and this was done by lowering the federal funds rate to 5.25 percent.”

Question 35
1.
People choose to hold a smaller quantity of money if

the interest rate rises, which causes the opportunity cost of holding money to rise.

the interest rate falls, which causes the opportunity cost of holding money to rise.

the interest rate rises, which causes the opportunity cost of holding money to fall.

the interest rate falls, which causes the opportunity cost of holding money to fall.

Question 36
1.
If expected inflation is constant, then when the nominal interest rate increases, the real interest rate

increases by more than the change in the nominal interest rate.

increases by the change in the nominal interest rate.

decreases by the change in the nominal interest rate.

decreases by more than the change in the nominal interest rate.

Question 37
1.
When the Fed sells government bonds, the reserves of the banking system

increase, so the money supply increases.

increase, so the money supply decreases.

decrease, so the money supply increases.

decrease, so the money supply decreases.

Question 38
1.
The opportunity cost of holding money

decreases when the interest rate increases, so people desire to hold more of it.

decreases when the interest rate increases, so people desire to hold less of it.

increases when the interest rate increases, so people desire to hold more of it.

increases when the interest rate increases, so people desire to hold less of it.

Question 39
1.
If there is excess money supply, people will

deposit more into interest-bearing accounts, and the interest rate will fall.

deposit more into interest-bearing accounts, and the interest rate will rise.

withdraw money from interest-bearing accounts, and the interest rate will fall.

withdraw money from interest-bearing accounts, and the interest rate will rise.

Question 40
1.
According to liquidity preference theory, if the price level increases, then the equilibrium interest rate

rises and the aggregate quantity of goods demanded rises.

rises and the aggregate quantity of goods demanded falls.

falls and the aggregate quantity of goods demanded rises.

falls and the aggregate quantity of goods demanded falls.

Question 41
1.
If the MPC = 3/5, then the government purchases multiplier is

5/3.

5/2.

5.

15.

Question 42
1.
If the multiplier is 5, then the MPC is

0.05.

0.5.

0.6.

0.8.

Question 43
1.
In a certain economy, when income is $200, consumer spending is $145. The value of the multiplier for this economy is 6.25. It follows that, when income is $230, consumer spending is

$151.25.

$166.75.

$170.20.

$175.00.

Question 44
1.
If the MPC is 0.80 and there are no crowding-out or accelerator effects, then an initial increase in aggregate demand of $100 billion will eventually shift the aggregate demand curve to the right by

$80 billion.

$125 billion.

$500 billion.

$800 billion.

Question 45
1.
Suppose that the MPC is 0.60; there is no investment accelerator; and there are no crowding-out effects. If government expenditures increase by $25 billion, then aggregate demand

shifts rightward by $62.5 billion.

shifts rightward by $50.0 billion.

shifts rightward by $32.5 billion.

None of the above is correct.

Question 46
1.
The economist A.W. Phillips published a famous article in 1958 in which he showed a

negative correlation between the rate of unemployment and the rate of inflation.

positive correlation between the rate of unemployment and the rate of inflation.

negative correlation between the rate of unemployment and the rate of interest.

positive correlation between the rate of unemployment and the rate of interest

Question 47
1.
In the short run, policy that changes aggregate demand changes

both unemployment and the price level.

neither unemployment nor the price level.

only unemployment.

only the price level.

Question 48
1.
If policymakers decrease aggregate demand, then in the short run the price level
Answer

falls and unemployment rises.

and unemployment fall.

and unemployment rise.

rises and unemployment falls.

Question 49
1.
If the central bank increases the money supply, then in the short run prices

rise and unemployment falls.

fall and unemployment rises.

and unemployment rise.

and unemployment fall.

Question 50
1.
According to the short-run Phillips curve, if the central bank increases the money supply, then

inflation and unemployment will both fall.

inflation and unemployment will both rise.

inflation will fall and unemployment will rise.

inflation will rise and unemployment will fall.

Here’s the SOLUTION

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2. Forrest Co. makes wooden tables (A+)

Forrest Co. makes wooden tables.

(a) Purchased $21,200 of raw materials on credit.

(b) Issued $17,800 of direct materials into production.

(c) Applied $47,500 of conversion cost.

(d) Paid in full the raw materials purchased on credit.

(e) Completed tables costing $53,550.

(f) Recorded actual conversion costs of $41,200. (Credited to Miscellaneous account)

(g) Sold tables for $94,400 that cost $48,900 to produce.

(h) Disposed of any over- or under applied conversion cost.

Required:

Prepare the journal entries to record each of the above transactions

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2. Hanson Company manufactures handheld calculators (A+)

Hanson Company manufactures handheld calculators and has the following information available for the month of July.

Work in process, July 1 72,000 units

(100% complete for materials, 22% for conversion)

Direct materials $112,000

Conversion $190,000

Number of units started 105,000 units

July costs

Direct materials $214,000

Conversion $252,000

Work in process, July 31 62,000 units

(100% complete for materials, 17% for conversion)

Required:

Using the weighted average method of process costing, complete each of the following steps:

(a) Reconcile the number of physical units worked on during the period.

(b) Calculate the number of equivalent units.

(c) Calculate cost per equivalent unit.

(d) Reconcile the total cost of work in process.

Click here for the SOLUTION

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2. Tien Company manufactures plastic storage crates and has the following information available for the month of April (A+)

Tien Company manufactures plastic storage crates and has the following information available for the month of April:

Work in process, April 1 19,600 units

(100% complete for materials, 42% for conversion)

Direct materials $22,000

Conversion $38,000

Number of units started 54,400 units

April costs

Direct materials $65,800

Conversion $99,800

Work in process, April 30 15,000 units

(100% complete for materials, 21% for conversion)

Required:

Using the weighted average method of process costing, complete each of the following steps:

(a) Reconcile the number of physical units worked on during the period.

(b) Calculate the number of equivalent units.

(c) Calculate the cost per equivalent unit.

(d) Reconcile the total cost of work in process.

Click here for the SOLUTION

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2. GoFly Company manufactures kites and has the following information available for the month of April (A+)

GoFly Company manufactures kites and has the following information available for the month of April:

Work in process, April 1

(100% complete for materials, 50% for conversion) 32,000 units

Direct materials $33,000

Conversion cost $61,000

Number of units started 83,000

April costs

Direct materials $104,000

Conversion cost $173,000

Work in process, April 30

(100% complete for materials, 28% for conversion) 35,000 units

Required:

Using the weighted average method, complete each of the following steps:

(a) Reconcile the number of physical units worked on during the period.

(b) Calculate the number of equivalent units.

(c) Calculate the cost per equivalent unit.

(d) Reconcile the total cost of work in process.

Click here for the SOLUTION

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Neechi Company adds all materials at the beginning of its manufacturing process (A+)

Neechi Company adds all materials at the beginning of its manufacturing process. Production information for the third quarter of the year follows:

Requirement 1:

Calculate the number of units started during each month.

Beginning Work in Process

Ending Work in Process

Month

Units

Number of Units Started

Units Transferred Out

Units

Conversion Completed (Percent)

July

0

?

75,000

27,400

71

August

?

?

104,500

20,000

58

September

?

?

78,500

23,200

26

Requirement 2:

Calculate the number of equivalent units for both materials and conversion for each month.

Click here for the SOLUTION

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