Question

4. An employee accidentally overstated the year's advertising expense by $50,000. Which of the following correctly depicts the effect of this error? A. Cost of goods manufactured will be overstated by $50,000. B. Cost of goods sold will be overstated by $50,000. C. Both cost of goods manufactured and cost of goods sold will be overstated by $50,000. D. Cost of goods sold will be overstated by $50,000, and cost of goods manufactured wi be understated by $50,000. E. None of these. Page 3 of 1 5. Which of the following companies would likely use a process-costing system? TIT Chemical Producer Yes Yes Soft Drink Custom Furniture Manufacturer Yes Bottler Yes No Yes No Yes No C. Yes Yes No D. Yes No No E. A. Choice A B. Choice B C. Choice C D. Choice D 2 of 12 E.Choice E e antrihutinn marain ratin is 15% If the degree of operating leverage C

I need the answers of questions 4 and 5 with explainations

Answer 1

Advertising costs are incurred to promote their products in the market. Since these costs are incurred to sell the products, hence comes under the cost of goods sold.

Therefore, overstatement of advertising expenses will result in overstating of cost of goods sold which will ultimately results on understatement of income

Answer : B)

2) process costing is a type of costing which is used to trace the manufacturing costs incurred at the different stages of manufacturing and allocating them to the products. In process costing there will be a mass production of similar products. Costs incurred for a fixed period of time are summarized and are allocated to all of the products produced during that period of time.

All of the above companies uses the process costing.

Answer : A