Company has four plants nationwide that cost $350 million. The
current fair value of the plants is $300 million. The plants will be
reported as assets at: $300 million. $350 million. $600 million. $700
million. 13 Are advanced receipts from customers treated as revenue
at the time of receipt? Why or why not? Yes, the intent of the
company is to perform the work and the customer is confident that the
services will be completed. No, the amount of revenue cannot be
adequately determined until the company completes the work. Yes,
they are treated as revenue at the time of receipt because the company
has access to the cash. No, revenue cannot be recognized until the
work is performed. 14 Which statement is correct? The cash basis of
accounting is objective because no one can be certain of the amount
of revenue until the cash is received. As long as management is
ethical, there are no problems with using the cash basis of accounting.
As long as a company consistently uses the cash basis of accounting,
generally accepted accounting principles allow its use. The use of the
cash basis of accounting violates both the revenue recognition and
expense recognition principles. 15 If a plant is operating at full
capacity and receives a one-time opportunity to accept an order at a
special price below its usual price, then: the order will likely be
accepted. only variable costs are relevant. the order will likely be
rejected. fixed costs are not relevant. 16 Kimble Company applies
overhead on the basis of machine hours. Given the following data,
compute overhead applied and the under- or overapplication of
overhead for the period: Estimated annual overhead cost $1,600,000
Actual annual overhead cost $1,575,000 Estimated machine hours
400,000 Actual machine hours 390,000 $1,560,000 applied and
$15,000 underapplied $1,560,000 applied and $15,000 overapplied
$1,600,000 applied and $15,000 overapplied $1,575,000 applied and
neither under- nor overapplied 17 Scorpion Production Company
planned to use 1 yard of plastic per unit budgeted at $81 a yard.
However, the plastic actually cost $80 per yard. The company
actually made 3,900 units, although it had planned to make only 3,300