Which of the following statements is not True?
a.A company is unlikely to be successful in the long run without adequate managerial
accounting information to support decision making.
b.Managerial accounting is completely optional.
c.Managerial accounting reports are covered by rules comparable to those governing
financial accounting.
d.Internal users have access to all the underlying data in managerial accounting reports.
The customer profit margin allows managers to compare customers based on
a. Absolute sales volume.
b. How much each dollar of revenue they generate goes to the bottom line, regardless of
the customers’ absolute sales volume.
c. How many dollars a customer contributes to the bottom line.
d. None of these answer choices are correct.
Which of the following is not a type of unethical behavior employees might observe?
a.Abusive or intimidating behavior
b.Lying to employees
c.Misreporting of hours worked
d.Having employees sign an acknowledgement that they understand and will adhere to
the corporate code of conduct.
Chillcott Manufacturing produces ceiling fans. A master budget was prepared by the
controller based on sales of 19,500 fans for the month of May. The budgeted income
statement for the period is as follows:
During May, Chillcott produced and sold 23,400 fans and had the following actual
results:
Required
a. Prepare a flexible budget for May.
b. Calculate Chillcott’s static budget variance for May.
c. Will the static budget variance that you calculated in part (b) be useful to
management? Why or why not?
d. Based on the available information, prepare a performance report for management.
e. Comment on the results of your report.
Basil Industries reported the following information for December:
How much manufacturing overhead was incurred by Basil during December?
a. $481,250
b. $525,000
c. $462,000
d. $475,000
Assume a sales volume of 6,000 units, unit selling price of $20, unit variable cost of
$12, and total fixed costs of $20,000. What is the margin of safety in sales dollars?
a. $25,000
b. $50,000
c. $70,000
d. $120,000
$20,000 / ($20 – $12) = 2,500; (6,000 – 2,500) x $20 = $70,000
Some costs have both a fixed and a variable component. These costs are referred to as
a.Discretionary costs.
b.Committed costs.
c.Mixed costs.
d.Step costs.
A manufacturer of potting soil has the following financial data:
Required: a. What is the company’s unit contribution margin? b. What is the company’s
degree of operating leverage?
Which of the following cash flows results from a financing activity?
a. Purchasing an automobile by borrowing money from the bank
b. Receiving a cash dividend on an investment in another company
c. Declaring a stock dividend on common stock
d. Issuing 1,000 shares of preferred stock
In setting the direct labor quantity standard, allowances are made for
a. Rest time.
b. Machine down time.
c. Both rest time and machine down time.
d. Neither rest time nor machine down time.
Operational planning translates strategic planning into a plan to be completed within
a.Three months.
b.One year.
c.Five years.
d.Ten years.
The mixing department of the Glasson Company started the month with 20,000 units in
its beginning work in process inventory. An additional 309,000 units were transferred
into the mixing department during the month. At the end of the month 29,000 units
were in ending work in process inventory in the mixing department. How many units
were transferred out of the mixing department during the period?
a. 280,000
b. 300,000
c. 318,000
d. 329,000
Solution: 20,000 + 309,000 – 29,000 = 300,000 units
Georgiana operates a nail salon. She is trying to plan her costs for the next month and is
uncertain as to how to estimate those costs. Help her estimate next month’s costs given
the following information she collected, based on number of customers per month.
If Georgiana estimates 1,400 customers next month, what is the estimated cost for nail
supplies?
a.$4,030
b.$4,340
c.$4,650
d.$3,720
Place an “X” in the column that corresponds to the type of activity level referred to in
each scenario.
Calculate activity-based product costs.
Murphy ‘s, Inc. has the following production and cost data for two of its products,
Standard and Deluxe:
A total of 80,000 hours is available each period for the production of the two products.
The demand for both products is strong and Murphy will be able to sell as many of
either product as it can produce. Ignoring qualitative issues, which of the two products
should Murphy produce?
Milligan Manufacturing Company produces and sells garden tools. The company has
developed the following production plan for its new electric trimmer.
Each unit requires three feet of metal tubing. The company wishes to have ending
inventory equal to 110% of its next month ‘s production needs, plus an additional 100
feet. January ‘s beginning inventory meets this requirement. Milligan ‘s standard cost
per foot is $2.80.
Required
Prepare the 1st quarter direct materials purchases budget for metal tubing.
If you wish to have $25,000 in five years, how much must you deposit today if you will
earn 12% compounded annually on your investment?
Margie’s Creations manufactures ceramic figurines. In planning for the coming year, the
budget committee is considering three different sales targets: 6,000 figurines, 7,000
figurines, and 8,000 figurines. Figurines sell for $39 each. The standard cost
information for one figurine is as follows:
Required:
Prepare a flexible budget for the three sales levels under consideration.
Most organizations have a plan for success. The plan may be formal or informal, but
leaders should be able to identify what they want their organizations to achieve. One
type of tactical planning is the budgeting process.
Required:
Describe the budget development process and explain how it fits into management ‘s
planning process.
Belhaven Company produces “collapse-proof” rod and reel cases. In preparing the
current budget, Belhaven’s controller estimates a total of $400,000 in direct materials
cost, $300,000 in direct labor cost, and $300,000 in manufacturing overhead costs.
Since the manufacturing process is highly automated, the company uses machine hours
as the overhead application base. Estimated machine hours total 12,000. At the end of
the period, Belhaven reported actual results as follows: direct materials cost of
$410,000, direct labor cost of $250,000, manufacturing overhead cost $310,000, and
machine hours used 12,500.
a. What was Belhaven’s predetermined overhead rate for the year?
b. How much manufacturing overhead did Belhaven apply to jobs during the year?
c. If over-/under-applied overhead is closed to cost of goods sold, what is the balance in
the Manufacturing Overhead account after the adjustment?
To calculate the unit cost of the Neoprene stockingfoot waders he sells, Gary Guinn
added up all his costs and divided by the number of waders he sold during the year. He
then used this unit cost to estimate total costs for the coming year. Explain why Gary’s
method is not useful in predicting total costs for the coming year.