The budgeted balance sheet assumes that all operating and financing plans are met.
a. True
b. False
Answer:
Principal components of a master budget include
a. production budget
b. sales budget
c. capital expenditures budget
d. all of these
Answer:
actual cost < standard cost at actual volumes
Match the following descriptions with the term (a-e) it describes:
a. Ideal standard
b. Nonfinancial performance measure
c. Currently attainable standard
d. Unfavorable cost variance
e. Favorable cost variance
Answer:
The primary disadvantage of decentralized operations is that decisions made by one
manager may affect other managers in such a way that the profitability of the entire
company may suffer.
a. True
b. False
Answer:
Based on the above data, what is the amount of working capital?
a. $238,000
b. $128,000
c. $168,000
d. $203,000
Answer:
Scoresby Co. uses 6 machine hours and 2 direct labor hours to produce Product X. It
uses 8 machine hours and 16 direct labor hours to produce Product Y. Scoresby’s
Assembly and Finishing departments have factory overhead rates of $240 per machine
hour and $160 per direct labor hour, respectively. How much overhead cost will be
charged to the two products?
a. Product X = $3,200; Product Y = $9,600
b. Product X = $800; Product Y = $800
c. Product X = $1,760; Product Y = $4,480
d. Product X = $1,440; Product Y = $2,560
Answer:
machine operator
Match the costs that follow to the type of product cost (a-c) or designate as not a
product cost (d).
a. direct labor
b. direct materials
c. factory overhead
d. not a product cost
Answer:
If fixed costs are $450,000 and the unit contribution margin is $50, the sales necessary
to earn an operating income of $50,000 are 10,000 units.
a. True
b. False
Answer:
The St. Augustine Corporation originally budgeted for $360,000 of fixed overhead at
100% normal production capacity. Production was budgeted to be 12,000 units. The
standard hours for production were 5 hours per unit. The variable overhead rate was $3
per hour. Actual fixed overhead was $360,000 and actual variable overhead was
$170,000. Actual production was 11,700 units.
The fixed factory overhead controllable variance is
a. $9,000 favorable
b. $9,000 unfavorable
c. $5,500 favorable
d. $5,500 unfavorable
Answer:
applied overhead is less than actual overhead incurred
Match the following phrases with the term (a-g) that it most closely describes.
a. job order cost system
b. process cost system
c. activity-based costing
d. under applied overhead
e. over applied overhead
f. finished goods ledger
g. materials ledger
Answer:
If the cost of materials is not a significant portion of the total product cost, the materials
may be classified as part of factory overhead cost.
a. True
b. False
Answer:
Hill Co. can further process Product O to produce Product P. Product O is currently
selling for $60 per pound and costs $42 per pound to produce. Product P would sell for
$82 per pound and would require an additional cost of $13 per pound to produce.
The differential cost of producing Product P is $13 per pound.
a. True
b. False
Answer:
The following information is taken from the financial records of Gunner
Manufacturing:
What is cost of goods manufactured? a. $178,000
b. $132,000
c. $122,000
d. $142,000
Answer:
Standard costs are determined by multiplying expected price by expected quantity.
a. True
b. False
Answer:
The balance sheets at the end of each of the first two years of operations indicate the
following:
If net income is $250,000 and interest expense is $20,000 for Year 2, and the market
price of common shares is $30, what is the price-earnings ratio on common stock for
Year 2? (Round intermediate calculation to two decimal places and final answers to one
decimal place.)
a. 7.5
b. 13.4
c. 12.1
d. 8.5
Answer:
Southern Company is preparing a cash budget for April. The company has $12,000 cash
at the beginning of April and anticipates $30,000 in cash receipts and $34,500 in cash
disbursements during April. Southern Company has an agreement with its bank to
maintain a minimum cash balance of $10,000. To maintain the required balance during
April, the company must
a. borrow $4,500
b. borrow $2,500
c. borrow $7,500
d. borrow $5,000
Answer:
Under the total cost concept, manufacturing cost plus desired profit is included in the
total cost per unit.
a. True
b. False
Answer:
In most business organizations, the chief accountant is called the treasurer.
a. True
b. False
Answer:
The beginning inventory is 5,000 units. All of the units manufactured during the period
and 3,000 units of the beginning inventory were sold. The beginning inventory fixed
costs are $25 per unit, and variable costs are $55 per unit. Determine (a) whether
variable costing income from operations is less than or greater than absorption costing
income from operations, and (b) the difference in variable costing and absorption
income from operations.
Answer:
Lead time includes both value-added time and non-value-added time.
a. True
b. False
Answer:
Equivalent units of production are always the same as the total number of physical units
finished during the period.
a. True
b. False
Answer:
Operating expenses incurred for the entire business as a unit that are not subject to the
control of individual department managers are called indirect expenses.
a. True
b. False
Answer:
Watson Company has the following data:
Calculate the amount of direct materials used.
Answer:
calculate equivalent units of production
Answer:
determine the cost per equivalent unit
Answer:
The Klein Company reports the following data:
Determine Klein Company’s operating leverage. Round your answer to two decimal
places.
Answer:
The Tom Company reports the following data:
Determine Tom Company’s operating leverage.
Answer:
Stevens Company’s inventory on March 1 and the costs charged to Work in
Process’”Department B during March are as follows:
During March, all direct materials were transferred from Department A, the units in
process at March 1 were completed, and of the 55,000 units entering the department, all
were completed except 6,000 units which were 70% completed. Inventories are costed
by the first-in, first-out method.
Prepare a cost of production report for March. Round unit cost data to four decimal
places and total cost to nearest cent.
Answer:
