The Schedule of Cost of Goods Manufactured is nothing more than a restatement of the
Work in Process Inventory account.
A company that focuses on product differentiation does not need to monitor product
costs because if the quality is sufficient customers will pay the price.
The primary users of managerial accounting information are managers and decision
makers.
When using a standard costing system, direct material and direct labor are recorded at
actual cost while manufacturing over is applied at a standard rate.
To make predictions about costs and income, you must first separate costs by their
behavior.
A flexible budget is a budget based on the budgeted sales volume at the beginning of
the period.
Unlike the percentage columns in a horizontal analysis, the columns in a common-size
percentage statement can be totaled.
A variance is labeled as ‘œfavorable’ or ‘œunfavorable’ indicating their effect on
managers’ bonuses.
Cindy’s Chocolates sells its cream filled donuts for $1.50 each. The variable cost per
unit for the donuts is $1.05 and total fixed costs are $9,000.
a. What is the contribution margin per unit for the donuts?
b. What is the breakeven point in sales dollars?
Frederick Taylor was the first to understand the importance of a business’s activities. He
examined workers’ jobs as a set of tasks, each of which had a standard completion time
in
a. The early 1800s.
b. The late 1800s.
c. The early 1900s.
d. The late 1900s.
Match the following terms to the appropriate statement by placing the letter to the left
of each statement. a. Direct method e. Operating activities
b. Financing activities f. Sources of cash
c. Indirect method g. Statement of cash flows
d. Investing activities h. Uses of cash
Sports Nation sells two types of soccer jerseys: Deluxe and Superior. The following
table shows the sales price and variable cost for each jersey. Sports Nation incurs
$200,000 a year in fixed costs. Assume the store has a sales mix of three Deluxe jerseys
for every Superior jersey sold.
Required:
a. How many jerseys of each type will be sold at the breakeven point?
b. What amount of revenue would need to be generated by each type of jersey for the
company to earn $25,000 in operating income?
has to do with the efficient use of the activity base rather than the efficient use of the
variable overhead itemThe variable overhead spending variance captures
a. Whether the company has paid more or less for variable overhead items.
b. The relative efficiency with which variable overhead items are used.
c. Whether a company is more or less efficient with respect to the production activity,
since variable overhead varies with production activity.
d. Both whether the company has paid more or less for variable overhead items and the
relative efficiency with which variable overhead items are used.
Quail Industries is preparing its cash budget for the third quarter of the current year.
Sales for the third quarter are budgeted at $696,000 ($232,000 per month). Sales are
80% cash, with the remaining 20% on credit which is collected in the month following
the month of sale. On June 30, the cash balance is $38,400, and the Accounts
Receivable (all related to June sales) balance is $40,800. Operating expenses for the
quarter are budgeted at $371,200, which includes $14,400 of depreciation. Cash
expenses are paid in the month incurred. Cash purchases for merchandise inventory are
budgeted at $313,600 for the quarter. To prepare for the busy fourth quarter, Quail ‘s
desired cash balance on September 30 is $120,000. How much financing will the
company need at the end of the third quarter?
a. $29,600
b. $61,600
c. $116,800
d. $15,200
Which of the following cash flows results from an operating activity?
a. Paying employees monthly payroll
b. Declaring a dividend of $5 per share
c. Selling an investment in another company
d. Purchasing a new delivery truck
The basic financial statements always report on transactions and events
a.That have already occurred.
b.That will occur in the future.
c.That are projected.
d.That have been audited.
Which of the following is not a component of the master budget?
a. Manufacturing overhead budget
b. Horizontal budget
c. Ending inventory and cost of goods sold budget
d. All of these answer choices are components of the master budget.
Springer Company produces and sells home-ground wheat flour. The flour mill division
sells to the general public in its outlet store located at the mill. The mill division also is
the supplier of flour for its bakery division located across the street from the flour mill.
The following information has been collected by Springer ‘s controller:
Number of pounds needed by the bakery 6,000
If the flour mill transfers flour to the bakery, it can avoid $0.03 of the variable selling
cost.
Required:
a. If the flour mill can only sell 12,000 pounds at its outlet store to outside customers,
what is the lowest acceptable transfer price per pound that the flour mill division should
accept?
b. If the flour mill can sell all 20,000 pounds at its outlet store to outside customers,
what is the lowest acceptable transfer price per pound the flour mill division should
accept?
When analyzing direct materials price and quantity variances, the responsibility
typically lies with
a. Controller and CFO.
b. Purchasing manager and production manager.
c. Purchasing and cost accounting manager.
d. Sales manager and production manager.
Debt is not a free resource because
a. The use of debt funds is restricted as designated by the debt instrument.
b. Companies must pay interest on the borrowings.
c. Companies must restrict cash flow until the debt is repaid.
d. None of these answer choices are correct.
Logan, Inc. is considering the purchase of a warehouse directly across the street from
its manufacturing plant. Logan currently warehouses its inventory in a public
warehouse across town. Rent on the warehouse and delivering and picking up inventory
cost Logan $48,000 per year. The building will cost Logan $400,000. Logan will
depreciate the building for 20 years. At the end of 20 years, the building will have a
$125,000 salvage value. Logan’s required rate of return is 10%. The building’s net
present value is
a. ($41,347)
b. $27,228
c. $427,228
d. $960,000
In the Dupont Model for calculating ROI, which of the following components appears
on both the margin side of the expression and the asset turnover side?
a. Operating income
b. Sales revenue
c. Average operating assets
d. Segment margin
Dawn Manufacturing produces industrial light fixtures. For the year, management
estimated that total manufacturing overhead would be $1,120,000. Management
decided to use direct labor hours to apply manufacturing overhead and budgeted
144,600 direct labor hours. The following information was compiled before an
adjustment had been made to close Manufacturing Overhead Control:
For the year, manufacturing overhead was underapplied by $220,000. If Dawn prorates
the underapplied overhead, what is the ending balance of the Finished Goods
Inventory?
a. $403,456
b. $462,284
c. $461,184
d. $404,556
When the units produced exceeds the units sold
a. Ending inventory on the balance sheet is lower under absorption costing than under
variable costing.
b. Ending inventory on the balance sheet is higher under absorption costing than under
variable costing.
c. Ending inventory on the balance sheet is the same under absorption costing and
variable costing.
d. Cannot be determined with the information given.
Which of the following cash flows results from a financing activity?
a. Borrowing money from the bank
b. Receiving a stock dividend worth $3 per share
c. Paying income taxes at end of year
d. All of these answer choices result from financing activities
Johnston Manufacturing Company purchased 14,000 switches to make 6,000 units. The
standard allows for 2 switches per unit. The company actually used 14,500 to produce
the 6,000 units. Johnson budgeted $0.75 per switch, but had to pay $0.80 per switch.
What is Johnston’s direct materials quantity variance for the period?
a. $1,875 unfavorable
b. $1,875 favorable
c. $2,000 unfavorable
d. $1,000 favorable
Foreman Outfitters, a retail store of camping supplies, has sales of $300,000 and cost of
goods sold of $210,000. Beginning inventory was $20,000 and ending inventory was
$12,000. What is the company’s average days to sell inventory?
The formula for the return on assets is
For each item below, identify whether the item applies to an absorption costing or
variable costing income statement by marking an ‘œX’ in the appropriate column.
Barnett Publishing Inc., reported the following current asset data (in $000s) in its 2014
annual report.
Required: Prepare a trend analysis of Barnett’s current assets, rounding your answers to
one decimal place. Comment on any significant trends you identify.
The following labor standards have been set for a product:
The following data pertain to operations for the period.
Required
Calculate the direct labor rate and efficiency variances and indicate whether the
variances are favorable or unfavorable.
Identify the cash flows associated with capital budgeting decisions.
To find the breakeven point, set the standard profit equation equal to zero, let x equal
the total costs, and then solve for x.