Which of the following is a factor that influences the discount rate?
a.
b. Inflation
c. Both the level of risk and inflation
d. Neither the level of risk nor inflation
The 2013 and 2014 partial balance sheets for Ottoman Industries is shown below.
Sales revenue for Ottoman was $120,000 for 2013 and $114,000 for 2014 while cost of
goods sold was $82,400 for 2013 and $72,500 for 2014.
What is the average days to sell inventory for 2014?
a. 133 days
b. 137 days
c. 141 days
d. 146 days
J Bryson, Ltd. is a local coat retailer. The store’s accountant prepared the following
income statement for the month ended January 31.
Bryson sells its coats for $250 each. Selling expenses consist of fixed costs plus a
commission of $6.50 per coat. Administrative expenses consist of fixed costs plus a
variable component equal to 6% of sales.
Required:
a.Prepare a contribution format income statement for January.
b.Using the format y = mx + , develop a cost formula for the operating expenses.
c.If 2,700 coats are sold next month, what is the expected total contribution margin?
Donnie’s Donuts sells three types of donuts: sugar-glazed, cream-filled and giant-sized.
The following table shows the sales price and variable cost for each type. Donnie’s
incurs $216,000 a year in fixed costs. Assume that the store has a sales mix of three
sugar-glazed, two cream-filled, and one giant-sized.
Required:
a. How many donuts of each type will be sold at the breakeven point?
b. What amount of revenue would need to be generated by each type of donut for the
company to earn $36,000 in operating income?
A collection of smaller budgets that leads to pro-forma financial statements is referred
to as the
a. Master budget.
b. Summary budget.
c. Overall budget.
d. Pro-forma budget.
Suppose you are charged a $10 per month base charge for your electrical service. You
are also charged an additional $0.08 for every kwh of electricity you use. Which of the
following statement is not true?
a.The $10 base charge is a fixed cost.
b.The $0.08 charge per kwh is a variable cost.
c.The total cost is an example of a step cost.
d.The total cost is an example of a mixed cost.
Barry Co. manufactures leather briefcases and carryalls. Barry ‘s production manager
has provided the following production budget. Each briefcase or carryall requires 1.2
yards of leather fabric and Barry maintains an ending inventory of leather fabric equal
to 25% of the next month ‘s production needs.
How many yards of leather fabric will Barry budget to purchase in May?
a. 94,200
b. 75,000
c. 62,500
d. 76,800
Absorption costing is also referred to as
a. Variable costing
b. Full costing
c. Nominal costing
d. None of these answer choices are correct
Which of the following is not a method of estimating costs?
a.Scattergraphs
b.The high-low method
c.Regression analysis
d.All of these answer choices are methods of estimating costs.
All differences between the flexible budget and actual performance must result from
a. Sales.
b. Operations.
c. Differences in quantities.
d. Differences in costs.
Calculate delivery cycle time, manufacturing cycle time, and manufacturing cycle
efficiency.
Managers look at the financial statement to see how well a company is doing, but the
account balances alone do not tell managers enough. Horizontal and trend analyses are
commonly used by managers to help assess the company’s financial strengths and
weaknesses. Required: Explain what horizontal analysis and trend analysis are and how
the numbers are used. What are the steps in preparing horizontal and trend analysis?
Marling Machine Works produces soft serve ice cream freezers. The freezers sell for
$12,000, and variable costs total $8,200 per unit. Marling incurs $6,840,000 in fixed
costs during the year. The company’s tax rate is 25%.
Required:
How many freezers must Marling sell to generate net income of $3,450,000?
Calculate the minimum transfer price between divisions that maximizes corporate
income. (Appendix)
The following information relates to the 2014 operations of Ace Manufacturing
Company.
a. What is Ace’s cost of goods manufactured for the period?
b. What is Ace’s cost of goods sold the period?
Identify which of the following items would be classified as direct material or direct
labor by placing an “X” in the appropriate column.
