Accounting 4 Exam 2, shasta

company occupies a building is 50000 square feet of the total square footage 5000 is used by service dept. #1, 10,000 is used by service dept. #2 and the 35,000 is used by the two operating departments. Under the direct method of service department allocation, square footage used in teh allocation of service Dept. #1's costs will be:

35,000 sq ft under the direct method, any allocation base attributed to service departments is ignored

in process costing, manufacturing overhead costs are distributed to each department

The cost is distributed according to the amount of the allocation base incurred in the department

when many different jobs or products are worked on each period, the most likely costing system is:

job-order

job-order costing is used for

many different products with unique production requirements

When constructing a cvp graph, the horizontal axis represents:

sales volume

cvp analysis focuses on how profits are affected by

selling prices, sales volume, unit variable costs, total fixed costs, mix of products sold (PVVFM)

to prepare a CVP graph, lines must be drawn representing total revenue

total expense, and total fixed expense

variable expenses/sales is the calculation for

variable expense ratio

equivalent units of production equal the number of units transfered to the next department (or finished goods) plus equivalent units in ending work in process under with method(s) of costing?

weighted average only

two types of departments in large organizations are:

-operating department -service department

a journal entry to record material cost in the sedcond department would include a

debit to work in process 2

When constructing a cvp graph, the vertical axis represents:

dollars

to report ending inventory, partially completed units are translated into

equivalent units

differences in cost-order costing and process costing include that the process costing:

-used for indistinguisable products -accumulates costs by department

Ceramic Creations sells pots for $25. The variable costs pet pot is $12 and 15,000 pots must be sold to break-even. If Ceramic Creations sells 25,000 pots, net income will be:

(25000-15000) x ($25- $12) = 130,000

using the weighted average method, if work in process inventory has 100 units that are 40% complete and 300 units were transferred to the next department during the period, there are a total of

(300+(100x40%))= 340 equivalent units in production

costs in beginning inventory was $4500 and $37800 in costs were added during the period. Under the weighted-average method, if there are 7050 equivalent units, the cost per equivalent unit is

(4500+37800)/7050= $6

the calculation of contribution margin (CM) ratio is

(contribution margin/sales)

Given a sales price of $100, variable cost of $70 and a break-even point of 500 units, net operating profit for sale of 501 units will be

(sales price - variable cost) = $30

net operating income can be calculated as

(unit sales -unit sales to break even) x contribution margin

companys break-even point is 17,000 units. If the contribution margin is $22 per unit and 26,000 units were sold, net operating profit will be:

(units sold - b.e.) x cm (26000-17000) x $22 = $198,000

Company A sold 200,000 units @ 7$. The CM is $4. Fixed expenses are $632,000. What is profit (or profit loss)?

(units x CM) - Fixed expense (200,000 x $4) - $632,000 = $168,000

processing department proiduces

-identical -homogenous

when using process costing, materials, labor , and overhead may be added in

any processing department

example of products that may use operation costing

clothing, shoes, jewelry

Lance Inc. has sales of 9,000 units. The contribution margin per unit is $32 and fixed costs total $120,000. Lance's profit is

(units x cm) - fexp (9,000 units x $32) - $120,000 = $168,000

PLush & Cushy sells high-end desk chairs. The variable per chair is $85.05 and the chair sells for $189.00 each. The variable expense ratio for PLush & Cushy's chair is

(variable expense/Price) (85.05/189)