Accounting Fundamentals - Final Exam Study Questions

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During the month, Meridian Company had the following cash transactions: Cash collected from customers $ 12,500 Cash received from a loan 8,000 Cash paid for wages payable (5,750) Cash paid for the purchase of a building (15,000) Cash received for the issuance of new shares of stock 2,600 Cash received from sale of land 6,400 Cash paid for rent (2,500) Cash paid for dividends (1,500) Given the above information, compute cash flow from operating activities.

$4,250 operating activities: 12,500 - 5750 - 2,500 = 4,250

($8,600) investing activities: (15,000) + 6,400 = (8,600)

The emphasis in financial accounting is on which of the following external user groups?

Investors and creditors

The financial statement that presents a summary of the revenues and expenses of a business for a specific period of time, such as a month or a year, is called a(n)

income statement

Which of the following financial statements reports the excess of a company's revenues over its expenses?

income statement

expense and revenue accounts appear on the

income statement

Which of the following generally is NOT considered to be a liability?

inventory

Which of the following is an example of a significant accounting policy that would be explained in the notes to the financial statements?

the method used to estimate depreciation on a piece of equipment

In non-U.S. Balance sheets, you will often see each of the following EXCEPT:

the stockholders' equity section will be listed first on the balance sheet

With a multiple-step income statement all revenues are grouped together, all expenses are grouped together, and net income is computed as the difference between the two.

false

The current standard-setting board for accounting in the private sector is the

financial accounting standards board (FASB)

Whether an item is big enough that proper accounting will make a difference to users of accounting information is referred to as

materiality

Which ONE of the following is NOT part of the definition of "accounting"?

minimum

The scattergraph method is used to analyze:

mixed costs

When analyzing a company's debt-to-equity ratio, if the ratio has a value that is greater then one, then the company has

more debt than equity

When revenue and expense items are arranged to highlight important profit relationships, the resulting income statement format is called a -

multiple-step income statement

Which of the following ratios is a comparison of a financial statement number to a market value number?

price-earning ratio

Which of the following ratios represents an indication of investors' expectations concerning a firm's growth potential?

price-earning ratio

Which budget supplies information for all manufacturing cost budgets?

production

Which of the following budgets is based on the expected sales volume and the desired ending inventory of finished goods and is adjusted for the expected beginning inventory of finished goods?

production budget

The traditional overhead cost allocation system focuses the accumulation of overhead cost on:

products

which of the following is not a key component of the definition of accounting?

qualitative

Significant noncash financing and investing transactions are

reported in a narrative or in a separate schedule

Which ONE of the following is one of the economic incentives an external auditor has to do a good job?

reputation

Which of the following is an example of a disclosure of information NOT recognized that would be explained in the notes to the financial statements?

the disclosure of the uncertain, potential outcome of a lawsuit

Under the general rule of revenue recognition, revenue is recognized when

the earning process is complete and a valid promise of payment has been received

Which of the following compares actual inputs at standard prices with standard quantity of inputs at standard prices?

usage variance

The process of determining the dollar value to assign to an item that is to be recognized in the financial statements is called

valuation

Which of the following statements best describes financial statement analysis?

Financial statement analysis involves relationships and trends.

Which ONE of the following is the most common sequence of the FLOW of costs through a job order cost system?

First, purchase raw materials, then transfer raw materials to production; then add direct labor and manufacturing overhead costs; then transfer the cost of completed goods to finished goods inventory, finally, sell goods and transfer cost to cost of goods sold

When there is idle capacity, which costs are most likely to be irrelevant?

Fixed costs

When using the contribution approach to set selling prices, the markup must cover:

Fixed costs plus a reasonable return on investment

When assigning cost drivers to facility support activities, an appropriate cost driver would be:

Floor space

When managers are deciding how much of each product to sell to maximize net income, they should:

Focus on the product that contributes the most toward covering indirect fixed costs in relation to the critical resource factor

Which of the following is a characteristic of good personal budgeters?

Goal oriented

Which of the following is NOT one of the three primary financial statements?

Statement of retained earnings

If sales revenue is equal for a manufacturing firm and a service firm, which of these two firms will probably need a higher contribution margin to break even?

Service firm

Significant noncash financing transactions

Should not be disclosed in the body of a statement of cash flows but should appear elsewhere

Which of the following is NOT an advantage of standard costing?

Standards are reported as specific figures but are treated by managers as ranges of acceptable performance

Costs that a manager CANNOT control are called:

Uncontrollable costs

If activity-based costing is used, assembly would be classified as a:

Unit-level activity

A budget committee includes:

Vice presidents for sales, production, purchasing and finance and the controller

Under what circumstance will it be profitable to continue processing after the split-off point?

When incremental revenues exceed incremental processing costs after the split-off point

Raw Materials Inventory is debited:

When raw materials are purchased

Joint product costs are:

costs incurred before the split-off point Irrelevant to decisions concerning further processing Incurred whether further processing is done or not

A special order is an:

Order that is priced below the normal price in order to utilize excess capacity

Which of the following is one of the three types of product costs?

manufacturing overhead

Work-in-Process Inventory is debited when:

manufacturing overhead is applied

An estimate of the overhead that will be incurred for each unit is the:

manufacturing overhead rate

The following information was taken from the records of Merle Corporation for the period ending December 31, 2012: Advertising expense $1,200 Equipment 800 Accounts receivable 1,500 Notes payable 6,000 Retained earnings 8,420 Utilities expense 1,385 Revenues 4,620 Dividends 975 Interest receivable 125 Rent expense 655 Assuming that 3,450 shares of stock are outstanding, earnings per share is approximately

$0.40 Net income: $4,620 - $1,200 - $1,385 - $655 = $1,380 Earnings per share: $1,380 / 3,450 shares = $0.40

BigView Monitors manufactures three different sizes of computer monitors: 15-inch, 17-inch, and 20-inch. The company has recently implemented an activity-based costing system. BigView has identified five different production activities as well as the best cost driver for each activity. Each activity and driver is listed below, along with the budgeted amount that is associated with each activity for next year. Budgeted Activity Cost Driver Costs Parts handling Number of parts $ 90,000 Parts insertion Number of parts 990,000 Automated processing Machine hours 336,000 Testing Labor hours 68,000 Packaging Orders shipped 68,000 Total indirect manufacturing cost $1,552,000 The following information relates to each size of monitor and next year's anticipated manufacturing operations: 20-inch 17-inch 15-inch Units to be produced 2,000 3,000 5,000 Orders to be shipped 200 500 800 Number of parts per unit 30 20 10 Machine hours per unit 4 2 1 Labor hours per unit 2 2 2 What is BigView's cost per cost driver for parts handling for next year (rounded)?

$0.53 per part Total number of parts: (2,000 x 30) + (3,000 x 20) + (5,000 x 10) = 170,000 Cost per part: $90,000 / 170,000 = $0.53 (rounded)

Granger Company makes portable DVD players. In its inventory, Granger found 200 DVD players that had become obsolete. Each DVD player has a cost of $100. Granger can upgrade these DVD players for $15 each after which they can be sold at a cost of $40 each. Granger has also received an offer to sell the DVD players, as is, for a total of $4,000. Compared to just selling the 200 DVD players for a total of $4,000 as they are, what is the net increase (decrease) in operating income if Granger upgrades the DVD players and then sells them?

$1,000 increase Net increase: ($40 x 200 units) - ($15 x200 units) - $4,000 = $1,000 increase

Given the following information, compute net income - Extraordinary Loss -80 Income Taxes 150 Interest Expense 100 Operating Income 1,500 Unrealized Gain not included in Net Income 120

$1,170 1,500 - 150 - 100 -80 = 1,170

Given the following information, compute net income - Cost of Goods Sold $2,000 Extraordinary Item -170 Income Taxes 350 Interest Expense 200 Operating Expenses 1,500 Sales 5,500

$1,280 5,500 - 2,000 - 1500 - 350 - 200 - 170 = 1,280

Given the following information, compute comprehensive income - Extraordinary Loss -80 Income Taxes 150 Interest Expense 100 Operating Income 1,500 Unrealized Gain not included in Net Income 120

$1,290 1,500 - 150 - 100- 80- + 120 = 1,290

Collins Co. earned a profit of $2,000 in January. The company has estimated that sales will increase by $13,500 in February. Assume that fixed costs for January were $3,000 (and are not expected to change) and the variable cost ratio is 40%. What is the expected profit for the next month?

$10,100 Expected profit: $13,500 - 0.4($13,500) + $2,000 = $10,100

Bird's Eye View manufactures three different sizes of bird cages: small (for finches and canaries), medium (for cockatiels and small parrots), and large (for cockatoos and other large parrots). The company has recently implemented an activity-based costing system. Bird's Eye View has identified five different production activities as well as the best cost driver for each activity. Each activity and driver is listed below, along with the budgeted amount that is associated with each activity for next year. Budgeted Activity Cost Driver Costs Materials handling Labor hours $ 55,000 Automated processing Machine hours 40,000 Plastic parts insertion Number of parts 6,000 Inspections Labor hours 29,000 Packaging Orders shipped 31,000 Total indirect manufacturing cost $161,000 The following information relates to each size of bird cage and next year's anticipated manufacturing operations: Large Medium Small Units to be produced 350 400 600 Orders to be shipped 180 200 250 Number of parts per unit 8 6 4 Machine hours per unit 4 2 1 Labor hours per unit 2 2 2 Under an activity-based costing system, what is the per unit cost for manufacturing overhead of a small cage (rounded)?

$100 Cost per cost driver: Total Cost per Cost Driver Large Medium Small Total costs driver Labor hours(materials) 700 800 1,200 2,700 $55,000 $20.37 Machine hours 1,400 800 600 2,800 40,000 14.29 Number of parts 2,800 2,400 2,400 7,600 6,000 0.79 Labor hours (inspections) 700 800 1,200 2,700 29,000 10.74 Orders shipped 180 200 250 630 31,000 49.21 Total manufacturing overhead cost of small cages: Cost per Number of Activity driver drivers Total Materials handling $20.37 1,200 $24,444 Automated processing 14.29 600 8,574 Plastic parts insertion 0.79 2,400 1,896 Inspections 10.74 1,200 12,888 Packaging 49.21 250 12,303 Total $60,105 Manufacturing cost per unit: $60,105 / 600 = $100 (rounded)

During the year, Rigby Corporation earned revenues of $114,000 and incurred $98,000 for various operating expenses. There are 1,280 shares of stock outstanding. Earnings per share is

$12.50 Net income: $114,000 - $98,000 = $16,000 Earnings per share: $16,000 / 1,280 shares = $12.50

$120 Cost per cost driver: Total Cost per Cost Driver Large Medium Small Total costs driver Labor hours(materials) 700 800 1,200 2,700 $55,000 $20.37 Machine hours 1,400 800 600 2,800 40,000 14.29 Number of parts 2,800 2,400 2,400 7,600 6,000 0.79 Labor hours(inspections) 700 800 1,200 2,700 29,000 10.74 Orders shipped 180 200 250 630 31,000 49.21 Total manufacturing overhead cost of medium cages: Cost per Number of Activity driver drivers Total Materials handling $20.37 800 $16,296 Automated processing 14.29 800 11,432 Plastic parts insertion 0.79 2,400 1,896 Inspections 10.74 800 8,592 Packaging 49.21 200 9,842 Total $48,058 Manufacturing cost per unit: $48,058 / 400 = $120 (rounded)

Shasta Company is operating at less than full capacity. The production manager is considering using this excess capacity to make a part that he usually buys. The full costs of manufacturing the part are as follows: Total Cost of Unit Cost 2,000 Units Direct materials $16 $ 32,000 Direct labor 30 60,000 Variable manufacturing overhead 12 24,000 Direct fixed manufacturing overhead 6 12,000 Indirect fixed manufacturing overhead 12 24,000 Totals $76 $152,000 Up to now, the company has been buying 2,000 units of the part for a total of $124,000. Refer above: If Shasta Company uses a differential-cost analysis in deciding whether to make the part, the total differential cost of making the part would be:

$128,000 Total differential cost: $32,000 + $60,000 + $24,000 + $12,000 = $128,000

Cachet Inc. had a $93,000 balance in Accounts Receivable on July 1. In July, it expects to collect 55% of these receivables and 30% of the July credit sales, which are budgeted at $138,000. What is the budgeted accounts receivable at the end of July?

$138,450 Budgeted accounts receivables: ($93,000 x 45%) + ($138,000 x 70%) = $138,450

What are the total costs for a company with per-unit variable costs of $12 and total fixed costs of $51,000 if it sells 8,000 units of product?

$147,000 Total costs: $51,000 + (8,000 x $12) = $147,000

The following information relates to Almira's operations for the month of August: Actual quantity of materials used 22,000 pounds Standard quantity of materials 20,000 pounds Actual price of materials $ 8.00 Standard price of materials $ 7.60 Actual direct labor hours 40,000 Standard direct labor hours 42,000 Actual direct labor rate $15.00 Standard direct labor rate $14.00 Given the information above, the materials quantity variance is:

$15,200 unfavorable Materials quantity variance: (20,000 standard lbs. - 22,000 actual lbs.) x $7.60 = $15,200 U

How much cash will be needed to pay the following general and administrative expenses? Advertising expense $ 4,500 Executives' salaries expense 10,000 Depreciation expense 5,250 Amortization of patent 1,225 Interest expense 750 Total $21,725

$15,250 Cash needed: $21,725 - $5,250 - $1,225 = $15,250

Hee Jung Company had the following information available: Collections on accounts receivable $53,200 Payments for equipment purchase $23,200 Payments for wages and salaries $18,000 Receipt of interest revenue $ 2,500 Payments to principal amount on loan $12,800 Payments for inventory $22,200 Using this information, compute Hee Jung's cash provided by (paid for) operating activities.

$15,500 Operating activities: $53,200 - $18,000 + $2,500 - $22,200 = $15,500

Given the following information, compute operating income - Cost of Goods Sold $2,000 Extraordinary Item -170 Income Taxes 350 Interest Expense 200 Operating Expenses 1,500 Sales 5,500

$2,000 5,500 - 2,000 - 1,500 = 2,000

Yuka Company had a beginning cash balance of $1,875. In addition, Yuka Company reported the following items from its cash flow statement: Operating activities $6,450 Investing activities ($4,735) Financing activities ($1,200) Given this information, Yuka Company's ending cash balance is

$2,390 Ending cash balance: $1,875 + $6,450 - $4,735 - $1,200 = $2,390

Wimmer Company makes swimming suits and wants to analyze its mixed costs. The diagram below shows a scattergraph representing Wimmer's mixed costs for the previous five months.Using the graph above, determine Wimmer's variable cost rate.

$2.00 Variable cost rate: ($600 - $400) / (100 - 0) = $2.00

Newell Company presently has three product lines: paper, stamps, and printer ink. The company is considering adding a new line of pens. Market research shows the following expected revenues and costs if the pen line were added: Sales revenue (expected annual sale of 15,000 units) $ 65,000 Variable costs (30,000) Direct fixed costs (12,000) Common fixed costs (9,000) Net income $ 14,000 Refer above: What is the lowest selling price that Newell should consider that would still make it economically desirable to add this product line?

$2.80 Lowest selling price: ($30,000 + $12,000) / 15,000 = $2.80

$20,000 Sunk cost: $100 ´ 200 units = $20,000

Lumens Corporation makes ornamental lamps. The costs per lamp are the following: Direct materials $ 35 Direct labor 45 Manufacturing overhead 50 Total $130 The manufacturing overhead can be divided into 40% variable manufacturing overhead and 60% fixed manufacturing overhead. Refer above. A major department store has offered to buy 1,000 of the lamps from Lumens for $120 each. Given this information, if Lumens has sufficient idle capacity, by how much would Lumens increase its profits by selling the lamps to the store?

$20,000 Variable costs: $35 + $45 + ($50 x 40%) = $100 Increase in profits: 1,000 x ($120 - $100) = $20,000

XYZ Company generally produces between 200 and 350 units of product. Its fixed costs, within this relevant range, are $50,000. Its variable costs at 250 units of production are $10 per unit. What are the fixed costs per unit at 250 and 300 units of production, respectively? (Round to the nearest dollar.)

$200 and $167 Fixed costs per unit at 250 units: $50,000 / 250 = $200 Fixed costs per unit at 300 units: $50,000 / 300 = $167

Avondale Inc. had the following cash transactions during 2012: Sales receipts $2,000,000 Inventory payments 1,500,000 Interest payments 20,000 Wage payments 120,000 Dividend receipts 10,000 Interest receipts 6,000 Equipment purchased 150,000 Stock of Canton Company purchased 50,000 Stock issued 300,000 Repaid a note (nonoperating) 100,000 What was Avondale's net cash provided by (used in) financing activities?

$200,000 Cash provided by financing activities: $300,000 - $100,000 = $200,000

The following information relates to St. Jean Industries: Expected unit sales 145 Expected unit sales price $45 Expected market sales 1,800 Actual unit sales 150 Actual unit sales price $50 Actual market sales 1,788 Based on the information above, the sales volume variance is:

$225 favorable Sales volume variance: (150 actual units - 145 expected units) x $45 = $225 F

The following information was taken from the records of McDyce Corporation for the year ended December 31, 2013: Dividends paid $ 12,800 Service revenue 90,500 Accounts payable 139,750 Capital stock 378,750 Total expenses 67,000 Retained earnings (1/1/13) 43,400 The net income at December 31, 2013 was

$23,500 90,500 - 67,000 = 23,500

Stites Corporation will make $100,000 if it sells 8,000 bathtubs for $200 per unit. If the contribution margin is 30%, what will the fixed costs be?

$380,000 Fixed costs: 0.3($200 x 8,000) - X = $100,000 X = $380,000

BigView Monitors manufactures three different sizes of computer monitors: 15-inch, 17-inch, and 20-inch. The company has recently implemented an activity-based costing system. BigView has identified five different production activities as well as the best cost driver for each activity. Each activity and driver is listed below, along with the budgeted amount that is associated with each activity for next year. Budgeted Activity Cost Driver Costs Parts handling Number of parts $ 90,000 Parts insertion Number of parts 990,000 Automated processing Machine hours 336,000 Testing Labor hours 68,000 Packaging Orders shipped 68,000 Total indirect manufacturing cost $1,552,000 The following information relates to each size of monitor and next year's anticipated manufacturing operations: 20-inch 17-inch 15-inch Units to be produced 2,000 3,000 5,000 Orders to be shipped 200 500 800 Number of parts per unit 30 20 10 Machine hours per unit 4 2 1 Labor hours per unit 2 2 2 Under an activity-based product costing system, what is the per unit cost for manufacturing overhead of 20-inch monitors (rounded)?

$273 Cost per cost driver: Total Cost per Cost Driver 20-inch 17-inch 15-inch Total costs driver Number of parts(parts handling) 60,000 60,000 50,000 170,000 $ 90,000 $ 0.53 Number of parts(parts insertion) 60,000 60,000 50,000 170,000 990,000 5.82 Machine hours 8,000 6,000 5,000 19,000 336,000 17.68 Labor hours 4,000 6,000 10,000 20,000 68,000 3.40 Orders shipped 200 500 800 1,500 68,000 45.33 Total manufacturing overhead cost for 20-inch monitors: Cost per Number of Activity driver drivers Total Parts handling $ 0.53 60,000 $ 31,800 Parts insertion 5.82 60,000 349,200 Automated processing 17.68 8,000 141,440 Testing 3.40 4,000 13,600 Packaging 45.33 200 9,066 Total $545,106 Manufacturing cost per unit: $545,106 / 2,000 = $273 (rounded)

The following financial information is available for the year 2012: Operating activities $ 309,800 Investing activities ($118,000) Financing activities ($190,000) Ending cash balance $ 5,600 Given this information, what is the beginning cash balance?

$3,800 Beginning cash balance: x + $309,800 - $118,000 - $190,000 = $5,600 x = $3,800

The following information is available for Dakota Company: Product 1 Product 2 Sales $1,400,000 $1,800,000 Direct materials (200,000) (400,000) Direct labor (600,000) (600,000) Manufacturing overhead* (500,000) (500,000) Gross margin $ 100,000 $ 300,000 *allocated based on direct labor hours Dakota Company has decided to allocate its manufacturing overhead cost using activity-based costing. Manufacturing overhead will be allocated based on batch-level and product line manufacturing as follows: Total Manufacturing Overhead Costs Product 1 Product 2 Batch-level manufacturing overhead $600,000 20 batches 60 batches Product line manufacturing overhead $400,000 10 lines 40 lines What is Dakota Company's gross margin for Product 2 using activity based costing?

$30,000 Batch-level cost per batch: $600,000 / 80 batches = $7,500 Product line cost per product line: $400,000 / 50 lines = $8,000 Manufacturing overhead for Product 2: ($7,500 x 60) + ($8,000 x 40) = $770,000 Gross margin for Product 2: $1,800,000 - $400,000 - $600,000 - $770,000 = $30,000

Stanley Company manufactures and sells one product for $200 per unit. The variable costs per unit are $140, and monthly total fixed costs are $7,500. Last month Stanley sold 100 units and expects sales to remain the same for the current month. If fixed costs increase by $1,500, what is the break-even point for the current month?

$30,000 Contribution margin percent: ($200 - $140) / $200 = 30% Break-even point: 0.30x - ($7,500 + $1,500) = 0 x = $30,000

The following information was taken from the records of Tellers Corporation for the month ended December 31, 2012: Advertising expense $20,625 Income tax expense 13,095 Accounts payable 13,450 Dividends paid 14,125 Retained earnings (12/1/12) 57,860 Consulting fees revenue 93,550 Rent expense 11,728 Supplies expense 16,917 Given the above information, net income is

$31,185 Net income: $93,550 - $20,625 - $13,095 - $11,728 - $16,917 = $31,185

If a company has $528,000 of sales revenue, pays $26,400 in dividends, and has net income of $158,400, how much were the expenses for the year?

$369,600 Expenses: $528,000 - $158,400 = $369,600

$370,000 Batch-level cost per batch: $600,000 / 80 batches = $7,500 Product line cost per product line: $400,000 / 50 lines = $8,000 Manufacturing overhead for Product 1: ($7,500 x 20) + ($8,000 x 10) = $230,000 Gross margin for Product 1: $1,400,000 - $200,000 - $600,000 - $230,000 = $370,000

$376,000 Cash provided by operating activities: $2,000,000 - $1,500,000 - $20,000 - $120,000 + $10,000 + $6,000 = $376,000

$376,000 Net increase in cash: $2,000,000 - $1,500,000 - $20,000 - $120,000 + $10,000 + $6,000 - $150,000 - $50,000 + $300,000 - $100,000 = $376,000

Newell Company presently has three product lines: paper, stamps, and printer ink. The company is considering adding a new line of pens. Market research shows the following expected revenues and costs if the pen line were added: Sales revenue (expected annual sale of 15,000 units) $ 65,000 Variable costs (30,000) Direct fixed costs (12,000) Common fixed costs (9,000) Net income $ 14,000 Refer above: If Newell generally sets a markup of 20%, what is the lowest selling price that should be considered for the new pen line?

$4.08 Total costs: ($30,000 + $12,000 + $9,000) / 15,000 = $3.40 Lowest selling price: $3.40 x 120% = $4.08

JD Smith Company is operating at less than full capacity. The production manager is considering using this excess capacity to make a part that he usually buys. The full costs of manufacturing the part are as follows: Total Cost of Unit Cost 3,000 Units Direct materials $15 $ 45,000 Direct labor 18 54,000 Variable manufacturing overhead 5 15,000 Direct fixed manufacturing overhead 2 6,000 Indirect fixed manufacturing overhead 6 18,000 Totals $46 $138,000 Up to now, the company has been buying 3,000 units of the part for a total of $115,000. Refer above: In deciding whether or not to make the part, JD Smith Company should use a differential unit cost figure of:

$40 Differential unit cost: $15 + $18 + $5 + $2 = $40

$40,000 unfavorable Labor rate variance: ($14.00 - $15.00) x 40,000 actual hours = $40,000 U

The Dormir Company uses an activity-based costing system to account for its process of manufacturing camping tents. Each tent has $140 of direct materials, includes 15 parts, and requires 3 hours of machine time. Information on conversion costs, manufacturing activities, and cost drivers is listed below. Cost Per Manufacturing Activity Cost Driver Unit Material handling Number of parts $ 3.00 Sewing Machine hours 20.00 Assembling Number of parts 1.00 Testing Number of finished units 8.00 The cost of material handling per tent is:

$45.00 Cost of material handling: 15 parts x $3 = $45.00

Imperial Company manufactures two types of fruit drinks, Tropical and Hawaiian. The company can sell as many bottles of each product as it can produce, but production is limited by the availability of direct labor hours. The revenues, costs, and labor hours for the two products are as follows:Tropical Hawaiian Selling price per 100 bottles $1,200 $1,800 Variable costs per 100 bottles $ 720 $1,200 Labor hours per 100 bottles 10 20 Refer above: What is the contribution margin per 100 bottles of Hawaiian?

$600 Contribution margin for Hawaiian: $1,800 - $1,200 = $600

Shasta Company is operating at less than full capacity. The production manager is considering using this excess capacity to make a part that he usually buys. The full costs of manufacturing the part are as follows: Total Cost of Unit Cost 2,000 Units Direct materials $16 $ 32,000 Direct labor 30 60,000 Variable manufacturing overhead 12 24,000 Direct fixed manufacturing overhead 6 12,000 Indirect fixed manufacturing overhead 12 24,000 Totals $76 $152,000 Up to now, the company has been buying 2,000 units of the part for a total of $124,000. Refer above: In deciding whether or not to make the part, Shasta Company should use a differential unit cost figure of:

$64 Differential unit cost: $16 + $30 + $12 + $6 = $64

$750 favorable Sales price variance: ($50 - $45) x 150 units = $750 F

Dr. Gatten began practicing dentistry on January 1, 2011. During January she served 250 patients who had their teeth examined and cleaned. The following information is known in relation to each patient visit: Cost of supplies used to clean teeth $3 Cost of items in "clean teeth" bag, given to each patient $4 Charges for dental hygienist $15 an hour, 1.5 hours per patient Charges for dentist $40 an hour, 1 hour per patient Overhead costs per patient $10 Given the information above, total service cost per patient served in January would be:

$79.50 Total service cost: $3 + $4 + ($15 x 1.5) + ($40 x 1) + $10 = $79.50

The Colonial Company produces porcelain collectibles. In August, the molding department had a beginning work-in-process inventory of $16,800. Costs added during August totaled $79,200 (direct materials $43,200; conversion costs $36,000). At the end of the month, the ending work-in-process inventory value was $14,400. Assuming that Colonial Company uses job order costing, the cost of goods completed and transferred to the next department (glazing) in August was

$81,600 Cost of goods completed and transferred: $16,800 + $79,200 - $14,400 = $81,600

Credit sales are $92,000 in June and $80,500 in July; 80% are collected in the month of sale and 20% collected in the following month. Total July collections are:

$82,800 July collections: ($80,500 x 80%) + ($92,000 x 20%) = $82,800

Dahbi Corporation has the following financial information available: Operating activities $14,250 Financing activities $ 3,500 Beginning cash balance $ 1,450 Ending cash balance $ 5,650 Given this information, what is the amount of cash provided by (used in) Dahbi's investing activities?

($13,550) Investing activities: $1,450 + $14,250 + x + $3,500 = $5,650 x = ($13,550)

The following data came from the financial statements of Petrini Company: Total assets $205,000 Total liabilities 95,000 Total stockholders' equity 110,000 Operating profit 60,000 Interest expense 500 Given the information above, compute the debt ratio (rounded to two decimal places) for Petrini Company.

0.46 Debt ratio: $95,000 / $205,000 = 0.46

The following data came from the financial statements of Petrini Company: Total assets $205,000 Total liabilities 95,000 Total stockholders' equity 110,000 Operating profit 60,000 Interest expense 500 Given the information above, compute the debt-to-equity ratio (rounded to two decimal places) for Petrini Company.

0.86 Debt-to-equity: $95,000 / $110,000 = 0.86

The following data came from the financial statements of the Cheviot Company: Revenue $1,800,000 Assets $1,200,000 Expenses 1,200,000 Liabilities 200,000 Net income 600,000 Equity 1,000,000 Compute the asset-to-equity ratio (round to two decimal places).

1.20 Asset-to-equity ratio: $1,200,000 / $1,000,000 = 1.20

1.50 Asset turnover: $1,800,000 / $1,200,000 = 1.50

The following information is available for Brandon Han Company: $50.00 wage rate per direct labor hour $60,000 Actual direct labor wages 1,100 Standard direct labor hours for output produced 1,000 Actual direct labor hours worked Given this information, the labor RATE variance is

10,000 UF

Selected information for Alastair Company is as follows: 2012 Current assets $450,000 Total assets 725,000 Cost of goods sold 700,000 Sales revenue 915,000 Net income 145,000 What is the percentage that would be given to sales revenue on a common-size income statement (round to the nearest percent)?

100 percent Sales revenue: $915,000 / $915,000 = 100%

On December 31, 2010 and 2011, Taft Corporation had 100,000 shares of common stock issued and outstanding. Additional information is as follows: Stockholders' equity at 12/31/2011 $4,500,000 Net income year ended 12/31/2011 1,200,000 Market price per share of common stock at 12/31/2011 144 The price-earnings ratio on common stock at December 31, 2011, was

12 Price-earnings ratio: (100,000 x $144) / $1,200,000 = 12

The following information relates to Bergen Corporation: Standard cost per unit: Direct materials (6 pounds) $18 Direct labor (3 hours) 24 Actual resources used: Direct materials 12,500 pounds at $2.95 Direct labor 5,900 hours at $7.85 Units of output 2,000 Based on the information above, the quantity of direct materials that should have been used is:

12,000 pounds Direct materials that should have been used: 2,000 units x 6 lbs. = 12,000 lbs.

Selected financial statement numbers for Frederick Company are given below: Sales $277,480 Cost of goods sold 179,155 Average accounts receivable 20,730 Average inventory 4,145 Average property, plant, and equipment 75,705 Using the information above, calculate Frederick's accounts receivable turnover (round to two decimal places).

13.39 times Accounts receivable turnover: $277,480 / $20,730 = 13.39

The following data came from the financial statements of Petrini Company: Total assets $205,000 Total liabilities 95,000 Total stockholders' equity 110,000 Net income 65,000 Tax expense 4,000 Interest expense 500 Compute the times interest earned ratio (rounded to two decimal places) for Petrini Company.

139 times Times interest earned: ($65,000 + $4,000 + $500) / 500 = 139 times

Makeby Corporation makes sharbees. The following data are available on December 1, 2011: Raw materials needed to make 1 sharbee: 6 units of X 4 units of Y Number of units available at beginning of December: Raw material X 44 Raw material Y 62 Finished sharbees 18 Expected sales during December: 144 sharbees Desired levels of ending inventory: Raw material X 60 Raw material Y 56 Sharbees 20 Cost of raw materials: Raw material X $6 per unit Raw material Y $8 per unit Given the information above, budgeted production for December is:

146 sharbees Budgeted production: 144 + 20 - 18 = 146

Selected financial statement numbers for Frederick Company are given below: Sales $277,480 Cost of goods sold 179,155 Average accounts receivable 20,730 Average inventory 4,145 Average property, plant, and equipment 75,705 Using the information above, calculate Frederick's fixed asset turnover (round to two decimal places).

3.67 times Fixed asset turnover: $277,480 / $75,705 = 3.67 times

151 Number of Driver Events Cost Driver Large Medium Small Total Labor hours (materials) 350 × 2 400 × 2 600 × 2 2,700 Machine hours 350 × 4 400 × 2 600 × 1 2,800 Number of parts 350 × 8 400 × 6 600 × 4 7,600 Labor hours (inspections) 350 × 2 400 × 2 600 × 2 2,700 Orders shipped 180 200 250 630 Cost per cost driver Total Total Cost per Cost Driver Driver Events costs driver Labor hours (materials) 2,700 $55,000 $20.37 Machine hours 2,800 40,000 14.29 Number of parts 7,600 6,000 0.79 Labor hours (inspections) 2,700 29,000 10.74 Orders shipped 630 31,000 49.21 Total manufacturing overhead cost of LARGE cages: Cost per Number of Activity driver drivers Total Materials handling $20.37 700 $14,259 Automated processing 14.29 1,400 20,006 Plastic parts insertion 0.79 2,800 2,212 Inspections 10.74 700 7,518 Packaging 49.21 180 8,858 Total $52,853 Manufacturing cost per unit: $52,853 / 350 = $151 (rounded)

Dean's Dairy uses 4 gallons of milk to make 1 batch of cheese. Dean currently has 40 gallons of milk and desires to maintain an inventory of 20 gallons of milk. If 49 batches of cheese will be produced, how much milk must be purchased?

176 gallons Milk to be purchased: (49 x 4) + 20 - 40 = 176

Meadowland Clothing uses 3 yards of material for each garment produced. On May 1, Meadowland had 24 yards of material on hand. If Meadowland desires an ending inventory of 15 yards of material and plans to produce 65 garments during the month, how many yards of material should the company purchase during May?

186 Material purchases during May: (65 x 3) + 15 - 24 = 186

A company with a cost-volume-profit structure of $50X = $30X + $20,000 will earn a 20% return on revenues when it sells:

2,000 units Units to sell: $50X - $30X - $20,000 = 0.2($50X) X = 2,000

Everclean Company cleans draperies. It charges $90 to clean a full-size drape, and its variable and fixed costs are $55 per drape and $10,000 per year, respectively. Given these data, if Everclean's fixed costs increased to $15,000, how many drapes must the firm clean to earn $60,000?

2,143 Units for target income: $90x - $55x - $15,000 = $60,000 x = 2,143

Selected information for Isaac Company is as follows: Common stock $1,200,000 Additional paid-in capital 500,000 Retained earnings 740,000 Sales revenue for year 1,830,000 Net income for year 480,000 Isaac's return on equity, rounded to the nearest percentage point, is

20 percent. Return on Equity: $480,000 / ($1,200,000 + $500,000 + $740,000) = 20%

After the break-even point is reached, a firm that has a per-unit contribution margin of $20 will have a $500 increase in profits when sales increase by:

25 units Sales increase: $500 / $20 = 25 units

Ramona Company has the following labor-related data. Standard labor hours for output: 15,000 hours Standard labor rate: $10 per hour Actual labor rate: $8 per hour Actual labor hours: 17,500 hours Given this information, the labor EFFICIENCY variance is

25,000 UF

Everclean Company cleans draperies. It charges $90 to clean a full-size drape, and its variable and fixed costs are $55 per drape and $10,000 per year, respectively. Given these data, if Everclean's variable costs were reduced to $50 per drape, how many drapes would the firm have to clean to break even?

250 Break-even units: $90x - $50x - $10,000 = 0 x = 250

Patricia's Piano Palace has budgeted piano sales for the fourth quarter of the year as follows: September October November December 24 28 25 33 Larry wishes to have 20% of the next month's sales in ending inventory. If the September 1 beginning inventory consisted of 7 pianos, budgeted purchases for October would be:

27 pianos September ending inventory: 28 x 20% = 6 October purchases: 28 + (25 x 20%) - 6 = 27

Selected financial statement numbers for Frederick Company are given below: Sales $277,480 Cost of goods sold 179,155 Average accounts receivable 20,730 Average inventory 4,145 Average property, plant, and equipment 75,705 Using the information above, calculate Frederick's average collection period (round to two decimal places).

27.26 days Accounts receivable turnover: $277,480 / $20,730 = 13.39 Average collection period: 365 / 13.39 = 27.26 days

Partial information from Blain Company's balance sheet is as follows: Current assets: Cash $ 1,200,000 Marketable securities 3,750,000 Accounts receivable 28,800,000 Inventories 33,150,000 Prepaid expenses 600,000 Total current assets $67,500,000 Current liabilities: Notes payable $ 750,000 Accounts payable 9,750,000 Accrued expenses 6,250,000 Income taxes payable 250,000 Payments due within one year on long-term debt 1,750,000 Total current liabilities $18,750,000 What is Blain's current ratio?

3.60 Current ratio: $67,500,000 / $18,750,000 = 3.6

Speedy Print Shop is considering whether it should take a job to print 5,000 copies of an announcement. The costs associated with this special order have been identified as follows. Paper cost: 5,000 sheets at $0.01 each. Labor cost: The job will take 5 hours. This job must be done on a rush basis after regular business hours; the special labor rate will be $24 per hour. Printing plate cost: The cost to make a plate to print the announcements is $100. Printing press usage: Speedy has determined that maintenance costs and depreciation associated with the usage of the printing press is $10 per hour. If the printing press is not used, it does not need any maintenance and it does not depreciate. Building depreciation: Speedy normally allocates $5 of building depreciation for each direct labor hour worked on a job. However, the building depreciates strictly with the passing of time; printing one more job does not cause any extra building depreciation. Manager's salary: The manager makes $20 per hour, on average. However, the manager is on a salary and does not get paid extra for working extra hours. What is the minimum amount that Speedy Print Shop should charge for this job?

320

The following data are for Julian Mark Company. Total sales revenue $250,000 Number of units sold 50,000 units Fixed costs $100,000 Net income $40,000 Calculate the breakeven point in number of units

35,714 units

The balance sheet at the end of the first year of operations indicates the following: 2012 Total current assets $600,000 Total investments 85,000 Total property, plant, and equipment 900,000 Total current liabilities 250,000 Total long-term liabilities 350,000 Common stock, $10 par 600,000 Paid-in capital in excess of par-common stock 60,000 Retained earnings 325,000 What is the debt ratio for 2012 (rounded to one decimal places)?

37.9% Debt Ratio: ($250,000 + $350,000) / ($600,000 + $85,000 + $900,000) = 37.9%

The following information is available for Dakota Company: Product 1 Product 2 Sales $1,400,000 $1,800,000 Direct materials (200,000) (400,000) Direct labor (600,000) (600,000) Manufacturing overhead* (500,000) (700,000) Gross margin $ 100,000 $ 100,000 *allocated based on direct labor hours Dakota Company has decided to allocate its manufacturing overhead cost using activity-based costing. It is determined that $200,000 of manufacturing overhead is for facility support costs and therefore will not be used in computing gross margin for the individual products. The remaining $1,000,000 in manufacturing overhead will be allocated based on batch-level and product line manufacturing as follows: Total Manufacturing Overhead Costs Product 1 Product 2 Batch-level manufacturing overhead $600,000 20 batches 60 batches Product line manufacturing overhead $400,000 10 lines 40 lines What is Dakota Company's gross margin for Product 1 using activity based costing?

370,000

Yvonne Company reported the following data. Price per unit = $20 Fixed cost = $6,000 Variable cost per unit = $11 How many units must Yvonne Company sell in order to reach a TARGET PROFIT OF $30,000?

4,000 units

West Star Company is planning to market a new computer and must decide on a proper selling price. The following cost information for the manufacture of one computer has been compiled: Direct materials $48 Direct labor 90 Variable manufacturing overhead 62 Variable selling and administrative expenses 40 Fixed manufacturing overhead 40 Refer above: If the selling price is set at $400 and only variable costs are considered in the pricing decision, what is the markup percentage based on selling price?

40% Total variable costs: $48 + $90 + $62 + $40 = $240 Markup percentage: ($400 - $240) / $400 = 40%

It is January 1 of Year 2. Purchases for Yosef Company for January, February, and March are forecasted to be as follows: January, $200,000; February $400,000; March, $500,000. 20% of purchases are for cash. Of the credit purchases, 30% are paid during the month of the purchase, 50% in the month following the purchase, and 20% in the second month following the purchases. TOTAL purchases for November and December of Year 1 were $200,000 and $400,000, respectively. What is the forecasted amount of total CASH PAYMENTS FOR PURCHASES in March? Note: This is the sum of immediate payments from cash purchases, same-month cash payments of credit purchases, and cash payments for credit purchases made in prior months.

412,000

Derrald Company manufactures snowboards. Costs for January were as follows. Indirect labor........................................................................................ $11,000 Direct materials...................................................................................... 36,000 Income tax expense.............................................................................. 14,000 Indirect materials..................................................................................... 5,000 Property taxes on the factory building.............................................. 18,000 Direct labor............................................................................................. 31,000 Salespersons commissions..................................................................... 9,000 Interest expense..................................................................................... 17,000 Insurance on manufacturing equipment.......................................... 12,000 What is Derrald Company's actual manufacturing overhead for January?

46,000

The Smith Company manufactures insulated windows. Costs for March were as follows. Salary of factory supervisors $25,000 Insurance on salespersons' automobiles 2,000 Indirect materials 4,000 Interest expense 7,500 Direct labor 53,000 Indirect labor 18,000 Salary of corporate vice president for advertising 3,000 Direct materials 48,000 What is Smith Company's actual manufacturing overhead for March?

47,000

Selected information for Alastair Company is as follows: 2012 Current assets $450,000 Total assets 725,000 Cost of goods sold 700,000 Sales revenue 915,000 Net income 145,000 What is the percentage that would be given to current assets on a common-size balance sheet using the percent of sales method (round to the nearest percent)?

49 percent Sales revenue: $450,000 / $915,000 = 49%

The following cost information is for Harry Company. Actual results Total cost of purchasing material $58,000 Number of labor hours worked 1,000 hours Number of material pounds used in production 5,850 pounds Total labor cost $48,000 Number of units produced 300 units Number of material pounds purchased 6,250 pounds Harry Company has established the following standards. Price per pound of materials $10.00 per pound Number of pounds of material to produce one unit 20 pounds Standard labor rate $50.00 per hour Number of labor hours to produce one unit 3 hours Compute Harry's Labor Efficiency Variance.

5,000 UF

The Catchem Reel Company uses an activity-based costing system to account for its production of fishing equipment. In the case of fishing reels, each reel has $200 of direct materials, $75 of direct labor, includes 25 parts, and requires 9 hours of machine time in the production process. Information on costs, manufacturing activities, and cost drivers is listed below. (Note: "cost per cost driver unit" refers to cost per part, per hour, or per reel, respectively.) Cost Per Manufacturing Activity Cost Driver Cost Driver Unit Material handling Number of parts $5.00 Polishing Machine hours (MH) 6.00 Assembling Number of parts 3.00 Testing Number of finished reels 10.00 What is the total cost to produce, polish, assemble, and test one reel?

539

During January, Sophie Toys expects to produce 2,000 toys. The following are needed to make one toy: Wood (direct materials): 2 board feet at $3 per foot Metal (direct materials): $3 per toy Direct labor: 1 hour at $16 per hour Manufacturing overhead is applied at a rate of $4 per direct labor hour. What is Sophie's budgeted TOTAL MANUFACTURING COST for January?

58,000

60% Return on equity: $600,000 / $1,000,000 = 60%

Below are the forecasted cash receipts and cash payments for Kaden Company for the first four months of the year. January February March April Budgeted cash collections 100,000 80,000 75,000 146,000 Budgeted cash payments: Operating expenses 127,000 105,000 92,000 120,000 Dividends 0 20,000 0 0 Equipment purchase 0 40,000 0 0 Total budgeted cash payments 127,000 165,000 92,000 120,000 On January 1, Kaden Company had a cash balance of $50,000. Kaden has a policy of maintaining a cash balance of at least $10,000 at the end of each month. Assume that Kaden Company had no outstanding loans on January 1. Also assume that there is no interest cost for its loans. What it the balance in Kaden Company's loans as of the end of April?

63,000

Grate Company's product has a selling price of $15 and a per-unit variable cost of $8. Its fixed costs are $14,000. How many units must the company sell to earn a profit of $35,000?

7,000 Units to sell: $15X - $8X - $14,000 = $35,000 X = 7,000

Selected information for Alastair Company is as follows: 2012 Current assets $450,000 Total assets 725,000 Cost of goods sold 700,000 Sales revenue 915,000 Net income 145,000 What is the percentage that would be given to cost of goods sold on a common-size income statement (round to the nearest percent)?

77 percent Sales revenue: $700,000 / $915,000 = 77%

The following cost information is for Harry Company. Actual results Total cost of purchasing material $58,000 Number of labor hours worked 1,000 hours Number of material pounds used in production 5,850 pounds Total labor cost $48,000 Number of units produced 300 units Number of material pounds purchased 6,250 pounds Harry Company has established the following standards. Price per pound of materials $10.00 per pound Number of pounds of material to produce one unit 20 pounds Standard labor rate $40.00 per hour Number of labor hours to produce one unit 3 hours Compute Harry's Labor Rate Variance.

8,000 UF

Selected financial statement numbers for Frederick Company are given below: Sales $277,480 Cost of goods sold 179,155 Average accounts receivable 20,730 Average inventory 4,145 Average property, plant, and equipment 75,705 Using the information above, calculate Frederick's number of days' sales in inventory (round to two decimal places).

8.45 days Inventory turnover: $179,155 / $4,145 = 43.22 times Number of days' sales in inventory: 365 / 43.22 = 8.45 days

When materials are requisitioned from raw materials inventory, the journal entry includes:

A debit to Work-in-Process Inventory or Manufacturing Overhead

The following data relate to Company A. Retained earnings 500 Paid-in capital 200 Long-term liabilities 1,050 Current assets 400 Current liabilities 600 Given these data, compute Company A's TOTAL LONG-TERM ASSETS.

According to the accounting equation, Assets = Liabilities + Owners' Equity Current liabilities 600 Long-term liabilities 1,050 Paid-in capital 200 Retained earnings 500 Total liabilities and owners' equity 2,350 Also, we know that Total Assets = Current Assets + Long-Term Assets 2,350 = 400 + Long-Term Assets Total Long-Term Assets = 1,950

Which method for allocating manufacturing overhead costs is usually more accurate?

Activity-based costing

Which of the following types of costing systems identifies business activities that create overhead costs and then assigns overhead to products or divisions according to these activities?

Activity-based costing

Decisions to drop a product line must take into consideration:

All differential costs Qualitative factors Joint costs

If direct labor time is charged to the wrong job number, that job will:

Appear less profitable than it should

Using the data below, compute Asset Turnover. Accounts Payable 800 Accounts Receivable 1,100 Capital Stock 2,000 Cash 50 Cost of Goods Sold 6,000 Inventory 1,500 Long-term Debt 1,820 Net Income 950 Property, Plant, and Equipment (net) 3,000 Retained Earnings 1,030 Sales 10,000 Market value of shares 12,000

Asset Turnover Sales 10,000 Total Assets 5,650 1.77

Using the data below, compute Asset Turnover. Accounts Payable 1,300 Accounts Receivable 1,500 Capital Stock 2,000 Cash 200 Cost of Goods Sold 8,000 Inventory 2,100 Long-term Debt 4,000 Net Income 650 Property, Plant, and Equipment (net) 5,000 Retained Earnings 1,500 Sales 12,000 Market value of shares 12,000

Asset Turnover Sales 12,000 Total Assets 8,800 1.36

Thomson Company started business on January 1 of Year 1. On December 31 of Year 1, Thomson had the following account balances: Accounts receivable: $145,000 Sales revenues: $991,000 Income taxes payable: $29,000 Loan payable: $60,000 Cost of goods sold: $627,000 Cash: $80,000 Inventory: $33,000 Operating expenses: $235,000 Income tax expense: $30,000 Accounts payable: $60,000 Property, Plant, and Equipment: $166,000 Prepaid Rent: $60,000 Bonds Payable: $150,000 Capital Stock: $86,000 Given these data, what is the total amount of Thomson's Stockholders' Equity as of December 31 of Year 1?

Assets Cash $80,000 Accounts receivable $145,000 Inventory $33,000 Prepaid Rent $60,000 Property, Plant, and Equipment $166,000 $484,000 Liabilities Accounts payable $60,000 Income taxes payable $29,000 Loan payable $60,000 Bonds payable $150,000 $299,000 Stockholders' Equity Capital Stock $86,000 Sales revenues $991,000 Cost of goods sold $(627,000) Operating expenses $(235,000) Income tax expense $(30,000) $185,000 Revenue, expense, and dividend accounts are subcategories of retained earnings. These accounts are included in the computation of retained earnings at the end of the year. In this example, because this is the company's first year of business, the beginning balance in retained earnings is zero. Assets - Liabilities = Stockholders' Equity $484,000 - $299,000 = $185,000

The New Company's assets equal $124,000, and its stockholders' equity totals $48,500. What is the amount of its liabilities?

Assets = Liabilities + Equity $124,000 = Liabilities + $48,500 Liabilities equal $75,500 or $124,000 - $48,500

The liabilities of the Old Company are $46,200, and its owners' equity is $35,800. What is the amount of its assets?

Assets equal $82,000 or $46,200 + $35,800

The statement of cash flows replaces the

Balance sheet, statement of financial position, income statement Xnone of theseX

Morton Company has two divisions. Sales, direct materials cost, direct labor cost, and manufacturing overhead data for Morton's two divisions are available below. Note: All of Morton Company's products are sold in competitive markets. Missile Salt Products Products Sales $1,500,000 $1,000,000 Direct labor (300,000) (800,000) Direct materials (100,000) (40,000) Manufacturing overhead* (150,000) (400,000) Gross profit $950,000 ($240,000) *Manufacturing overhead is allocated to production based on the amount of direct labor cost. Morton has determined that its total manufacturing overhead cost of $550,000 is a mixture of batch-level costs and product line costs. Morton has assembled the following information concerning the manufacturing overhead costs, the annual number of production batches, and the number of product lines in each division. Total Manufacturing Overhead Missile Salt Costs Products Products Batch-level overhead $250,000 10 batches 90 batches Product line overhead 300,000 3 lines 7 lines $550,000 Which ONE of the following statements is MOST CORRECT?

Batch-level overhead: $250,000 / 100 batches = $2,500 per batch Product line overhead: $300,000 / 10 lines = $30,000 per line Missile Salt Products Products Sales $1,500,000 $1,000,000 Direct labor (300,000) (800,000) Direct materials (100,000) (40,000) Batch-level overhead (25,000) (225,000) Product line overhead (90,000) (210,000) Gross profit $985,000 ($275,000) *Manufacturing overhead is allocated based on number of batches and number of product lines. Missile Salt Products Products Old gross profit $950,000 ($240,000) New gross profit 985,000 (275,000) Change in gross profit increase $35,000 decrease $35,000

When a segment of a business consistently shows net losses, it should:

Be dropped only if its contribution to overall company profits is negative

When managers are deciding what price to charge for a special order, they should consider:

Both additional costs and qualitative factors

Which of the following statements is true when making product and process decisions?

Both quantitative and qualitative factors should be considered

Predetermined overhead rates are used because:

Both total manufacturing overhead costs are not known until year-end and manufacturing overhead benefits many products and therefore cannot be directly assigned

What is BUDGETARY SLACK?

Budgetary slack is the process of inflating a department's budget request for resource inputs (such as materials, labor, time, and so forth) or deflating the department's budget commitment to output (products, services, sales, etc.) so that the department manager can more easily achieve the budget. Intentionally creating easy budget targets

During Year 1, Knight Company recorded the following information on its Income Statement. Sales revenue $500,000 Interest expense 10,000 Interest income 15,000 Gross Profit (or Gross Margin) 200,000 Selling and administrative expenses 75,000 Income tax expense 12,000 What is Knight Company's cost of goods sold for Year 1?

By definition, gross profit is the amount of sales revenue left, after taking out the cost of goods sold, to cover other expenses. Therefore, Gross Profit = Sales Revenue - Cost of Goods Sold By using algebra, Cost of Goods Sold = Sales Revenue - Gross Profit In this problem, Cost of Goods Sold = $500,000 - $200,000 = $300,000 None of the other accounts were relevant in determining this answer.

Use the following account balance information to compute TOTAL ASSETS as of the END of the year. Cost of Goods Sold 9,000 Accounts Payable 1,100 Paid-in Capital 2,000 Cash 400 Sales 10,000 Dividends 700 Retained Earnings (beginning) 1,000 Inventory 4,000 Hint: An item that appears in the income statement does NOT also appear in the balance sheet.

Cash $ 400 Inventory 4,000 Total Assets $4,400

Using the following information, compute cash flow from investing activities. Cash Inflow (Outflow) Cash received from sale of a building $5,600 Cash paid for interest (450) Cash paid to repurchase shares of stock (treasury stock) (1,000) Cash collected from customers 10,000 Cash paid for dividends (780) Cash paid for income taxes (1,320)

Cash Inflow (Outflow) Investing Cash received from sale of a building $5,600

Which ONE of the following would NOT be reported as an operating activity on a statement of cash flows?

Cash collected from sale of old equipment is an INVESTING activity.

Yokum Company had the following transactions for 20X1. Payments of dividends - $11,250 Depreciation expense - $22,500 Income taxes paid - $27,000 Proceeds received from sale of equipment - $225,000 Utilities paid - $6,750 Interest paid on note to local bank - $5,625 Proceeds from issuance of common stock - $56,250 Collections on accounts receivable - $337,500 Payments on inventory - $168,750 Payments for wages and salaries - $78,750 Using the transactions above, compute the net cash flow from operating activities.

Collections on accounts receivable 337,500 Payments on inventory (168,750) Payments for wages and salaries (78,750) Income taxes paid (27,000) Utilities paid (6,750) Interest paid on note to local bank (5,625) Cash from operating activities 50,625 Depreciation expense of $22,500 is a non-cash expense and is ignored when computing operating cash flow using the direct method. The items below are NOT operating items: Payments of dividends 11,250 Proceeds received from sale of equipment 225,000 Proceeds from issuance of common stock 56,250

A useful tool in financial statement analysis is the common-size financial statement. What does this tool enable the financial analyst to do?

Compare the mix of revenue, and expenses, and determine efficient use of resources within a company over time or between companies within a given industry without respect to relative size.

Which ONE of the following persons is LEAST LIKELY to be involved in the determination of standard costs in a manufacturing firm?

Corporate headquarters executive assistant

When using activity-based costing, the cost associated with producing each batch is an example of a:

Cost pool

Tracing overhead costs to activities involves dividing overhead costs into:

Cost pools

The idea that transactions are recorded at their exchange prices at the transaction date is referred to as the

Cost principle

Jack Corporation used a job order costing system to account for jobs in its construction division. During April, the following transactions occurred: Purchased $4,000 of lumber (raw materials) on account. Incurred direct labor costs of $8,000. Depreciation on construction equipment of $1,600 was recorded. A house that was completed in March at a cost of $160,000 was sold for $184,000. Given the information above, the entry to record the purchase of the $4,000 of lumber would include a

Credit to Accounts Payable of $4,000

Credit to Accounts Payable of $4,000 Credit to Accounts Payable of $4,000

Under job order costing, the journal entry made to record indirect labor cost includes a:

Credit to Wages Payable

Debit to Manufacturing Overhead of $1,600

When recording depreciation for manufacturing equipment, the entry should be:

Debit to Manufacturing Overhead, Credit to Accumulated Depreciation

Debit to Work-in-Process Inventory of $8,000

The actual costs of indirect materials are:

Debited to Manufacturing Overhead

JD Smith Company is operating at less than full capacity. The production manager is considering using this excess capacity to make a part that he usually buys. The full costs of manufacturing the part are as follows: Total Cost of Unit Cost 3,000 Units Direct materials $15 $ 45,000 Direct labor 18 54,000 Variable manufacturing overhead 5 15,000 Direct fixed manufacturing overhead 2 6,000 Indirect fixed manufacturing overhead 6 18,000 Totals $46 $138,000 Up to now, the company has been buying 3,000 units of the part for a total of $115,000. Refer above: If JD Smith decided to make this product, its profit would:

Decrease $5,000 Total differential cost: $45,000 + $54,000 + $15,000 + $6,000 = $120,000 Change in profit: $115,000 - $120,000 = $5,000 Decrease

Costs that can be eliminated in whole or in part by choosing one alternative over another are:

Differential costs

Midwest Company manufactures lamps. Shop Smart, a large retail merchandiser, wants to buy 200,000 lamps from Midwest Company for $12 each. The lamp would carry Shop Smart's name and would be sold in its stores. Midwest Company normally sells 420,000 lamps a year at $16 each; its production capacity is a total of 550,000 units a year. Cost information for the lamps is as follows: Production costs: Variable production costs $6 per unit Fixed manufacturing overhead ($2,100,000 / 420,000 units) $5 per unit Selling and administrative expenses: Fixed ($840,000 / 420,000 units) $2 per unit Shop Smart has indicated that the company is not interested in signing a contract for less than 200,000 lamps. Total fixed costs will not change regardless of whether the Shop Smart order is accepted. By how much will overall Midwest Company's net income change if the Shop Smart order is accepted?

Differential sales (200,000 × $12) $2,400,000 Differential variable costs (200,000 × $6) (1,200,000) Differential contribution margin $1,200,000 Opportunity cost (70,000 × $10) (700,000) Differential PROFIT $500,000 Yes, accept the offer. The opportunity cost is the contribution margin ($16 - $6) lost on the 70,000 units in lost regular sales because Midwest Company has a capacity constraint. 420,000 current lamp sales - 70,000 lost regular sales + 200,000 Shop Smart sales = 550,000

What type of transaction is represented in the following entry? Work-in-process Inventory 25 Raw Materials Inventory 25

Direct materials were requisitioned for the production department

In a personal budget, the amount of income left after covering the withdrawals and fixed expenditures is referred to as:

Disposable income

Which of the following should be considered in a decision to enter a market?

Effects on profits Effects on quality Effects on delivery time

"The accounting records of a small business must be kept separate from the personal finances of the owner." - Which ONE of the terms below matches the definition/description just given?

Entity concept

If activity-based costing is used, property taxes would be classified as a:

Facility support activity

CharCore mixes together wood chips and pine oil. After joint manufacturing costs of $2,000 have been incurred, the mixture separates into two products, granulated charcoal and methyl alcohol. At the split-off point, granulated charcoal can be sold for $5,000 and the alcohol can be sold for $9,000. The charcoal can be further processed at a cost of $6,000 to make air filters which could be sold for $15,000. The alcohol can be further processed at a cost of $7,000 to make a cleaning solvent which could be sold for $14,000. Which product should be processed further?

Granulated charcoal only Granulated charcoal: Additional revenue from further processing: $15,000 - $5,000 = $10,000 Net increase: $10,000 - $6,000 = $4,000 Methyl alcohol: Additional revenue from further processing: $14,000 - $9,000 = $5,000 Net decrease: $5,000 - $7,000 = $(2,000)

For greater accuracy when using activity-based costing, management accountants should:

Have a larger number of cost pools

Low levels of raw materials inventory may cause which ONE of the following?

High incidence of work stoppage

Which of the following statements about opportunity costs is true?

ITs NOT : They are not recorded in the accounts but are useful in the decision-making process, but i dont know correct answer

The five steps in implementing and using an ABC system are:

Identify overhead cost activities. Analyze individual overhead costs in terms of those cost activities. Identify measurable cost drivers. Assign overhead. Use the ABC data to make decisions.

Which ONE of the following is a behavioral factor that must be considered when responsibilities are assigned to managers?

If managers are responsible for costs only, they are usually evaluated on how well they control costs. If they are responsible for revenues and costs, they are usually evaluated on the profitability of their units. And if they are responsible for costs, revenues, and investments, managers are most frequently evaluated on the return their division investments generate. Managers should be held responsible for only those costs, revenues, or assets over which they have substantial control

If a company's total fixed costs decreased by $6,000 and its contribution margin increased by $12,000, net income would:

Increase by $18,000 $6,000 + $12,000 = $18,000 increase in net income

Merced Corporation is considering adding a new product line. Market research indicates that sales revenue for the new line would be $80,000 for 35,000 units. Variable costs would be $1.70 per unit; direct fixed costs, $0.40 per unit; and indirect fixed costs, $0.50 per unit. If Merced added the new line, its income would:

Increase by $6,500 Total relevant costs: 35,000 x ($1.70 + $0.40) = $73,500 Segment margin for new line: $80,000 - $73,500 = $6,500

A manufacturing overhead budget:

Is used to calculate the manufacturing overhead rates and will vary with each quarter's production level

Which of the following is NOT a purpose of the statement of cash flows?

It measures the profitability of an entity

A company should generally add a product line if:

Its segment margin is positive

On December 31, 20X1, Ryan Company had the following account balances. Accounts receivable 15,000 Sales revenues 845,000 Gain on sale of equipment 14,000 Retained earnings (beginning of year, January 1, 20X1) 20,000 Accounts payable 25,000 Loan payable 45,000 Cost of goods sold 650,000 Cash 6,000 Inventory 11,000 Common stock 41,000 Operating expenses 210,000 Dividends 34,000 Unearned revenue 5,000 Property, plant, and equipment 45,000 Prepaid rent 50,000 Bonds payable 26,000 Given these data, what are Ryan's TOTAL LIABILITIES as of December 31, 20X1? Hint #1: An item that appears in the income statement does NOT also appear in the balance sheet. Hint #2: "Unearned revenue" is an obligation to deliver a service that has not yet been delivered but for which the customer has already paid.

Liabilities Accounts payable 25,000 Loan payable 45,000 Unearned revenue 5,000 Bonds payable 26,000 TOTAL 101,000

Which of the following is an example of a cost driver?

Machine setups

Lauria Electronics has excess capacity that could be used to make 2,000 antennas for the cell phones that the company produces. The following cost figures are available: Per Unit Total Direct materials $2.00 $4,000 Direct labor 3.00 6,000 Utilities 2.50 5,000 Direct fixed costs 1.20 2,400 Indirect fixed costs 2.40 4,800 Lauria can buy the antennas from an outside supplier for $10.50. Refer above: Given the data above, if Lauria has idle facilities with no alternative use, it should:

Make the antennas Differential costs: $2 + $3 + $2.50 + $1.20 = $8.70

Which of the following would not be in the overhead budget of a hotel?

Manager's salary

To maximize net income in a situation involving scarce resources, a company should:

Manufacture products that generate the greatest overall contribution margin per unit of scarce resource

Finished Goods Inventory is debited when:

Manufactured goods are completed

Activity-based costing deals with the allocation of:

Manufacturing overhead costs

Usually activity-based costing would be significantly more accurate than traditional product costing in a:

Multiple-product firm where products are quite different

Midwest company manufactures lamps. Shop smart a large retail merchandiser, wants to buy 200,000

Net income will increase by 1,200,000 if the order is accepted

If a cost activity does not have any production-related cost driver that matches up with changes in the amount of overhead cost associated with the activity then:

No cost driver should be selected; the costs should be treated as common costs

An appropriate cost driver for inspection costs is:

Number of inspections completed

Which of the following is true when making product and process decisions?

Only the differential costs should be used to make a decision.

A cost important to the decision-making process but NOT recorded in conventional accounting records is called a(n):

Opportunity cost

A cost that is measured by the benefits forgone from an alternative use of resources is called a(n):

Opportunity cost

C-V-P analysis is useful to managers in:

Planning Controlling decisions Evaluating decisions

Dotsero Technology, Inc., has a job-order costing system. The company uses predetermined overhead rates in applying manufacturing overhead cost to individual jobs. The predetermined overhead rate is based on direct labor hours. At the beginning of the most recent year, the company's management made the following estimates for the year. Direct labor-hours. . . . . . . . . . . . . 20,000 Manufacturing overhead cost. . . . $600,000 Job 243 entered into production on April 1 and was completed on May 12. The company's actual cost records show the following information about the job. Direct labor-hours. . . . . . . . . . . . . . . . 120 Direct materials cost. . . . . . . . . . . . . . . $1,100 Direct labor cost. . . . . . . . . . . . . . . . . $880 Compute the total manufacturing cost of Job 243. Note: "Total manufacturing cost" is the sum of direct materials, direct labor, and applied manufacturing overhead cost.

Predetermined overhead rate Manufacturing overhead cost. . . . $600,000 Direct labor-hours. . . . . . . . . . . . . 20,000 Predetermined overhead rate: $30 per direct labor hour Manufacturing cost Direct materials cost. . . . . . . . . . . . . . . $1,100 Direct labor cost. . . . . . . . . . . . . . . . . . 880 Manufacturing overhead cost 3,600 Total $5,580 Overhead = $30 per direct labor hour × 120 direct labor hours

Using the data below, compute Price-Earnings Ratio. Accounts Payable 1,300 Accounts Receivable 1,500 Capital Stock 2,000 Cash 200 Cost of Goods Sold 8,000 Inventory 2,100 Long-term Debt 4,000 Net Income 650 Property, Plant, and Equipment (net) 5,000 Retained Earnings 1,500 Sales 12,000 Market value of shares 12,000

Price-Earnings Ratio Market value of shares 12,000 Net income 650 18.5

Tarver Corporation makes stools and tables. The company can sell as many stools and tables as it can produce, but its machine-hour capacity is limited. Revenue and cost data for each unit are given as follows: Stool Table Selling price $7.50 $18.00 Variable costs 6.00 15.50 Contribution margin $1.50 $ 2.50 It takes two machine hours to make a table and one machine hour per stool. Given this information, Tarver should:

Produce stools rather than tables Stool's contribution margin per machine hour: $1.50 / 1 = $1.50 Table's contribution margin per machine hour: $2.50 / 2 = $1.25

ophamia Company sells five products, as follows. Product A: Price per unit, $100 -- Variable cost per unit, $40 -- 3 machine hours required Product B: Price per unit, $80 -- Variable cost per unit, $50 -- 2 machine hours required Product C: Price per unit, $120 -- Variable cost per unit, $30 -- 5 machine hours required Product D: Price per unit, $90 -- Variable cost per unit, $60 -- 1 machine hour required Product E: Price per unit, $150 -- Variable cost per unit, $110 -- 4 machine hours required Because of a delay in the delivery of new production machines, during the current year the scarce resource in Sophamia Company is MACHINE HOURS. Which product should the company emphasize in its marketing campaign?

Product D

The particular analytical measures chosen to analyze a company may be influenced by all BUT which one of the following?

Product quality or service effectiveness

The purchases budget for a merchandising firm replaces four budgets for a manufacturing firm. These four budgets are:

Production budget, direct materials budget, direct labor budget, and manufacturing overhead budget

Activity-based costing is most useful when there are variations in:

Production volume Size of products Complexity of products XAll of these are correctX

A segment margin income statement is a measure of performance in which type of responsibility center?

Profit center

The order of cost flow through the accounts in a manufacturing firm is:

Raw Materials, Work-in-Process, Finished Goods, Cost of Goods Sold

Using the data below, compute NET INCOME. Wages Expense 200 Cash 220 Income Tax Expense 240 Prepaid Insurance Expense 120 Interest Expense 300 Interest Revenue 500 Unearned Rent Revenue 150 Accounts Payable 600 Inventory 800 Cost of Goods Sold 1,600 Sales Revenue 3,000

Remember that assets and liabilities are reported in the balance sheet, not in the computation of net income in the income statement. The income statement includes revenues (the sources of assets generated through business operations) and expenses (the uses of assets in business operations). Prepaid expenses are not expenses at all but are assets. Unearned revenues are not revenues at all but are liabilities. Sales Revenue 3,000 Interest Revenue 500 Cost of Goods Sold (1,600) Wages Expense (200) Interest Expense (300) Income Tax Expense (240) Net Income 1,160

Which one of these is NOT one of the benchmarking problems that arises when analyzing financial statements?

Reported financial statement numbers may actually be a measurement of different things Companies that are being compared may be conglomerates Not all companies use the same accounting practices XAll of these are benchmarking problemsX

The income statement provides a detailed explanation of the year-to-year change in one balance sheet account. Which balance sheet account?

Retained earnings

Using the data below, compute Return on Sales. Accounts Payable 1,300 Accounts Receivable 1,500 Capital Stock 2,000 Cash 200 Cost of Goods Sold 8,000 Inventory 2,100 Long-term Debt 4,000 Net Income 650 Property, Plant, and Equipment (net) 5,000 Retained Earnings 1,500 Sales 12,000 Market value of shares 12,000

Return on Sales Net income 650 Sales 12,000 5.4%

Using the data below, compute Return on Sales. Accounts Payable 800 Accounts Receivable 1,100 Capital Stock 2,000 Cash 50 Cost of Goods Sold 6,000 Inventory 1,500 Long-term Debt 1,820 Net Income 950 Property, Plant, and Equipment (net) 3,000 Retained Earnings 1,030 Sales 10,000 Market value of shares 12,000

Return on Sales Net income 950 Sales 10,000 9.5%

Another name for the sales budget in a service firm is the

Revenue budget

Which of the following costs would not be classified as a product cost?

Salary of the Vice President of Finance

Using the following information, compute NET INCOME. Cost of Goods Sold $ 6,000 Interest Expense 1,100 Selling and Administrative Expense 750 Cash 400 Sales 10,000 Wages Payable 250 Dividends 700 Retained Earnings (beginning) 1,000 Income Tax Expense 1,200

Sales $10,000 Less Expenses: Cost of Goods Sold 6,000 Selling and Administrative Expense 750 Interest Expense 1,100 Income Before Income Taxes $2,150 Income Tax Expense 1,200 Net Income $ 950

Which of the following informs management whether actual sales prices were higher or lower than expected?

Sales price variance

Which of the following is not an advantage of bottom-up budgeting as compared to top-down budgeting?

Segment managers know the strategic direction

The per-unit contribution margin is equal to:

Selling price per unit − Variable costs per unit

The scattergraph method is a useful tool for:

Separating mixed costs into their variable and fixed components

The statement of cash flows

Summarizes all cash inflows and outflows of an entity for a given period of time

Which ONE of the following statements is TRUE?

The PCAOB inspects the audit practices of registered audit firms in the United States.

What is the danger in focusing a financial analysis solely on the data found in the historical financial statements?

The analysis might ignore current-year data

Sophamia Company sells five products, as follows. Product A: Price per unit, $100 -- Variable cost per unit, $40 -- 3 machine hours required Product B: Price per unit, $80 -- Variable cost per unit, $50 -- 2 machine hours required Product C: Price per unit, $120 -- Variable cost per unit, $30 -- 5 machine hours required Product D: Price per unit, $90 -- Variable cost per unit, $60 -- 2 machine hours required Product E: Price per unit, $150 -- Variable cost per unit, $110 -- 4 machine hours required Because of a delay in the delivery of new production machines, during the current year the scarce resource in Sophamia Company is MACHINE HOURS. Which product should the company emphasize in its marketing campaign?

The company should emphasize the product with the highest contribution margin per machine hour. A B C D E Price per unit $100 $80 $120 $90 $150 Variable cost per unit 40 50 30 60 110 Contribution margin per unit $60 $30 $90 $30 $40 Critical resource requirement ÷ 3 ÷ 2 ÷ 5 ÷ 2 ÷ 4 Contribution margin per unit of critical resource $20 $15 $18 $15 $10

Brandon Company prices its products using a 50% markup on total manufacturing cost to cover selling and administrative expenses and to provide a reasonable return on investment. Cost per Unit Direct materials $39 Direct labor 20 Variable manufacturing overhead 27 Variable selling and administrative expenses 10 Fixed manufacturing overhead totals $200,000 per year. Fixed selling and administrative expenses are $100,000 per year. The average number of units sold per year is 10,000. Using these data and the functional cost approach to pricing products, estimate the NORMAL SELLING PRICE. Note: The markup will end up being 50% of the selling price.

The estimated selling price is $202 per unit, as shown below: Cost per Unit Direct materials................................................................................ $39 Direct labor........................................................................................ 20 Variable manufacturing overhead.............................................. 27 Fixed manufacturing overhead ($200,000 ÷ 10,000 units).... 20 Total manufacturing costs..................................................... $106 Man. costs as a percentage of selling price (1 - 0.5)................ ÷ 0.5 Estimated normal selling price..................................................... X$212X Markup = $212 - $106 = $106 $106/ $212 = 50%

Which ONE of the following is NOT one of the steps in establishing and operating a standard cost system?

The steps in establishing and operating a standard cost system are as follows. Develop standard costs Collect actual costs Identify variances (differences between actual and standard costs) Record the variances Report the variances to the responsible managers Analyze causes of significant, controllable variances Take action to eliminate variances (or revise the standard) (apply Manufacturing overhead)

Chen Corporation had the following cash flows during 20X3. Cash receipt from the issuance of stock......................................................... $60,000 Cash received from customers............................................................................ 20,000 Interest received on long-term investments...................................................... 10,000 Cash paid for wages.............................................................................................. 12,000 Cash paid for insurance.......................................................................................... 1,000 Cash paid for dividends.......................................................................................... 6,000 Cash paid to purchase building........................................................................... 40,000 Cash paid to purchase land................................................................................. 20,000 Given this information, net cash inflow (outflow) from investing activities is:

The first thing to do is classify the various cash receipts and payments as operating, financing, or investing cash flows. Cash receipt or Cash Payment Amount Classification Cash receipt from the issuance of stock, $60,000 Financing Cash received from customers, 20,000 Operating Interest received on long-term investments 10,000 Operating Cash paid for wages 12,000 Operating Cash paid for insurance 1,000 Operating Cash paid for dividends 6,000 Financing Cash paid to purchase building 40,000 Investing Cash paid to purchase land 20,000 Investing After the cash flows have been classified, the investing activities section of the cash flow statement can be prepared as follows: Investing Activities Cash paid to purchase building $(40,000) Cash paid to purchase land (20,000) Net cash flow for investing activities $(60,000)

The budget that details immediate goals for revenues, production, expenses, and cash for the next period is called:

The operating budget

When analyzing financial statements, prognosis is

The prediction of how a business will perform in the future

A firm can increase profits if:

The selling price exceeds the total variable and differential fixed costs

Which of the following statements is NOT true?

The statement of cash flows includes transactions that are not already reflected in the balance sheet and income statement.

Which of the following items is NOT a key factor involved in cost-volume-profit (C-V-P) analysis?

Time value of money

The overall purpose of a budget is to:

To develop a plan to meet specified goals and allow ongoing comparison between actual results and a specified plan

Which of the following budget development approaches can be used by management?

Top-down approach Bottom-up approach A combination of top-down and bottom-up

The Barney Corporation started July with assets of $150,000 and liabilities of $90,000. During the month of July, stockholders' equity increased by $24,000 and liabilities increased by $10,000. What is the amount of total assets at the end of July?

Total assets at the end of July equal $184,000, computed as follows. Stockholders' equity at the beginning of July ($150,000 - $90,000) $60,000 Increase in stockholders' equity 24,000 Stockholders' equity at the end of July $84,000 Liabilities at the end of July ($90,000 + $10,000) 100,000 Assets at the end of July $184,000

Which of the following is not critical to accurately measure product costs?

Trace all period costs to the correct product

The journal entry to apply manufacturing overhead to products includes a debit to:

Work-in-Process Inventory

Which ONE of the following is NOT one of the factors that can reduce comparability among financial statements?

a company reports both net income and retained earnings

Which of the following is NOT included in the DuPont framework?

a measure of market share

Which ratio represents how many times during the year a company is collecting its receivables?

accounts receivable turnover

Which ONE of the following items is NOT a type of stockholders' equity?

accrued issuances

Which of the following would NOT be reported as an investing activity on a statement of cash flows?

amounts borrowed

Estimated data for Lorien Company for Year 1 are as follows: Direct materials to be purchased...................................................... $35,000 Indirect labor.......................................................................................... 10,000 Wages of janitors in corporate office building................................. 47,000 Factory building rent............................................................................. 60,000 Depreciation on production equipment............................................. 20,000 Administrative office supplies............................................................. 25,000 Estimated direct labor hours: 40,000 hours Actual data for Year 1 are as follows: Total manufacturing overhead: $110,000 Direct labor hours: 35,000 hours The predetermined manufacturing overhead rate is determined on the basis of direct labor hours. Which ONE of the following statements is TRUE?

applied overhead was LESS than actual overhead by $31,250

The idea that certain figures on an operating statement help to explain changes in figures on comparative balance sheets is referred to as

articulation

Which of the following ratios is used to measure a firm's efficiency at using its assets?

asset turnover

Generally, recognition criteria are met and revenues are recognized

at the point of sale

Which of the following is one of the purposes of financial statement analysis?

both diagnosis and prognosis

Financial statement analysis is greatly enhanced when financial ratios are compared with

both past values and values for other firms in the same industry

For a gain or loss to be classified as extraordinary, it must be

both unusual and infrequent

How does reliable financial disclosure benefit a company that is seeking to borrow money from a bank? [Choose only ONE.]

by reducing uncertainty

Which of the following is NOT an acceptable basis for the recognition of expenses?

cash disbursement

Which of the following would be reported as a cash flow from financing activities?

cash receipts from the issuance of long-term debt

Which of the following would be classified as an operating activity on a statement of cash flows?

cash received as dividends on investments

The initials CPA stand for

certified public accountant

Which of the following below generally is the most useful in analyzing companies of different sizes?

common-sized financial statements

If a company uses job order costing, the amount transferred from Work-in-Process Inventory to Finished Goods Inventory is equal to the cost of goods:

completed during the period

Which of the following is NOT included in the DuPont framework of the return on equity ratio?

current ratio

Which of the following is a measure of the liquid position of a corporation?

current ratio

Which of the following ratios is calculated using only balance sheet numbers?

current ratio

debits to cost of goods sold

Which of the following ratios is used to measure a firm's leverage?

debt ratio

Which of the following ratios represents the proportion of borrowed funds used to acquire the company's assets?

debt ratio

Which of the following ratios is NOT an efficiency ratio?

debt-to-equity

Within the relevant range, the fixed cost per unit:

decreases as activity level increases

When determining the amount of cash payments for manufacturing overhead, which costs are removed from the budgeted manufacturing overhead?

depreciation Depreciation is a non-cash expense and is therefore excluded from consideration in the cash budget.

Which of the following is an application of the principle of systematic and rational allocation?

depreciations expense

Generally accepted accounting principles are

developed by accounting rule makers

An example of direct matching of an expense with revenues would be

direct labor costs incurred to produce inventory sold during a period

When analyzing a company's debt-to-equity ratio, if the ratio has a value that is equal to one, then the company has

equal amounts of debt and equity

The concept that income is defined as the excess of net assets at the end of an accounting period over the net assets at the beginning of the accounting period, excluding effect of transactions with owners is called

financial capital maintenance

Relationships between financial statement amounts are called

financial ratios

The repayment of the principal on a loan used to finance the purchase of equipment should be classified as a(n)

financing activity

After the completion of a product, the product costs are transferred to:

finished goods

Hopson Company is located in a large city that has good access to both raw materials and a dependable labor supply. Real estate in the city is extremely expensive, and Hopson's warehouse is always full because the company operates at 100% capacity. Hopson's critical resource probably is:

floor space

Which of the following is the correct way to date an income statement?

for the year ended Decemeber 31, 2012

The initials GAAP stand for

generally accepted accounting principles

A wholesale bakery would normally recognize revenue when

goods are delivered to the customer

Which of the following principles best describes the rationale for matching administrative and selling expenses with revenues of the current period?

immediate recognition

Operating Income is equal to -

income from continuing operations plus income tax expense and interest expense plus/minus other miscellaneous revenues, expenses, gains, and losses

Which of the following is the government agency that stipulates the rules and regulations that govern the collection of taxes in the United States?

internal revenue service

Which ratio represents how many times a company replenishes its inventory during the year?

inventory turnover

External users of financial statements use financial statement analysis for

investing decisions

Which of the following is not included in the manufacturing overhead budget?

labor for product assembly

Borrowing that allows a company to purchase more assets than its stockholders are able to pay for is

leverage

The ability a company has to pay its debts in the short run is its

liquidity

Blaine Avenue Company manufactures three products. Profit computations for these three products for Year 1 are given below. Product X Product Y Product Z Sales $300,000 $700,000 $800,000 Direct materials (70,000) (150,000) (200,000) Direct labor (50,000) (200,000) (250,000) Manufacturing Overhead (100,000) (400,000) (500,000) Profit $80,000 ($50,000) ($150,000) Blaine Avenue has a total of $1,000,000 in manufacturing overhead costs. Of this amount, $700,000 is directly related to the number of product batches produced during the year. The number of batches of the three products for Year 1 was as follows: Product X, 20 batches; Product Y, 30 batches; Product Z 50 batches. The remaining $300,000 in overhead is for facility support (property taxes, security costs, general administration, etc.) and doesn't not vary at all with the level of activity. What would total company NET INCOME be if the Product Z line were dropped? Assume that Blaine Avenue has no other costs or expenses except those described here.

loss of 120,000

Which of the following products usually consumes the highest amount of overhead costs per unit?

low volume unique products

A debit to Work-in-Process Inventory is sometimes accompanied by a credit to:

manufacturing overhead

A measure of a company's performance that is intended to summarize in one number the overall economic performance of a company in a given period is -

net income

Earnings per share is equal to

net income divided by total number of shares of stock outstanding

Which of the following ratios is used to measure a firm's profitability?

net income/ sales

When analyzing a company's debt ratio, if the ratio has a value that is equal to one, then the company has

no stockholders equity

Evening theater tickets are probably more expensive than matinee tickets because

none of these

Which of the following would NOT be considered cash or cash equivalents for purposes of preparing a statement of cash flows?

notes receivable

Vital information that CANNOT be captured solely by dollar amounts is reported in a firm's

notes to financial statements

The result of cross-subsidization is that:

ome products look less profitable than they really are Some products look more profitable than they really are

Which ONE of the following is included in an income statement?

operating cash flows

Which of the following is the typical sequencing of activities on the statement of cash flows?

operating, investing, and financing

C-V-P analysis, while useful for several purposes, is primarily useful in:

planning

Which of the following costs would LEAST likely be a variable cost?

plant managers salary

In a common-size income statement, each item on the statement is expressed as a percentage of

revenue

"Amount of assets created through doing business operations" - Which ONE of the terms below matches the definition/description just given?

revenues

Gross profit is the difference between -

sales and costs of goods sold

In a common-size balance sheet, using the percent of sales method, each item on the balance sheet is typically expressed as a percentage of

sales revenue

Which of the following ratios is used to measure a firm's efficiency?

sales/assests

Which of the following is a revenue-generating activity

selling a product

Financing mix is a measure of

the degree to which a company finances assets using liabilities or owners' equity

Top management's broad, long-range goals are found in:

the strategic plan

The ratio that indicates if a borrowing company will be able to meet its required interest payments is the

times interest earned ratio

Which type of data might cause a manager to erroneously reject an order?

total cost

When making normal pricing decisions, management should consider:

total costs and markup amount

With a single-step income statement all revenues are grouped together, all expenses are grouped together, and net income is computed as the difference between the two

true

In a graph used for breakeven analysis, what is represented by the SLOPE of the TOTAL COST LINE?

variable cost per unit

Mosely Company's per-unit cost is the same at all levels of activity. The company's cost structure must have all:

variable costs

Which of the following types of costs remain constant per unit within a certain relevant range?

variable costs

Businesses use accounting systems to?

Analyze transactions, handle routine bookkeeping tasks, evaluate the performance and health of the business, all of the are correct

Which of the following is true of the balance sheet?

It identifies a company's assets and liabilities as of a specific date

Which of the following is true about the double-entry system of bookkeeping?

It was developed in the 1300's - 1400's in Italy

Which of the following is NOT typically true of accounting information?

The information relates to future time periods

One reason for a company's preparing and providing financial statements is to reduce uncertainty for an investor regarding the firm's future financial performance.

True

An independent audit report is usually issued by

a certified public accountant

Which of the following is NOT a service typically provided by large public accounting firms?

making management decisions

Internal reports are generally used by

management

The accuracy of the information contained in the financial statements is the responsibility of the

management

Which of the following is NOT an external user of financial information?

management

Which of the following is NOT a function of accounting?

Executing sales transactions for organizations

With the current state of information technology, investors outside a company are now allowed access to a company's internal database of financial information and do their own customized analysis of a firm's performance

False

Which of the following is the most correct definitions of accounting?

a system for providing quantitative information, primary financial in nature, about economic entities that is intended to be useful in making economic decisions

Which of the following is NOT a key component of the definition of accounting?

Qualitative

Current assets usually are listed on a balance sheet in

decreasing order of liquidity

Reporting the details of a transaction in the notes to the financial statements is called

disclosure

A company's asset mix is determined by

dividing each asset item on the balance sheet by total assets

Which of the following is the most correct definition of accounting

A system for providing quantitative information, primarily financial in nature, about economic entities that is intended to be useful in making economic decisions.

If a corporation has total assets of $350,000, total liabilities of $150,000, and retained earnings of $100,000, what is the amount of capital stock?

$100,000 Capital stock: 350,000 - 150,000 - 100,000 = 100,000

The following data were taken from the records of Moss Corporation for the year ending December 31, 2012: 01/01/12 12/31/12 Assets $11,250 ? Liabilities 8,580 $10,365 Owners' equity ? 6,465 Given the above information, assets on December 31, 2012, were

$16,830 Assets: 10,365 + 6,465 = 16,830

The financial statement that reports resources owned, the obligations to transfer resources to other organizations, and the claims by the entity's owners is known as the

Balance Sheet

Which of the following financial statements reports a company's resources, obligations, and owner's equity?

Balance sheet

The primary internal group that uses accounting information is

Management

Increased federal oversight of the audit process resulted from the passage of the following act of Congress -

Sarbanes-Oxley Act

Which of the following is NOT a reason for the integration of worldwide accounting standards?

The theoretical necessity of a common set of accounting standards

A borrower benefits from providing financial information regarding income and expenses in the form of a lower interest rate on the loan because of reduced uncertainty for the lender with regard to repayment. TrueFalse

True

The process of valuation involves computing numbers that are both

relevant and reliable

Which of the following organizations has specific legal authority to establish accounting standards for publicly held companies?

securities and exchange commission

Which of the following financial statements reports the amount of cash collected and paid out by a company?

Statement of cash flows

The idea that the activities of the entity are to be separated from those of the individual owner is the

separate entity concept

Which of the following accounts would NOT be considered a current asset?

equipment

costs that are incurred during the normal operations of a business to generate revenues are called

expenses

Another name for the income statement is

statement of earnings

another name for the balance sheet is the

statement of financial position

Owners of a corporation are referred to as

stockholders

Which of the following is NOT one of the four general types of financial statement notes?

supplementary information requires by the internal revenue service

$9,100 8,000 + 2,600 - 1,500 = 9,100

Which of the following is generally considered to be an asset?

accounts receivable

Revenues cause

an increase in net assets

Economic resources that are owned or controlled by an enterprise are called

assets

Which of the following financial statements provides a picture of the enterprise at a particular point in time?

balance sheet

Which of the following classifications does NOT appear on the Statement of Cash Flows?

borrowing

Which of the following types of accounts show how resources came into a firm?

both liabilities and owner's equity

Which of the following distinguishes between current and long-term assets?

classified balance sheet

The idea that information becomes more useful when it can be related to a benchmark or a standard is referred to as

comparability

The notion that when doubt exists concerning two or more reporting alternatives, users should select the alternative with the least favorable impact on reported income, assets, and liabilities is referred to as

conservatism

The idea that businesses must be accounted for as though they will exist at least for the foreseeable future is the

going concern concept

The organization that develops worldwide accounting standards is the

international accounting standards board (IASB)

Standards established by the international accounting standards board are referred to as

international financial reporting standards

Which of the following is NOT true of the financial accounting standards board (FASB)?

it is a government agency

Which of the following would be classified as a long-term asset?

land

Which of the following classifications refers to those activities that are part of the day-to-day business of a company?

operating

In completing an audit of a company's financial statements, auditors

provide some assurance that the financial statements are not misleading

a major source of cash from operating activities is

receipts from sale of goods

The process of formally recording an item in the accounting records so that it will be reflected in the financial statements is called

recognition

The notion that information will be more useful if it will impact a decision is referred to as

relevance

Historical cost has long been used in accounting because it is

reliable

Which of the following would be included on an income statement

rent expense

Which of the following are the two economic factors that enable us to trust an independent auditor despite the fact that the auditor was hired by the company being audited?

reputation of auditor and risk of lawsuits

resource increases from the sales of goods or services are called

revenues

A company's asset mix is strongly influence by

the company's industry

Which of the following is an example of additional information about summary totals that would be explained in the notes to the financial statements?

the description of all the individual items that comprise notes payable

Which of the following is NOT typically true of accounting information?

the information relates to future time periods

Which of the following financial statements shows an entity's cash receipts and payments?

the statement of cash flows

The international accounting standards board (IASB) is charged with developing worldwide accounting practices?

true

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