ACG2071 Exam 2 Full Review

The Boyle Company estimated that April sales would be 150,000 units with an average selling price of $6.00. Actual sales for April were 149,000 units and the average selling price was $6.12. The sales revenue flexible budget variance was (ch8)

$17,880 favorable

Frost Corporation incurred the following transactions during its first year of operations. Assume all transactions involve cash (ch11) A. acquired $2,500 of capital from the owners. B. purchased $525 of direct raw materials. C. used $350 of these direct raw materials in the production process. D. paid production workers $550 cash. E. paid $350 for manufacturing overhead (applied and actual overhead are the same). F. started and completed 250 units of inventory. G. sold 200 units at a price of $6 each. H. paid $190 for selling and administrative expenses. The amount of raw material inventory on the balance sheet at the end of the accounting period would be:

$175

Cheyenne Company has budgeted the following information for June: cash receipts = $271,000 beginning cash balance = 5,000 cash payments = 280,000 desired ending cash balance = 25,000 If there is a cash shortage, the company borrows money from the bank. All cash is borrowed at the beginning of the month in $1,000 increments, and interest is paid monthly at 1% on the first day of the following month. The company had no debt before June 1. The amount of interest paid on July 1 would be (ch7)

$290

Tucker Company's work in process account decreased by $1,000, while its Finished Goods Inventory account increased by $500. Assuming total manufacturing costs were $5,000, what was the company's cost of goods sold amount? (ch11)

$5,500

Fortune Company had a beginning raw materials inventory of $8,900. During the period, the company purchased $50,500 of raw materials on account. If the ending balance in raw materials was $5,900, the amount of raw materials transferred to work in process is (ch11)

$53,500

The Boyle Company estimated that April sales would be 150,000 units with an average selling price of $6.00. Actual sales for April were 149,000 units and the average selling price was $6.12. The sales volume variance was (ch8)

$6,000 unfavorable

Jones Company developed the following static budget at the beginning of the company's accounting period: Revenue (8,000 units) = $16,000 - Variable Costs = $4,000 = Contribution Margin = $12,000 - Fixed Costs = $4,000 = Net Income = $8,000 If actual production totals 8,200 units, the flexible budget would show total costs of (ch8)

$8,100

White Company budgeted for $287,100 of fixed overhead cost and volume of 43,500 units. During the year, the company produced and sold 42,500 units and spent $295,800 on fixed overhead. The fixed overhead cost spending variance is (ch8)

$8,700 unfavorable

Hernandez Company expects credit sales for January to be $56,000. Cash sales are expected to be $36,000. The company expects credit and cash sales to increase 10% for the month of February. Credit sales are collected in the month following the month in which sales are made. Based on this information, the amount of cash collections in February would be (ch7)

$95,600

Which of the following equations can be used to compute the total materials variance

(AQxAP) - (SQxSP)

Dobson Company expects to begin operating on January 1. The company's master budget contained the following operating expense budget... Sales commissions are paid in cash in the month following the month in which the expenses is recognized. All other expense items requiring cash payment are paid in the month in which are recognized. The amount of cash to be paid for operating expenses during the month of January is (ch7)

???

For a manufacturing business, cost of indirect materials is first recorded in the (ch11)

???

Skymont Company wants an ending inventory each month equal to 30% of that month's cost of goods sold. cost of goods sold for February is projected at $89,000. Ending inventory at the end of January was $30,000. Based on this information, purchases for February would be (ch7)

???

Which of the following accounts would appear on the inventory purchases budget and pro forma balance sheet?

Accounts payable

Which of the following correctly computes cost of goods manufactured?

Beginning work in process + Direct materials used + Direct labor + Overhead − Ending work in process.

Which of the following items typically found on the selling and administrative expense budget will also impact the cash budget?

Both administrative salaries and advertising expense are correct.

Which of the following would not be included in a selling and administrative expenses budget?

Budgeted interest expense

Budgeted depreciation expense would not appear on a:

Cash budget.

Which of the following would not be included in the inventory purchases budget?

Cash collections

Select the correct equation format for the purchases budget.

Cost of budgeted sales + desired ending inventory - beginning inventory = required purchases.

Jared expects to charge $60 per hour for his industrial maintenance business during the following year. He expects to reach 50,000 hours at that price. Jared's partner disagrees with the estimate and expects closer to 40,000 hours. What should Jared do when preparing the budget for the year? (ch8)

Create a flexible budget showing a range of outcomes between 40,000 hours and 50,000 hours

Which of the following would appear on a selling and administrative expense budget, but would not appear on a schedule of cash payments for selling and administrative expenses?

Depreciation expense

Which of the following items is not needed to prepare a sales budget by product line?

Expected purchase price of each product.

Which of the following is NOT an inventory account maintained by a manufacturing company?

Merchandise Inventory

Which of the following is not considered a pro forma financial statement?

Sales budget

Which of the following would be prepared first when a merchandising company uses a master budget?

Sales forecast

Which of the following would represent the order in which most master budgets are prepared?

Sales, Purchases, Cash, Income Statement

Which of the following is generally included in a sales budget?

Schedule of cash receipts for the projected sales

which of the following statements regarding the schedule of cost of goods manufactured and sold is correct?

The schedule is an internal document that is not presented with the company's financial statements, and, in addition, the schedule of cost of goods manufactured and sold reports the amount of direct raw materials used during the period.

Select the incorrect statement regarding the cash budget.

The total cash available is calculated by adding cash receipts and the ending cash balance.

Select the correct statement from the following, assuming Carmichael Company had a favorable direct materials price variance of $1,700 and an unfavorable direct materials usage variance of $1,000. (ch8)

[not the total direct materials variance is $2,700 favorable]

Which of the following is correct?

a favorable variance may indicate the existence of unfavorable conditions

select the response that best illustrates the point that production cost flows are cyclical and occur in a specific sequence.

acquire raw materials, convert raw materials, sell finished goods, collect cash

select the CORRECT statement regarding the selling and administrative (S&A) expense budget.

all of the answers are correct: - The s&a budget is prepared after the sales budget - the s&a budget is prepared before the cash budget - the s&a budget is prepared before the pro forma income statement

The cash budget is based on which budget?

all of these are correct: - sales budget - inventory purchases budget - selling and admin. expense budget

with regards to financial statements, "pro forma" means:

all of these are correct: - budgeted - prepared in advanced - financial condition or position that can be expected if planning assumptions prove correct

purchasing production supplies for cash is a(n):

asset exchange transaction

purchasing production supplies for cash is an

asset exchange transaction

Cost of goods sold is equal to the cost of goods (ch11)

available for sale minus ending finished goods

cost of goods sold is equal to the cost of goods:

available for sale minus ending finished goods.

Which of the following items typically found on the selling and administrative expense budget will also impact the cash budget? (ch7) A. both administrative salaries and advertising expense are correct B. advertising expense C. deprecation expense D. administrative salaries

both administrative salaries and advertising expense are correct

Company x manufactures 3-ring notebooks. All of the following are considered indirect costs except:

cardboard used in the production of the notebooks

the3 budgeting process that involves adding a month to the end of the budget period at the end of each months, thus maintaining a twelve-month planning horizon is referred to as:

continuous budgeting

The budgeting process that involves adding a month to the end of the budget period at the end of each month, thus maintaining a twelve-month planning horizon, is referred to as:

continuous budgeting.

grimes company sold 2500 units that has cost $12000 to produce. The recording of the sale would increase to:

cost of goods sold

Kelly Company's manufacturing overhead costs totaled $2,871,400 during the year. At the end of the year, manufacturing overhead had been under-applied by $5310. As a result:

cost of goods sold increases

which of the following costs would NOT increase the work in process inventory account?

cost of selling supplies

Kelly Company's manufacturing overhead costs totaled $2,871,400 during the year. At the end of the year, manufacturing overhead had been underapplied by $5,310. As a result (ch11)

costs of goods sold increases

Jared expects to charge a $60 per hour for his industrial maintenance business during the following year. He expects to reach 50,000 hours at that price. Jared's partner disagrees with the estimate and expects closer to 40,000 hours. What should Jared do when preparing the budget for the year?

create a flexible budget showing a range of outcomes between 40,000 hours and 50,000 hours

All of the following costs are accumulated in the Work In Process Inventory account except:

depreciation on factory equipment

Assuming actual volume is 10,000 units and planned volume is 12,000 units, the sales volume variance in units

equals 2,000 units favorable

Which of the following items is not needed to prepare an inventory purchases budget for a merchandising business? (ch7) A. desired ending inventory B. expected unit selling price C. expected unit sales D. beginning inventory

expected unit selling price

which of the following items is NOT needed to prepare an inventory purchases budget for a merchandising business?

expected unit selling price

All of the following are reasons to assign estimated overhead to inventory except:

managers need to use estimated overhead to control earnings

Select the incorrect statement concerning the human factor of performance evaluation

managers should always be punished for unfavorable variances

In which account is the actual amount of costs such as factory utilities and maintenance initially recorded?

manufacturing overhead

The cost of direct materials flow through all of the following accounts except (ch11) A. work in process inventory B. cost of goods sold C. manufacturing overhead D. finished goods inventory

manufacturing overhead

in which account is the actual amount of costs such as factory utilities and maintenance initially recorded?

manufacturing overhead

the cost of indirect labor will initially be charged to:

manufacturing overhead

the cost of indirect labor will initially charged to:

manufacturing overhead

Which marketing manager is generally held responsible for the sales volume variance

marketing manager

which manager is generally held responsible for the sales volume variance? (ch8) A. production manager B. plant manager C. purchasing agent D. marketing manager

marketing manager

Multiplying the difference between actual materials price per unit and standard materials price per unit by actual quantity of materials used is known as the:

materials price variance

recording depreciation on manufacturing equipment will:

not affect total assets or net income.

Herald Company paid $2800 cash for production supplies. The recognition of this event will:

not impact total assets

which of the following items would be LEAST useful in preparing a schedule of cash receipts

number of units expected to be purchased

the master budget normally covers?

one year

The Winchester Company estimates that its overhead costs will amount to $595,000 and the company's manufacturing employees will work 85,000 direct labor hours during the current year. If actual overhead costs for the year amounted to $599,000 and actual labor hours amounted to 87,000, then overhead would be (ch11)

over-applied by $10,000

The Winchester Company estimates that its overhead costs will amount to $595,000 and the Company's manufacturing employees will work 85,000 direct labor hours during the current year. If actual overhead costs for the year amounted to $599,000 and actual labor hours amounted to 87,000, then overhead would be:

over-applied by 10000

Which range of difficulty should normally be used to develop standards

practical standards

Which manager is usually held responsible for materials price variances? (ch8) A. purchasing agent B. marketing manager C. production supervisor D. plant manager

purchasing agent

For a manufacturing business, cost of indirect materials is first recorded in the:

raw materials inventory account

select the response that indicates the correct sequence of product cost lows from production to sale

raw materials, work in progress, finished goods, and cost of goods sold

Which of the following is not considered a pro forma financial statement? (ch7) A. sales budget B. balance sheet C. cash flow statement D. income statement

sales budget

A budget prepared at a single volume of activity is referred to as a:

static budget

The sales volume variance is the difference between the

static budgets (based on planned volume) and the flexible budget (based on actual volume)

Which of the following is a difference between a static and a flexible budget?

static budgets are based on a single estimate of volume, where as flexible budgets show estimated costs and revenues at a variety of activity levels

Heartwood Company reported a $4,000 favorable direct labor price variance and a $1,500 unfavorable direct labor usage variance. Select the correct statement from the following

the actual direct labor rate must have exceeded the standard direct labor rate

All of the following factors should be influence the decision to investigate a variance except (ch8) A. the direction of the variance (favorable or unfavorable) B. materiality of the variance amount C. capacity for management to control D. frequency of occurrence

the direction of the variance (favorable or unfavorable)

Select the incorrect statement about the planning process (ch7) A. the shorter the time period, the lass general the plans B. the longer the time period, the more specific the plans C. the nature of planning changes with the length of the time period being considered D. planning decisions can often be subdivided into three distinct planning phases: short term, intermediate term, and long term

the longer the time period, the more specific the plans

which of the following statements regarding the schedule of costs of goods manufactured and sold is correct?

the schedule is an internal document that is not presented with the company's financial statements, and in addition, the schedule of cost of goods manufactured and sold reports the amount of direct raw materials used during the period.

Select the incorrect statement regarding the cash budget (ch7) A. cash inflows and outflows indicated on the cash budget are reported on a company's pro forma statement of cash flows B. the total cash available is calculated by adding cash receipts and the ending cash balance C. the cash budget helps managers to anticipate cash shortages and excess cash balances D. cash payments may include outflows for inventory, selling and administrative expenses, and equipment purchases

the total cash available is calculated by adding cash receipts and the ending cash balance

Virginia Company paid $7,500 cash for various manufacturing overhead costs. As a result of this transaction...

total assets, total equity, and net income are not affected. Which

What information does the sales budget provide for pro forma financial statements? (ch7)

total budgeted sales to be used on the pro forma income statement

A difference between the static budget based on a planned volume and a flexible budget prepared at actual volume is called a

volume variance

A difference between the static budget based on a planned volume and a flexible budget prepared at actual volume is called a:

volume variance

When would a variance be labeled as favorable?

when actual costs are less than standard costs

When would a sales variance be listed as favorable? (ch8) A. none of the answers are correct B. when actual sales are less than budgeted or expected sales C. when actual sales exceed budgeted or expected sales D. when actual sales are equal to budgeted or expected sales

when actual sales exceed budget or expected sales

When would a sales variance be listed as favorable?

when actual sales exceed budgeted or expected sales

When would a sales price variance be listed as unfavorable?

when the actual sales volume is less than the budget sales volume

Hughes Company paid production workers $25,550 cash. These wages will be classified as (ch11)

work in process

Pinkston Company completed 12,000 units of a product at a total cost of $28,000. The recording of the product completed would include a decrease to (ch11)

work in process inventory