BACC 222 FINAL
Pittman Framing's cost formula for its supplies cost is $1,150 per month plus $11 per frame. For the month of November, the company planned for activity of 789 frames, but the actual level of activity was 792 frames. The actual supplies cost for the month was $9,480. The spending variance for supplies cost in November would be closest to:
$382 F
Jeanclaude Corporation produces and sells one product. The budgeted selling price per unit is $105. Budgeted unit sales for July, August, September, and October are 7,400, 7,500, 13,800, and 15,300 units, respectively. All sales are on credit. Regarding credit sales, 40% are collected in the month of the sale and 60% in the following month.
472,500
Dollar sales for company to break even=
(traceable fixed expenses + common fixed expenses) / overall CM ratio
Higgs Enterprises' flexible budget cost formula for indirect materials, a variable cost, is $0.75 per unit of output. If the company's performance report for last month shows a $600 favorable spending variance for indirect materials and if 8,000 units of output were produced last month, then the actual costs incurred for indirect materials for the month must have been:
5,400
Carroll Corporation has two products, Q and P. During June, the company's net operating income was $25,000, and the common fixed expenses were $37,000. The contribution margin ratio for Product Q was 30%, its sales were $200,000, and its segment margin was $21,000. If the contribution margin for Product P was $80,000, the segment margin for Product P was:
41,000
Parwin Corporation plans to sell 23,000 units during August. If the company has 8,000 units on hand at the start of the month, and plans to have 9,000 units on hand at the end of the month, how many units must be produced during the month?
24,000
Corbel Corporation has two divisions: Division A and Division B. Last month, the company reported a contribution margin of $60,000 for Division A. Division B had a contribution margin ratio of 40% and its sales were $300,000. Net operating income for the company was $40,000 and total traceable fixed expenses for divisions were $80,000. Corbel Corporation's common fixed expenses were:
60,000
unit product cost (variable costing)
= direct materials + direct labor + variable manufacturing overhead cost
unit product cost (absorption costing)
= direct materials + direct labor + variable manufacturing overhead cost + fixed manufacturing overhead cost
Fixed manufacturing overhead cost deferred in inventory
= ending units in inventory * cost per unit
total variable period cost
= variable selling + admin (per unit * units sold) + fixed MOH + fixed selling + admin
When the number of units produced is greater than the number of units sold, variable costing net operating income will be
less than absorption costing net operating income
indirect (statement of cash flows, operating)
Accrual net income (per Income Statement) is adjusted to a cash basis; used by 99%
Investing Activities
Acquiring or disposing of noncurrent assets (PP&E, Investments, etc)
Financing Activities
Borrowing from and repaying principal to creditors and transactions with stockholders
Under U.S. GAAP and IFRS rules, gains and losses must be included in the Operating activities section of the statement of cash flows.
Cash Received from these transactions will be shown in the Investing Activities section.
direct (statement of cash flows, operating)
Reconstructs the income statement on a cash basis from top to bottom
Operating Activities
Revenue and expense transactions, and Gains and Losses that affect net income
budgeting
The act of preparing a budget is called
budgetary control
The use of budgets to control an organization's activities is known as
static planning budget
are prepared fora single, plannedlevel of activity. (before the period begins)
Generally speaking, net operating income under variable and absorption costing will:
be equal only when production and sales are equal.
change in Cash Balance =
change in Noncash Balance Sheet Accounts
Which of the following will usually be found on an income statement prepared using absorption costing?
contribution margin -> no; gross margin -> yes
financing section
details the borrowings and repayments projected to take place during the budget period.
Cash excess or deficiency section
determines if the company will need to borrow money or if it will be able to repay funds previously borrowed; and
U.S. GAAP and IFRS allow two methods for preparing the operating activities section of the statement of cash flows
direct and indirect methods
Which of the following costs at a manufacturing company would be treated as a product cost under variable costing?
direct material cost; direct labor cost; variable manufacturing overhead
responsiblity accounting
enables organizations to react quickly to deviations from their plans and to learn from feedback.
difference in net operating income between absorption and variable costing is
equals the amount of fixed manufacturing overhead deferred in ending inventory
Absorption costing treats all fixed costs as product costs.
false
The cash budget is the starting point in preparing the master budget.
false
fixed manufacturing overhead cost per unit
fixed manufacturing overhead cost / units produced
The difference between absorption costing net operating income and variable costing net operating income can be explained by the way these two methods account for
fixed overhead costs
planning
involves developing objectives and preparing various budgets to achieve those objectives.
controling
involves the steps taken by management to increase the likelihood that the objectives set down while planning are attained and that all parts of the organization are working together toward that goal.
budget
is a detailed quantitative plan for acquiring and using financial and other resources over a specified forthcoming time period
fixed manufacturing overhead
period cost
Variable selling and administrative expenses
period costs
fixed selling and administrative expenses
period costs
direct labor
product cost
variable manufacturing overhead
product cost
cash in statement of cash flows
refers broadly to both currency and cash equivalents
cash disbursements
section consists of all cash payments excluding repayments of principal and interest
cash receipts
section lists all cash inflows excluding cash received from financing
statement of cash flows
shows a reconciliation of WHY the cash balance on the Balance Sheet has changed from one period to the next.
Higado Confectionery Corporation has a number of store locations throughout North America. In income statements segmented by store, which of the following would be considered a common fixed cost with respect to the stores?
the cost of corporate advertising aired during the Super Bowl
under variable costing
those manufacturing costs that vary with output, such as direct labor, are treated as product costs; only those manufacturing costs that vary with output are treated as product costs. Fixed manufacturing overhead is treated as a period cost; those manufacturing costs that vary with output, such as variable manufacturing overhead, are treated as product costs
Paying wages and salaries to employees is classified as a cash outflow in the operating activities section of the statement of cash flows.
true
Segment margin is sales less variable expenses less traceable fixed expenses.
true
The selling and administrative budget is typically prepared before the cash budget.
true
To help assess how well a manager has controlled costs, actual costs should be compared to what the costs should have been for the actual level of activity.
true
Variable manufacturing overhead costs are treated as product costs under both absorption and variable costing.
true
When the activity measure is the number of units sold, the revenue variance is favorable if the average actual selling price is greater than expected.
true
The costing method that treats all fixed costs as period costs is:
variable
Absorption costing income statements ignore
variable and fixed cost distinctions
