Chapter 13 Cost Accounting videos and exercises

IP Company has a beginning cash balance of $5,000; cash receipts of $20,000; cash disbursements of $15,000. IP Company's preliminary cash balance is ________________

-$10,000 IP Company's preliminary cash balance is $ 10,000 Explanation: Knowledge Check 01 IP Company's preliminary cash balance is computed as the beginning cash balance of $5,000 plus cash receipts of $20,000 minus cash disbursements of $15,000 for a preliminary cash balance of $10,000.

IP Company pays for purchases of materials in full in the month following the purchase. During the previous month, IP had purchases of $25,000. During the current month, IP had purchases of $30,000. The amount that IP will pay during the current month for purchases is _____________

-$25,000

IP Company has a preliminary cash balance of $25,000 and an agreement with the bank that it will keep a minimum balance of $20,000. IP Company has a beginning loan balance of $12,000. IP Company's ending loan balance is __________________

-$7,000 IP Company's ending loan balance is $ 7,000 Explanation: Knowledge Check 01 Since IP Company has an agreement with the bank to keep a minimum balance of $20,000, they can pay back a total of $5,000 on their loan. Their beginning loan balance is $12,000. $12,000 minus $5,000 equals $7,000.

IP Company's sales are 20% paid in cash and 80% are on credit collected in full in the month following the sale. If IP's last month's sales were $75,000 and their current month's sales are $100,000, how much cash is collected during the current month? multiple choice $60,000 $80,000 $20,000 $100,000

-$80,000 Explanation: Knowledge Check 01 Cash collected from the current month's sales are $100,000 × 20% = $20,000. Cash collected from previous month's credit sales are $75,000 × 80% = $60,000. $20,000 + $60,000 = $80,000.

Shoe Time Company has been in business since 2 years and sells 5,000 pairs of shoes each month. The company wants to maintain an ending inventory equal to 25 percent of its next month's sales. If Shoe Time anticipates its recent advertising campaign will increase monthly sales by 20%, what is the new budgeted monthly ending inventory balance? multiple choice 1,250 1,500 6,000 5,000

-1,500 Explanation: Knowledge Check 01 Budgeted ending merchandise inventory of 500 units, plus budgeted sales of 1,200 units minus 200 units in budgeted beginning merchandise inventory equals 1,500 merchandise inventory units to be purchased.

Feline Watch Company makes wrist watches out of silver metal sheets. Five hours of labor are needed to make each watch. Factory workers are paid $7 each hour. Variable overhead costs are $4 per labor hour. Fixed overhead costs total $5,000 each month. If Feline wanted to manufacture 500 watches in the month of September, what should it budget in overhead costs? multiple choice $7,000 $22,500 $17,500 $15,000

-15,000 Variable overhead costs10000=500*5*4Fixed overhead costs5000Budgeted overhead costs15000$15,000 is correct option

Feline Watch Company makes wrist watches out of silver metal sheets. Five hours of direct labor are needed to make each watch. Factory workers are paid $7 each hour. What are total direct labor costs to make 500 watches? multiple choice $3,500 $17,500 $2,500 $20,000

-17,500

Feline Watch Company makes wrist watches out of silver metal sheets. Feline sold 200 watches in the month of June. It projects July and August sales to be 400 and 600 respectively. The company`s policy is to have 50% of next month`s sales in inventory. If the June ending inventory of watches is 200, how many watches must be produced in July? multiple choice 300 400 500 700

-Correct Option : 500 Watches to be produced in July JulyAugust Units Expected to be sale400600 Add: Desired ending inventory 300 Total available 700 Less: Beginning Inventory 200Units to be produced = 500

Hammer Time Company sells hammers that it purchases at a cost of $5. Hammer Time sells the hammers for $15. Last year, it sold 12,000 hammers. The company estimates that it can sell 5,000 more hammers than last year if it decreases the selling price to $10 per hammer. What is the budgeted sales revenue if Hammer Time implements the decrease in selling price? multiple choice $120,000 $85,000 $170,000 $5,000

-Given information: Purchase cost of per hammer=$5. Selling price =$15. Last year 12,000 hammers are sold. Explanation: The company estimates that it can sell 5,000 more hammers than last year.(i.e 12000+5000units) Selling price =$10 Budgeted sales = 17,000 units x $10 = $170,000.

Telecom Company is preparing its annual budgeted income statement. What is the best place to locate the amount of interest expense for the year? multiple choice Selling expense budget Capital expenditures budget General and administrative expense budget Cash budget

-cash budget

All of the following items would be included in a General and Administrative Expense Budget except multiple choice depreciation on nonmanufacturing assets. insurance on nonmanufacturing assets. taxes on nonmanufacturing assets depreciation on factory equipment.

-depreciation on factory equipment

All of the following items would be included in a Selling Expense Budget except multiple choice factory overhead. sales commissions .marketing expenses. advertising. delivery expenses.

-factory overhead

Telecom Company is preparing its budgeted balance sheet for the end of the year. Assuming that no dividends were declared during the year, what is the best place to locate ending retained earnings? multiple choice -from the current year's net income plus the current year's common stock balance. -from the current year's net income plus the previous year's retained earnings balance. -from the current year's net income minus the previous year's retained earnings balance. -from the current year's net income plus the previous year's common stock balance.

-from the current year's net income plus the previous year's retained earnings balance.

Feline Watch Company makes wrist watches out of silver metal sheets. Two pounds of metal are required to make one watch. Metal costs $4 per pound. What are the direct material costs to make 500 watches? multiple choice $4,000 $1,000 $2,000 $500

-option $4,000 is correct Explanation: Amount watches produced 500 pounds of metal require per watch 2 total metal require to produce watches 1000 cost per pound $4 direct material cost$4,000 note: Assuming no beginning and ending material

In a cash budget, the beginning cash balance plus budgeted cash receipts minus budgeted cash payments equals multiple choice ending cash balance next period's beginning cash balance preliminary cash balance beginning loan balance

-preliminary cash balance

A capital expenditures budget includes cash estimated to be purchase and/or cash expected to be received from ___________________

-sale of plant assets