acc 201 multiple choice

Variable Overhead Rate Variance

(AH × AR) - (AH × SR)

total amount of manufacturing overhead cost =

(Total Var MOH per unit * Units produced) + (Total Fixed MOH * units used that made the table ) = Total MOH

Sabv Corporation's break-even-point in sales is $930,000, and its variable expenses are 75% of sales. If the company lost $43,000 last year, sales must have amounted to:

1) CM ratio = 1 - 0.75 = 0.25 2) Dollar sales to break even = Fixed expenses ÷ CM ratio $930,000 = Fixed expenses ÷ 0.25 Fixed expenses = $930,000 × 0.25 = $232,500 3) Profit = (CM ratio × Sales) - Fixed expenses -$43,000 = (0.25 × Sales) - $232,500 Sales = ($232,500 - $43,000) ÷ 0.25 = $758,000

The annual financial advantage (disadvantage) for the company as a result of accepting this special order should be:

1) calculate revenue = unite produced X price 2) calculate total costs (not fixed costs) 3) subtract

The management of Cook is considering the elimination of the West Division. If the West Division were eliminated, its traceable fixed costs could be avoided. Total common corporate costs would be unaffected by this decision. Given these data, the elimination of the West Division would result in an overall company net operating income (loss) of:

1) do not include unaffected categories, include avoidable fixed exp sales - costs = net operating income effect on loosing division NOI noi 1 - noi 2 = total net operating inc total net operating inc - Effect on net operating income of dropping the West Division = answer

Sarafiny Corporation is in the process of preparing its annual budget. The following beginning and ending inventory levels are planned for the year. Beginning Inventory Ending Inventory Finished goods (units) 23,000 33,000 Raw material (grams). 53,000 43,000 Each unit of finished goods requires 2 grams of raw material. The company plans to sell 300,000 units during the year. The number of units the company would have to manufacture during the year would be:

33,000 - 23,000 = 10,000 10,000 + 300000 = 310,000

Schister Systems uses the following data in its Cost-Volume-Profit analyses: TotalSales $315,000 Variable expenses 157,500 Contribution margin 157,500 Fixed expenses 103,000 Net operating income. $54,500 What is total contribution margin if sales volume increases by 40%?

CM ratio = $157,500 ÷ $315,000 = 0.50 Contribution margin = 0.50 × (1.4 × $315,000) = $220,500

Fabri Corporation is considering eliminating a department that has an annual contribution margin of $36,000 and $72,000 in annual fixed costs. Of the fixed costs, $18,000 cannot be avoided. The annual financial advantage (disadvantage) for the company of eliminating this department would be:

Contribution margin $36,000 - Avoidable fixed costs 54,000 = Segment margin $(18,000) If the department were eliminated, the company would eliminate the department's negative segment margin of $18,000.

Payback period =

Investment required ÷ Annual net cash inflow

The management of Byrge Corporation is investigating buying a small used aircraft to use in making airborne inspections of its above-ground pipelines. The aircraft would have a useful life of 5 years. The company uses a discount rate of 10% in its capital budgeting. The net present value of the investment, excluding the intangible benefits, is −$395,950. (Ignore income taxes.) Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using the tables provided. How large would the annual intangible benefit have to be to make the investment in the aircraft financially attractive?

Minimum annual cash flows from the intangible benefits = Negative net present value to be offset ÷ Present value factor = $395,950 ÷ 3.791(annuity sheet) = $104,445

Project profitability index =

NPV of Project / Investment Required

Average operating assets =

Net operating income / ROI

Direct Costs

Costs that can be specifically identified with a particular project or activity. only include cost where the specific department Is named

Bau Long-Haul, Inc., is considering the purchase of a tractor-trailer that would cost $397,607, would have a useful life of 7 years, and would have no salvage value. The tractor-trailer would be used in the company's hauling business, resulting in additional net cash inflows of $79,000 per year. The internal rate of return on the investment in the tractor-trailer is closest to (Ignore income taxes.):

Factor of the internal rate of return = Investment required ÷ Annual net cash inflow = $397,607 ÷ $79,000 = 5.033 This factor is the present value of an annuity over 7 periods at 9% per period

A shift in the sales mix from low-margin items to high-margin items will decrease total profits even though total sales increase.

False

All other things the same, if a division's traceable fixed expenses decrease then the division's segment margin will decrease.

False

Departmental overhead rates applied on the basis of a single activity measure will eliminate any distortions in unit costs due to product diversity.

False

Carroll Corporation has two products, Q and P. During June, the company's net operating income was $26,000, and the common fixed expenses were $56,000. The contribution margin ratio for Product Q was 40%, its sales were $141,000, and its segment margin was $48,000. If the contribution margin for Product P was $46,000, the segment margin for Product P was:

1) Segment margin = $26,000 + $56,000 = $82,000 2) Product P segment margin = $82,000 - $48,000 = $34,000

Decaprio Inc. produces and sells a single product. The company has provided its contribution format income statement for June. Sales (7,000 units) $245,000 Variable expenses 140,000 Contribution margin 105,000 Fixed expenses 87,700 Net operating income. $17,300 If the company sells 7,200 units, its net operating income should be closest to:

1) Selling price per unit = $245,000 ÷ 7,000 units = $35 per unit 2) Variable expenses per unit = $140,000 ÷ 7,000 units = $20 per unit 3) Unit CM =$35 per unit - $20 per unit = $15 per unit 4) Profit = ($15 per unit × 7,200 units) - $87,700(fixed exp) = $108,000 - $87,700 = $20,300

Krepps Corporation produces a single product. Last year, Krepps manufactured 32,210 units and sold 26,700 units. Production costs for the year were as follows: Direct materials $241,575 Direct labor $157,829 Variable manufacturing overhead. $251,238 Fixed manufacturing overhead $418,730 Sales totaled $1,241,550 for the year, variable selling and administrative expenses totaled $138,840, and fixed selling and administrative expenses totaled $199,702. There was no beginning inventory. Assume that direct labor is a variable cost. Under absorption costing, the ending inventory for the year would be valued at:

1) Units in ending inventory = 32,210 units - 26,700 units = 5,510 units 2) Find Absorption costing unit product cost Direct materials ($241,575 ÷ 32,210 units produced)$7.50 Direct labor ($157,829 ÷ 32,210 units produced) 4.90 Variable manufacturing overhead ($251,238 ÷ 32,210 units produced) 7.80 Fixed manufacturing overhead cost ($418,730 ÷ 32,210 units produced) 13.00 3) Absorption costing unit product cost = 33.2 4) 33.2 X 5,510 units = 182,938

Angel Corporation uses activity-based costing to determine product costs for external financial reports. The company has provided the following data concerning its activity-based costing system: Assuming that actual activity turns out to be the same as expected activity, the total amount of overhead cost allocated to Product X would be closest to:

1) find all 3 predetermined rates for each category Machine related $311,240 12,400MHs. $25.10per MH Batch setup $343,980 12,600setups $27.30per setup Order size $242,820 11,400DLHs $21.30per DLH 2) multiply each rate by product X's activity cost pools X's cost pool. total Machine related ($25.10 per MH) 5,200. $130,520 Batch setup ($27.30 per setup). 10,400 283,920 Order size ($21.30 per DLH). 4,200 89,460 3) add Total overhead costs assigned $503,900

Viger Corporation has a standard cost system in which it applies manufacturing overhead to products on the basis of standard machine-hours (MHs). The company has provided the following data for the most recent month: Budgeted level of activity 8,700MHs Actual level of activity 8,900MHs Standard variable manufacturing overhead rate. $7.40per MH Actual total variable manufacturing overhead $63,360 What was the variable overhead rate variance for the month?

= $63,360 - (8,900 hours × $7.40 per hour) = $63,360 - $65,860 = $2,500 F

Variable Costing

A costing method that includes only variable manufacturing costs—direct materials, direct labor, and variable manufacturing overhead—in unit product costs.

If a job is not completed at year end, then no manufacturing overhead cost would be applied to that job when a predetermined overhead rate is used. Group starts

False

If activity is higher than expected, total fixed costs should be higher than expected. If activity is lower than expected, total fixed costs should be lower than expected.

False

Helmers Corporation manufactures a single product. Variable costing net operating income last year was $91,000 and this year was $109,000. Last year, $33,900 in fixed manufacturing overhead costs were released from inventory under absorption costing. This year, $12,700 in fixed manufacturing overhead costs were deferred in inventory under absorption costing. What was the absorption costing net operating income last year?

Absorption costing net operating income = 91,000 - 33,900 = 57,100

Most companies use the contribution approach in preparing financial statements for external reporting purposes.

False

When preparing a direct materials budget, beginning inventory for raw materials should be added to production needs, and desired ending inventory should be subtracted to determine the amount of raw materials to be purchased. Group starts

False

Jennifer Company has two products: A and B. The company uses activity-based costing. The estimated total cost and expected activity for each of the company's three activity cost pools are as follows: Estimated Expected Activity Activity Cost Pools Overhead Cost. Product A. Product B. Total Supporting customers. $34,600 600 300 900 The activity rate under the activity-based costing system for Supporting customers is closest to:

Activity rate = Estimated overhead cost ÷ Expected activity = $34,600 ÷ 900 = $38.44

Minimum required return =

Average operating assets × Minimum required rate of return

Raw materials used in production =

Beginning raw materials inventory + Purchases of raw materials − Ending raw materials inventory

T account** The following accounts are from last year's books at Sharp Manufacturing Sharp uses job-order costing and applies manufacturing overhead to jobs based on direct labor costs. What is the amount of cost of goods manufactured for the year?

Cost of goods manufactured is represented by the debit to Finished Goods and the credit to Work in Process (entry f) = $514,000 cost of goods manufactured

Kogler Corporation's relevant range of activity is 7,000 units to 11,000 units. When it produces and sells 9,000 units, its average costs per unit are as follows: Direct materials. $5.00 Direct labor. $5.00 Variable manufacturing overhead. $1.80 Fixed manufacturing overhead. $9.00 Fixed selling expense. $3.60 Fixed administrative expense. $1.80 Sales commissions. $0.90 Variable administrative expense. $0.85 If the selling price is $27.00 per unit, the contribution margin per unit sold is closest to:

DM + DL + Var MOH + Sales commission + Var Admin expense = variable cost per unit sold (13.55) selling price (27.00) - variable cost per unit sold (13.55) = $13.45

When reconciling variable costing and absorption costing net operating income, fixed manufacturing overhead costs deferred in inventory under absorption costing should be deducted from variable costing net operating income to arrive at the absorption costing net operating income.

False

The following cost data pertain to the operations of Quinonez Department Stores, Inc., for the month of September. Corporate headquarters building lease $80,100 Cosmetics Department sales commissions--Northridge Store $5,680 Corporate legal office salaries $61,900 Store manager's salary-Northridge Store $19,200 Heating-Northridge Store $13,100 Cosmetics Department cost of sales--Northridge Store $38,700 Central warehouse lease cost $8,600 Store security-Northridge Store $21,100 Cosmetics Department manager's salary--Northridge Store$4,460 The Northridge Store is just one of many stores owned and operated by the company. The Cosmetics Department is one of many departments at the Northridge Store. The central warehouse serves all of the company's stores. What is the total amount of the costs listed above that are direct costs of the Cosmetics Department?

Direct costs of the Cosmetics Department = Cosmetics Department sales commissions + Cosmetics Department cost of sales + Cosmetics Department manager's salary = $5,680 + $38,700 + $4,460 = $48,840

Direct materials $10.00 Direct labor 7.00 Variable manufacturing overhead 2.80 Fixed manufacturing overhead 4.80 Unit product cost $24.60 Assume that direct labor is a variable cost. Of the fixed manufacturing overhead, 30% is avoidable if the component were bought from the outside supplier. In addition, making the component uses 1 minutes on the machine that is the company's current constraint. If the component were bought, time would be freed up for use on another product that requires 2 minutes on this machine and that has a contribution margin of $6.40 per unit. When deciding whether to make or buy the component, what cost of making the component should be compared to the price of buying the component?

Direct materials $10.00 Direct labor 7.00 Variable manufacturing overhead 2.80 Fixed manufacturing overhead (30% × $4.80 is avoidable) 1.44 Opportunity cost ($6.40 per unit ÷ 2 minutes per unit) × 1 minutes 3.20 Total cost $24.44

Landor Appliance Corporation makes and sells electric fans. Each fan regularly sells for $36. The following cost data per fan is based on a full capacity of 138,000 fans produced each period. Direct materials $9 Direct labor $8 Manufacturing overhead (25% variable and 75% unavoidable fixed)$8 A special order has been received by Landor for a sale of 15,000 fans to an overseas customer. The only selling costs that would be incurred on this order would be $3 per fan for shipping. Landor is now selling 123,000 fans through regular channels each period. Assume that direct labor is an avoidable cost in this decision. What should Landor use as a minimum selling price per fan in negotiating a price for this special order?

Direct materials $9 Direct labor 8 Manufacturing overhead (25% of $8) 2 Shipping cost 3 Relevant cost $22

Job 910 was recently completed. The following data have been recorded on its job cost sheet: Direct materials $2,491 Direct labor-hours 74 labor-hours Direct labor wage rate $20 per labor-hour Machine-hours 129 machine-hours The Corporation applies manufacturing overhead on the basis of machine-hours. The predetermined overhead rate is $21 per machine-hour. The total cost that would be recorded on the job cost sheet for Job 910 would be:

Direct materials = $2,491 Direct labor (74 direct labor-hours × $20 per direct labor-hour) = 1,480 Overhead (129 machine-hours × $21 per machine-hour) =2,709 Total manufacturing cost for Job = $6,680

Dacosta Corporation had only one job in process on May 1. The job had been charged with $1,850 of direct materials, $6,990 of direct labor, and $9,950 of manufacturing overhead cost. The company assigns overhead cost to jobs using the predetermined overhead rate of $18.50 per direct labor-hour. During May, the following activity was recorded: Raw materials (all direct materials): Beginning balance $8,550 Purchased during the month $38,050 Used in production $39,350 Labor: Direct labor-hours worked during the month 1,950 Direct labor cost incurred$24,560 Actual manufacturing overhead costs incurred $33,350 Inventories: Raw materials, May 30 ? Work in process, May 30 $16,950 Work in process inventory on May 30 contains $3,750 of direct labor cost. Raw materials consist solely of items that are classified as direct materials. The balance in the raw materials inventory account on May 30 was:

Ending raw materials inventory = Beginning raw materials inventory + Purchases of raw materials − Raw materials used in production Ending raw materials inventory = $8,550 + $38,050 − $39,350 = $7,250

Entry (16) in the below T-account represents the cost of goods manufactured transferred to Finished Goods from Work in Process. Entry (16) = (credit on the right side of Finished goods)

Entry (16) (credit on the right side of Finished goods) = Cost of goods sold so, False

Estimated total manufacturing overhead cost =

Estimated total fixed manufacturing overhead cost + (Estimated variable overhead cost per unit of the allocation base × Estimated total amount of the allocation base)

An activity measure in activity-based costing expresses how much of an activity is carried out and it is used as the allocation base for assigning overhead costs to products and services.

True

Product costs are also known as inventoriable costs.

True

Longobardi Corporation bases its predetermined overhead rate on the estimated labor-hours for the upcoming year. At the beginning of the most recently completed year, the Corporation estimated the labor-hours for the upcoming year at 34,700 labor-hours. The estimated variable manufacturing overhead was $5.66 per labor-hour and the estimated total fixed manufacturing overhead was $902,200. The actual labor-hours for the year turned out to be 32,100 labor-hours. The predetermined overhead rate for the recently completed year was closest to:

Estimated total manufacturing overhead = $902,200 + ($5.66 per labor-hour × 34,700 estimated labor-hours) = $1,098,602 Predetermined overhead rate = $1,098,602 ÷ 34,700 labor-hours = $31.66 per labor-hour

Cull Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on machine-hours. The company based its predetermined overhead rate for the current year on total fixed manufacturing overhead cost of $497,700, variable manufacturing overhead of $2.70 per machine-hour, and 63,000 machine-hours. The company has provided the following data concerning Job X455 which was recently completed: Number of units in the job 20 Total machine-hours 80 Direct materials $750 Direct labor cost $1,500 If the company marks up its unit product costs by 25% then the selling price for a unit in Job X455 is closest to:

Estimated total manufacturing overhead cost = $497,700 + ($2.70 per machine-hour × 63,000 machine-hours) = $497,700 + $170,100 = $667,800 Predetermined overhead rate = $667,800 ÷ 63,000 machine-hours = $10.60 per machine-hour Overhead applied to a particular job = $10.60 per machine-hour × 80 machine-hours = $848 Total cost of job = 750 + 1500 + 848 = 3098 unit product cost = 3098 / 20 = 154.9 new selling price = 154.9 * 1.25 = $193.63

The appeal of using multiple departmental overhead rates is that they presumably provide a more accurate accounting of the costs caused by jobs.

True

The direct labor budget begins with the required production in units from the production budget.

True

To estimate what the profit will be at various levels of activity, multiply the number of units to be sold above or below the break-even point by the unit contribution margin

True

Predetermined overhead rate =

Estimated total manufacturing overhead cost ÷ Estimated total amount of the allocation base

Predetermined overhead rate =

Estimated total manufacturing overhead ÷ Estimated total amount of the allocation base

Investment required in equipment $38,500 Annual cash inflows $9,400 The company uses straight-line depreciation on all equipment. Assume cash flows occur uniformly throughout a year except for the initial investment. Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using the tables provided. The internal rate of return of the investment is closest to:

Factor of the internal rate of return = Investment required ÷ Annual net cash inflow = $38,500 ÷ $9,400 = 4.096 (annuity sheet) This is closest to the present value of an annuity over 15 years at 23%. Therefore the internal rate of return is closest to 23%.

When raw materials are purchased, they are recorded as an asset.

True

Which of the following is true of a company that uses absorption costing?

Unit product costs can change as a result of changes in the number of units manufactured.

Factor of the internal rate of return =

Investment required ÷ Annual net cash inflow

The management of Leitheiser Corporation is considering a project that would require an initial investment of $54,000. No other cash outflows would be required. The present value of the cash inflows would be $81,830. The profitability index of the project is closest to (Ignore income taxes.):

Investment required$(54,000) - Present value of cash inflows 81,830 = Net present value $27,830 Profitability index = 27,830 / 54,000 = 0.52

The Fime Corporation uses a standard costing system. The following data have been assembled for December: Actual direct labor-hours worked 6,500hours Standard direct labor rate $10per hour Labor efficiency variance $3,000Unfavorable The standard hours allowed for December's production is:

Labor efficiency variance = (AH - SH) × SR $3,000 U = (6,500 hours - SH) × $10 per hour $3,000 = (6,500 hours - SH) × $10 per hour $3,000 = $65,000 - (SH × $10 per hour) SH × $10 per hour = $65,000 - $3,000 SH × $10 per hour = $62,000 SH = $62,000 ÷ $10 per hour SH = 6,200 hours

The management of Osborn Corporation is investigating an investment in equipment that would have a useful life of 4 years. The company uses a discount rate of 12% in its capital budgeting. The net present value of the investment, excluding the annual cash inflow, is −$409,014. How large would the annual cash inflow have to be to make the investment in the equipment financially attractive? (Ignore income taxes.)

Minimum annual cash flows from the intangible benefits = Negative net present value to be offset ÷ Present value factor = $409,014 ÷ 3.037(annuity sheet) = $134,677

Croce, Inc., is investigating an investment in equipment that would have a useful life of 7 years. The company uses a discount rate of 15% in its capital budgeting. The net present value of the investment, excluding the salvage value, is −$579,721. (Ignore income taxes.) Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using the tables provided. How large would the salvage value of the equipment have to be to make the investment in the equipment financially attractive?

Minimum salvage value = Negative net present value to the offset ÷ Present value factor = $579,721 ÷ 0.376(present value sheet) = $1,541,811

Minimum annual cash flows from the intangible benefits =

Negative net present value to be offset ÷ Present value factor

ROI =

Net operating income ÷ Average operating assets

The LaGrange Corporation had the following budgeted sales for the first half of the current year: cash. credit January $60,000 $160,000 February $65,000 $180,000 March $50,000 $140,000 April $45,000 $130,000 May $55,000 $210,000J une $90,000 $240,000 The company is in the process of preparing a cash budget and must determine the expected cash collections by month. To this end, the following information has been assembled: Collections on sales: 45% in month of sale 35% in month following sale 20% in second month following sale The accounts receivable balance on January 1 of the current year was $85,000, of which $55,000 represents uncollected December sales and $30,000 represents uncollected November sales. The total cash collected during January by LaGrange Corporation would be:

November credit sales collected in January$30,000 December credit sales collected in January ($100,000* × 35%) 35,000 January credit sales collected in January ($160,000 × 45%) 72,000 January cash sales 60,000 Total cash collections in January $197,000 *Accounts receivables representing December credit sales = $55,000 = (35% + 20%) × December credit sales December credit sales = $55,000 ÷ (35% + 20%) = $100,000

Bayest Manufacturing Corporation uses a predetermined overhead rate based on direct labor-hours to apply manufacturing overhead to jobs. Last year, the Corporation worked 56,750 actual direct labor-hours and incurred $382,000 of actual manufacturing overhead cost. The Corporation had estimated that it would work 60,300 direct labor-hours during the year and incur $349,740 of manufacturing overhead cost. The Corporation's manufacturing overhead cost for the year was:

Predetermined overhead rate = $349,740 ÷ 60,300 direct labor-hours = $5.80 per direct labor-hour Actual MOH cost = 382,000 MOH should cost = 5.80 X 56,750 = 329,150 382,000 - 329,150 = 52,850 underapplied Guess

Overhead applied to a particular job =

Predetermined overhead rate × Amount of the allocation base incurred by the job

throughput time =

Process time + Inspection time + Move time + Queue time The average amount of time it takes for products to move through the system

margin =

ROI/ Turnover

Contribution Margin per unit =

Selling price per unit - Variable costs per unit

Perteet Corporation's relevant range of activity is 6,600 units to 13,000 units. When it produces and sells 9,800 units, its average costs per unit are as follows: Direct materials $7.30 Direct labor $3.70 Variable manufacturing overhead. $1.80 Fixed manufacturing overhead $3.10 Fixed selling expense $0.70 Fixed administrative expense $0.40 Sales commissions $0.50 Variable administrative expense $0.55 If 7,300 units are produced, the total amount of manufacturing overhead cost is closest to:

Total variable manufacturing overhead cost ($1.80 per unit × 7,300 units) = $13,140 Total fixed manufacturing overhead cost ($3.10 per unit × 9,800 units*) = 30,380 Total manufacturing overhead cost = $43,520

MCE =

Value-added time (Process time) ÷ Throughput (manufacturing cycle) time

Kerekes Manufacturing Corporation has prepared the following overhead budget for next month. Activity level 3,300machine-hours Variable overhead costs: Supplies $17,490 Indirect labor 30,360 Fixed overhead costs: Supervision 15,300 Utilities 6,700 Depreciation 7,700 Total overhead cost $77,550 The company's variable overhead costs are driven by machine-hours. What would be the total budgeted overhead cost for next month if the activity level is 3,200 machine-hours rather than 3,300 machine-hours?

Variable cost per MH for supplies = $17,490 ÷ 3,300 MHs = $5.30 per MH Variable cost per MH for indirect labor = $30,360 ÷ 3,300 MHs = $9.20 per MH 9.2 X 32,000 = 29,440 5.3 X 32,000 = 16,960 29,440 + 16,960 + 15,300 + 6,700 + 7,700 = 76,100

Absorption Costing

assigns all 3 factors(direct material, direct labor, and both fixed and variable manufacturing overhead) to inventory

The Silver Corporation uses a predetermined overhead rate to apply manufacturing overhead to jobs. The predetermined overhead rate is based on labor cost in Dept. A and on machine-hours in Dept. B. At the beginning of the year, the Corporation made the following estimates: Dept. A. Dept. B Direct labor cost $60,000. $40,000 Manufacturing overhead $90,000$. 45,000 Direct labor-hours 6,000 9,000 Machine-hours 2,000 15,000 What predetermined overhead rates would be used in Dept. A and Dept. B, respectively?

dep A = manufacturing overhead * 100 / direct labour cost = 90000 * 100 / 60000 = 150 % dep B = manufacturing overhead / machine hour = 45000 / 15000 = 3 per machine hences = 150 % and 3.00

Caspion Corporation makes and sells a product called a Miniwarp. One Miniwarp requires 2.5 kilograms of the raw material Jurislon. Budgeted production of Miniwarps for the next five months is as follows: August 24,400units September 23,100units October 24,500units November 25,700units December 25,400units The company wants to maintain monthly ending inventories of Jurislon equal to 20% of the following month's production needs. On July 31, this requirement was not met since only 12,600 kilograms of Jurislon were on hand. The cost of Jurislon is $25 per kilogram. The company wants to prepare a Direct Materials Purchase Budget for the next five months. The total cost of Jurislon to be purchased in August is:

desired ending inventory = 24,400 + (20% * 23,100) = 29,020 * 2.5 = 72,550 the total raw material needed = 72,550 - 12,600 (beg inv) = 59,950 total price of material needed = 59,950 * 25 = 1,498,750

A spending variance is the difference between the amount of the cost in the static planning budget and the amount of the cost in the flexible budget.

false

T account** The following accounts are from last year's books at Sharp Manufacturing: Sharp uses job-order costing and applies manufacturing overhead to jobs based on direct labor costs. What is the manufacturing overapplied or underapplied for the year?

look under manufacturing overhead to see the balance and determine if its under or over-applied The manufacturing overhead is overapplied by $6,000 because the manufacturing overhead applied of $210,000 exceeds the manufacturing overhead incurred by $6,000.

Net operating income =

margin X Sales

How many minutes of grinding machine time would be required to satisfy demand for all four products?

multiply each products grinding minutes per unit by each products monthly demand in units and add them all together grinding minutes per unit X monthly demand in units

Flesch Corporation produces and sells two products. In the most recent month, Product C90B had sales of $30,380 and variable expenses of $7,595. Product Y45E had sales of $26,390 and variable expenses of $14,514. The fixed expenses of the entire company were $18,200. If the sales mix were to shift toward Product C90B with total dollar sales remaining constant, the overall break-even point for the entire company:

product C90B: 30,380-7,597 = 22,785 cm = 22,785 / 30,380 = 75% product Y45E: 26,390-14,514 = 11,876 cm = 11,876 / 26390 = 45% Since Product C90B has a higher contribution margin ratio, a shift in sales to that product would decrease the break-even point of the entire company.

net operating income (loss) =

sales - (fixed expenses + variable expenses)

Sales$936,000 Variable expenses$412,000 Fixed manufacturing expenses$350,000 Fixed selling and administrative expenses$257,000 All fixed expenses of the company are fully allocated to products in the company's accounting system. Further investigation has revealed that $214,000 of the fixed manufacturing expenses and $125,000 of the fixed selling and administrative expenses are avoidable if product D74F is discontinued. What would be the financial advantage (disadvantage) from dropping product D74F?

sales - var exp - avoidable fixed manufacturing exp - avoidable fixed selling exp

If variable manufacturing overhead is applied on the basis of direct labor-hours and the variable overhead rate variance is favorable, then:

the standard variable overhead rate exceeded the actual rate.

In the standard cost formula Y = a + bX, what does the "Y" represent?

total cost

Delivery cycle time =

wait time + process time + inspection time + move time + queue time