account exam

A business is operating at 90% of capacity and is currently purchasing a part used in its manufacturing operations for $15 per unit. The unit cost for the business to make the part is $20, including fixed costs, and $12, not including fixed costs. If 30,000 units of the part are normally purchased during the year but could be manufactured using unused capacity, what would be the amount of differential cost increase or decrease from making the part rather than purchasing it?

$ 90,000 cost decrease

Lloyd Company produces music boxes. The standard factory overhead cost at 100% of normal capacity is $100,000 (20,000 hours at $5: $3 variable, $2 fixed). If 700 hours were unused, the fixed factory overhead volume variance would be:

$1,400 unfavorable

If a product is manufactured in batch sizes of 20 and it takes two minutes to manufacture each unit within each of two operations what is the within batch wait time?

76 min

and capital rationing alternative proposals are initially screen for a minimum standards using which of the following two evaluation methods?

Cash payback method, an average rate of return method

The amount of increase or decrease in cost that is expected for my particular course of action, as compared with an alternative is

Differential cost

A company is contemplating investing in a new piece of manufacturing machinery. The amount to be invested $210,000. The present value of future cash flows are $225,000. The company is desired rate of return used in the present value computations was 12% which of the following statements is true?

Internal rate of return on the project is more than 12%

which of the following can be used to place capital investment proposals, involving different amount of investment on a comparable basis for purpose of net present value analysis?

Present value index

which of the following can be used to place capital investments proposals, involving different amounts of investment on a comparable basis, for purpose of net present value analysis?

Present value index

Squirrel Co. operates in a lean manufacturing environment. For June production, Squirrel purchased 6,000 units of raw materials at $6.00 per unit on account. The journal entry required to record this transaction is

Raw and In Process Inventory 36.000 Accounts Payable 36.000

Calculate the Total Direct Materials Quantity variance using the above information:

$4,725 Favorable

The cell rate is $175 per hour. Each unit has $48 of materials cost and requires 18 minutes of cell conversion time. The cell produces 300 units, of which 285 are sold. What is the finished goods inventory balance?

$1,507.50

The following data relate to direct materials cost for November: Actual cost 4600 pounds at $5.50 Standard cost 45,000 pounds at $6.00 What is the direct materials price variance?

$2,300 favorable

The following data is given for the Walker Company: Budgeted production Actual production Materials: Standard price per lb Standard pounds per completed unit Actual pounds purchased and used in production Actual price paid for materials Labor: Standard hourly labor rate Standard hours allowed per completed unit Actual labor hours worked Actual total labor costs Overhead: Actual and budgeted fixed overhead Standard variable overhead rate Actual variable overhead costs $15,500 1,000 units 980 units $2.00 12 11,800 $23,000 $14 per hour 4.5 4,560 $62,928 $27,000 $3.50 per standard labor hour overhead is applied on standard labor hours. The direct labor time variance is

2100U

The expected average rate of return for a proposed investment of $4,800,000 in a fixed asset, using straight-line depreciation, with a useful life of 20 years, no residual value, and an expected total net income of $10,560,000 over the 20 years is

22%

hey variable cost variance occurs when

Standard cost are more than actual cost

the following data relate to direct materials costs for February Materials cost per yard: standard, $2.00; actual, $2.10 Yards per unit: standard, 4.5 yards, actual, 4.75 Units of production: 9,500 The direct materials price variance is

$4512.50 unfavorable

The amount of income that would result from an alternative use of cash is called:

opportunity cost

The revenue that is forgone from an alternative use of an asset, such as cash, is called

opportunity cost

The following data relate to direct labor costs for the current period: Standard costs Actual costs 9,000 hours at $5.50 8,750 hours at $5.75 What is the direct labor rate variance?

$2187.50 UF

From the provided schedule of activity costs, determine the non-value-added costs.

$64,000

If a product manufactured him back sizes of 30 units and it takes four minutes to manufacture each unit within each of two operations. What is the within batch wait time?

232 min

a series of equal cash flows at fixed intervals is termed a(n)

annuity

The standard factory overhead rate is $7.50 per machine hour ($6.20 for variable factory overhead and $1.30 for fixed factory overhead) based on 100% of normal capacity of 80,000 machine hours. The standard cost and the actual cost of factory overhead for the production of 15,000 units during August were as follows: Actual: Variable factory overhead $360.000 Fixed factory overhead 104,000 Standard hours allowed for units produced: 60,000 hours The fixed factory overhead volume variance is

$12,000 F

Sage Company is operating at 90% of capacity and is currently purchasing a part used in its manufacturing operations for $15 per unit. The unit cost for the business to make the part is $20, including fixed costs, and $11, not including fixed costs. If 30,000 units of the part are normally purchased during the year but could be manufactured using unused capacity, what would be the amount of differential cost increase or decrease from making the part rather than purchasing it?

$120,000 cost increase

The condensed income statement for Hayden Corp. for the past year is as follows: Product I U Sales Costs: Variable costs $ 680,000 $320.000 $(540.000) S(220.000) Fixed costs _(145,000) (40,000) Total costs Income (loss) $(685,000) $(260,000) $ (5,000) $ 60,000 Management is considering the discontinuance of the manufacture and sale of Product T at the beginning of the current year. The discontinuance would have no effect on the total fixed costs and expenses or on the sales of Product U. The amount of change in profit for the current year that will result from the discontinuance of Product T is a

$140,000 decrease

Wilson company is considering replacing equipment which originally cost $310,000 and which has$295,000 accumulated depreciation to date. A new machine will cost $450,000. What is this sunk cost in the situation?

$15,000

The cell rate is $175 per hour. Each unit has $48 per unit of materials cost and requires 18 minutes of cell conversion time. The cell produces 300 units, of which 285 are sold. What is the Finished Goods Inventory balance?

$1507.50

Elfrink Corporation uses the product cost concept of product pricing. Below is cost information for the production and sale of 35,000 units of its sole product. Elfrink desires a profit equal to a 11.2% rate of return on invested assets of $350,000. Fixed factory overhead cost Fixed selling and administrative costs Variable direct materials cost per unit Variable direct labor cost per unit Variable factory overhead cost per unit Variable selling and administrative cost per unit $105,000 35,000 4.34 5.18 98. 70 The unit selling price for the company's product is:

$16.32

Java, Inc has bought a new server and is having to decide what to do with the old one. The cost of the old server was originally $60,000 and has been depreciated $45,000. The company has received two offers that it must consider. One offer was made to purchase the equipment outright for $18,500 less a 5% sales commission. The other offer was to lease the equipment for $7,000 for the next five years but the company will be required to provide maintenance and insurance totaling $3,000 per year. What offer should Java, Inc. accept?

$16.500 in favor of leasing

From the following Schedule of Activity Cost, determine the value-added costs. Activity. Preventive maintenance Warranty work Product design Prototype inspection Emergency maintenance Rework Scrap processing Processing returned products Machine operator training Process audits Activity Cost $48,000 24,000 32,000 16,000 40,000 24,000 16,000 24,000 48,000 16,000

$160,000

Keating Co. is considering disposing of equipment that cost $50,000 and has $40,000 of accumulated depreciation to date. Keating Co. can sell the equipment through a broker for $25,000 less 5% commission. Alternatively, Gunner Co. has offered to lease the equipment for five years for a total of $48,750. Keating will incur repair, insurance, and property tax expenses estimated at $8,000 over the five-year period. At lease-end, the equipment is expected to have no residual value. The net differential income from the lease alternative is

$17,000 loss

Following is a table for the present value of $1 at compound interest: Year 6% 10% 12% 0.943 0.909 0.893 2 0.890 0.826 0.797 3 0.840 0.751 0.712 4 0.792 0.683 0.636 5 0.747 0.621 0.567 Following is a table for the present value of an annuity of $1 at compound interest: Year. 6% 10% 12% 1 0.943 0.909 0.893 2 1.833 1.736 1.690 3 2.673 2.487 2.402 3.465 3.170 3.037 4.212 3.791 3.605 using the table, provided the present value of $25,000 call rounded to the nearest dollar" to re-receipt for years from today, assuming an earnings ratio of 10% is

$17,075

The management of Wyoming Corporation is considering the purchase of a new machine costing $375,000. The company's desired rate of return is 6%. The present value factor for an annuity of $1 at interest of 6% for 5 years is 4.212. In addition to the foregoing information, use the following data in determining the acceptability of this investment: Year 2 3 4 5 Operating Income $18.750 18.750 18.750 18.750 18.750 Net Cash Flow $93.750 93.750 93.750 93.750 93.750 The net present value for this investment is

$19,975

The standard factory overhead rate is $10 per direct labor hour ($8 for variable factory overhead and $2 for fixed factory overhead) based on 100% of normal capacity of 30,000 direct labor hours. The standard cost and the actual cost of factory erhead for the production of 5,000 units during May were as follows: Standard: 25.000 hours at $10 $250,000 Actual: Variable factory overhead Fixed factory overhead $202.500 60,000 The variable factory overhead controllable variance is

$2,500 unfavorable

The condensed income statement for a Fletcher Inc. fur the past year is as follows: Sales Costs: Variable costs Fixed costs Total costs Income (loss) Product F G H Total $ 300,000 $ 210,000 $ 340,000 $ 850,000 S(180,000) S(180,000) $(220,000) $(590,000) _(50,000) (50,000) (40,000) (140,000) $(230,000) $(230,000) $(260,000) $(730.000) $ 70.000 § (20.000) $ 80,000 $ 120.000 Management is considering the discontinuance of the manufacture and sale of Product G at the beginning of the current year. The discontinuance would have no effect on the total fixed costs and expenses or on the sales of Products F and H. The amount of change in profit for the current year that will result from the discontinuance of Product G is a

$20,000 decrease

The standard costs and actual costs for factory overhead for the manufacture of 2,500 units of actual production are as follows: Standard Costs Fixed overhead (based on 10,000 hours 3 hours per unit at $0.80 per hour Variable overhead 3 hours per unit at $2.00 per hour Actual Costs Total variable cost, $18,000 Total fixed cost, $8,000 The fixed factory overhead volume variance is

$2000 unfavorable

Yasmin Co. can further process Product B to produce Product C. Product B is currently selling for $30 per pound and costs $28 per pound to produce. Product C would sell for $55 per pound and would require an additional cost of $31 per pound to produce. The differential cost of producing Product C is

$28 per pound

Sifton Electronics Corporation manufactures and assembles electronic motor drives for video cameras. The company assembles the motor drives for several accounts. The process consists of a lean cell for each customer. The following information relates to only one customer's lean cell for the coming year. For the year, projected labor and overhead was $7,370,000 and materials costs were $28 per unit. Planned production included 4,000 hours to produce 27,500 motor drives. Actual production for August was 1,600 units, and motor drives shipped amounted to 1,380 units. Conversion costs are applied based on units of production ​ From the foregoing information, determine the manufacturing cost per unit

$296.00

Myers Corporation has the following data related to direct materials costs for November: actual cost for 5,000 pounds of material at $4.50 per pound and standard cost for 4,800 pounds of material at $5.10 per pound. The direct materials price variance is

$3,000 favorable

The standard costs and actual costs for factory overhead for the manufacture of 2,500 units of actual production are as follows: Standard Costs Fixed overhead (based on 10,000 hours) 3 hours per unit at $0.80 per hour Variable overhead 3 hours per unit at $2.00 per hour Actual Costs Total variable cost, $18,000 Total fixed cost, $8,000 The variable factory overhead controllable variance is

$3,000 unfavorable

The Hill Company produced 5,000 units of X. The standard time per unit is 0.25 hours. The actual hours used to produce 5,000 units of X were 1,350 hours. The standard labor rate is $12 per hour. The actual labor cost was $18,900. What is the total direct labor cost variance?

$3,900 unfavorable

The condensed income statement for a Fletcher Inc. for the past year is as follows: F Product G Total $ 300,000 $ 210,000 $ 340,000 $ 850,000 Sales Costs: Variable costs Fixed costs Total costs Income (loss) S(180,000) S(180,000) S(220,000) S(590,000) (50,000) (50,000) (40,000) (140,000) S(230,000) S(230,000) S(260,000) S(730,000) § 70.000 § (20,000) $ 80,000 S 120,000 Management is considering the discontinuance of the manufacture and sale of Product G at the beginning of the current year. The discontinuance would have no effect on the total fixed costs and expenses or on the sales of Products F and H. The amount of change in profit for the current year that will result from the discontinuance of Product G is a

$30,000 decrease

The cell rate is $175 per hour. Each unit has $48 per unit of materials cost and requires 18 minutes of cell conversion time. The cell produces 300 units, of which 285 are sold. What is the total debit to Raw and In Process Inventory?

$30,150

The following data relate to direct labor costs for February: Actual cost: 7700 hours at $13 Standard costs: 7000 hours at $9 what is the direct labor variance?

$30,800 unfavorable

Foley Electronics Corporation manufactures and assembles electronic motor drives for video cameras. The company assembles the motor drives for several accounts. The process consists of a lean manufacturing cell for each customer. The following information relates only to one customer's lean cell for the coming year. Projected labor and overhead, $4,800,000; materials costs, $25 per unit. Planned production included 2,400 hours to produce 19,200 motor drives. Actual production for August was 1,300 units, and motor drives shipped amounted to 1,260 units. From the foregoing information, determine the production costs transferred to Cost of Goods Sold during August.

$346,500

Grace Co. can further process Product B to produce Product C. Product B is currently selling for $60 per pound and costs $38 per pound to produce. Product C would sell for $95 per pound and would require an additional cost of $13 per pound to produce. What is the differential revenue of producing and selling Product C?

$35 per pound

The following data relate to direct materials costs for February: Materials cost per yard: standard, $2.00; actual, $2.10 Yards per unit: standard, 4.5 yards; actual, 4.75 yards Units of production: 9,500 The direct materials quantity variance is

$4,750.00 unfavorable

Sifton Electronics Corporation manufactures and assembles electronic motor drives for video cameras. The company assembles the motor drives for several accounts. The process consists of a lean cell for each customer. The following information relates to only one customer's lean cell for the coming year. For the year, projected labor and overhead was $7,370,000 and materials costs were $28 per unit. Planned production included 4,000 hours to produce 27,500 motor drives. Actual production for August was 1,600 units, and motor drives shipped amounted to 1,380 units. Conversion costs are applied based on units of production From the foregoing information, determine the production costs transferred to Cost of Goods Sold during August.

$408,480

Sifton Electronics Corporation manufactures and assembles electronic motor drives for video cameras. The company assembles the motor drives for several accounts. The process consists of a lean cell for each customer. The following information relates to only one customer's lean cell for the coming year. For the year, projected labor and overhead was $7,370,000 and materials costs were $28 per unit. Planned production included 4,000 hours to produce 27,500 motor drives. Actual production for August was 1,600 units, and motor drives shipped amounted to 1,380 units. Conversion costs are applied based on units of production ​ 21. From the foregoing information, determine the production costs transferred to Cost of Goods Sold during August. a. $369,840 b. $408,480 c. $428,800 d. $473,600

$428,800

The following data are given for Harry Company: Budgeted production Actual production Materials: Standard price per ounce Standard ounces per completed unit Actual ounces purchased and used in production Actual price paid for materials Labor: Standard hourly labor rate Standard hours allowed per completed unit Actual labor hours worked Actual total labor costs Overhead: Actual and budgeted fixed overhead Standard variable overhead rate Actual variable overhead costs 26,000 units 27,500 units $6.50 8 228,000 $1,504,800 $22.00 per hour 6.6 183,000 $4,020,000 $1,029,600 $24.50 per standard labor hour $4,520,000 Overhead is applied on standard labor hours. (Round interim calculations to the nearest cent.) The direct labor rate variance is

$5,490 favorable

Matthews Company is considering replacing equipment that originally cost $450,000 and that has $400,000 accumulated depreciation to date. A new machine will cost $640,000, and the old equipment can be sold for $10,000. What is the sunk cost in this situation?

$50,000

The standard costs and actual costs for factory overhead for the manufacture of 2,500 units of actual production are as follows: Standard Costs Fixed overhead (based on 10,000 hours 3 hours per unit at $0.80 per hour Variable overhead 3 hours per unit at $2.00 per hour Actual Costs Total variable cost, $18,000 Total fixed cost, $8,000 The total factory overhead cost variance is

$5000 unfavorable

Carmen Co. can further process Product J to produce Product D. Product J is currently selling for $20.00 per pound and costs $15.75 per pound to produce. Product D would sell for $38.00 per pound and would require an additional cost of $8.55 per pound to produce.

$6.25 per pound

Flapjack Corporation had 8,200 actual direct labor hours at an actual rate of $12.40 per hour. Original production had been budgeted for 1,100 units, but only 1,000 units were actually produced. Labor standards were 7.6 hours per completed unit at a standard rate of $13.00 per hour.

$7,800 unfavorable

The following data are given for Zoyza Company: Budgeted production (at 100% of normal capacity) Actual production Materials: Standard price per ounce Standard ounces per completed unit Actual ounces purchased and used in production Actual price paid for materials Labor: Standard hourly labor rate Standard hours allowed per completed unit Actual labor hours worked Actual total labor costs Overhead: Actual and budgeted fixed overhead Standard variable overhead rate Actual variable overhead costs variance is 26,000 units 27,500 units $6.50 8 228,000 $1,504,800 $22.00 per hour 6.6 183,000 $4,020,000 $1,029,600 $24.50 per standard labor hour $4,520,000 Overhead is applied on standard labor hours. The variable factory overhead controllable variance is

$73,250 favorable

Conan Electronics Corporation manufactures and assembles electronic motor drives for video cameras. The company assembles the motor drives for several accounts. The process consists of a lean cell for each customer. The following information relates to only one customer's lean cell. For the year, planned labor and overhead was $80,000,000 and materials costs were $25 per unit. Planned production included 9,600 hours to produce 76,800 motor drives. Actual production for the month of August was 5,200 units, and motor drives shipped amounted to 5,040 units. From the foregoing information, determine the cell conversion cost rate for applying conversion costs.

$8,333 per hour

The standard costs and actual costs for direct materials for the manufacture of 2,500 actual units of product are as follows: Standard Costs Direct materials 2,500 kilograms a, $8 Actual Costs Direct materials 2,600 kilograms @ $8.75 The amount of direct materials quantity variance is:

$800 unfavorable

The rate of earnings is 6% and the cash to be received in one year is $10,000. Determine the present value amount, using the following partial table of present value of $1 at compound interest:

$9,430

From the following Schedule of Activity Cost, determine the value-added costs. Activity Preventive maintenance Warranty work Product design Prototype inspection Emergency maintenance Rework Scrap processing Processing returned products Machine operator training Process audits Activity Cost $48.000 24,000 32.000 16.000 40,000 24.000 16,000 24.000 48,000 16,000

$96,000

Mallard Corporation uses the product cost method of product pricing. Below is cost information for the production and sale of 45,000 units of its sole product. Mallard desires a profit equal to a 12% return on invested assets of $800,000. Fixed factory overhead cost Fixed selling and administrative costs Variable direct materials cost per unit Variable direct labor cost per unit Variable factory overhead cost per unit Variable selling and administrative cost per unit $82,000 45.000 5.50 7.65 2.25 0.90 The dollar amount of desired profit from the production and sale of the company's product is

$96,000

Following is a table for the present value of an annuity of $1 at compound interest: Year 6% 0.943 1.833 2.673 3.465 4.212 10% 0.909 1.736 2.487 3.170 3.791 12% 0.893 690 2.402 3.037 3.605 Using the tables provided, the internal rate of return of an investment of $227,460 that would generate an annual cash inflow of $60.000 for the next 5 years is

10%

Tennessee Corporation is analyzing a capital expenditure that will involve a cash outlay of $109,332. Estimated cash flows are expected to be $36,000 annually for 4 years. The present value factors for an annuity of $1 for 4 years at interest of 10%, 12%, 14%, and 15% are 3.170, 3.037, 2.914, and 2.855, respectively. The internal rate of return for this investment is

12%

The management of Arnold Corporation is considering the purchase of a new machine costing $400,000. The company's desired rate of return is 10%. The present value factors for $1 at compound interest of 10% for 1 through 5 years are 0.909, 0.826, 0.751, 0.683, and 0.621, respectively. In addition to the foregoing information, use the following data in determining the acceptability in this situation: Year Income from Operations $100.000 40.000 20.000 10.000 10,000 Net Cash Flow $180.000 120.000 100.000 90.000 90.000 The average rate of return for this investment is:

18%

The management of Charlton Corporation is considering the purchase of a new machine costing $380,000. The company's desired rate of return is 6%. The present value factor for an annuity of $1 at interest of 6% for 5 years is 4.212. In addition to the foregoing information, use the following data in determining the acceptability of this investment: Year Operating Income $20.000 Net Cash Flow $95.000 20.000 95.000 95.000 3 4 5 20.000 20.000 95,000 20.000 95,000 The cash payback period for this investment is

4 years

An anticipated purchase of equipment for $490,000 with a useful life of 8 years and no residual value is expected to yield the following annual incomes and net cash flows: Income $60,000 50.000 50.000 40.000 40.000 40.000 40.000 40.000 Net Cash Flow $110.000 100.000 100.000 90,000 90.000 90.000 90.000 90.000 The cash payback period for the equipment is

5 years

Using the tables provided, the internal rate of return of an investment of $210,600 that would generate an annual cash inflow of $50,000 for the next 5 years is

6%

Sifton Electronics Corporation manufactures and assembles electronic motor drives for video cameras. The company assembles the motor drives for several accounts. The process consists of a lean cell for each customer. The following information relates to only one customer's lean cell for the coming year. For the year, projected labor and overhead was $7,370,000 and materials costs were $28 per unit. Planned production included 4,000 hours to produce 27,500 motor drives. Actual production for August was 1,600 units, and motor drives shipped amounted to 1,380 units. Conversion cosis are applied based on units of production From the foregoing information, determine the cell conversion cost rate

S268.00 per unit

which of the following reasons would cause a company to rejecting, offered to accept business at a special price?

The additional sales will increase fixed expenses

An analysis of a proposal by the net present value method indicated that the present value of future cash inflows exceeded the amount to be invested. Which of the following statements best describes the results of this analysis?

The proposal is desirable and the rate of return expected from the proposal exceeds the minimum rate used for the analysis

What do you mean manufacturers demand from their vendors?

all of these choices (high quality materials, on-time deliveries, low-cost materials)

The lean philosophy attempts to reduce setup times, which will

decrease within-batch wait time

Dary Co. produces a single product. It's normal selling price is $28 per unit. The variable cost or $18 per unit. Fixed cost are $20,000 for normal production of 5000 units per month dary received a request for a special order that would not interfere with normal sales. The order was for 1500 units and a special price of $17.50 per unit. Dary Co. Has the capacity to handle the special order and, for this order, a variable selling cost of two dollars per unit would be eliminated. If the order is accepted, what would be the impact on net income?

increase of $2,250

Falcon Co. produces a single product. Its normal selling price is $30.00 per unit. The variable costs are $19.00 per unit. Fixed costs are $25,000 for a normal production run of 5,000 units per month. Falcon received a request for a special order that would not interfere with normal sales. The order was for 1,500 units with a special price of $20.00 per unit. Falcon has the capacity to handle the special order, and for this order, a variable selling cost of $1.00 per unit would be eliminated. If the order is accepted, the differential effect on profit would be a(n)

increase of $3,000

which of the following would be considered value added lead time?

machine time

Mighty Safe Fire Alarm is currently buying 50,000 motherboards from MotherBoard, Inc., at a price of $65 per board. Mighty Safe is considering making its own boards. The costs to make the board are as follows: direct materials, $32 per unit; direct labor, $10 per unit; and variable factory overhead, $16 per unit. Fixed costs for the plant would increase by $75,000. Which option should be selected and why?

make, $275,000 increase in profits

which of the following is an example of valued-added time?

processing time

If the wage rate paid per hour differs from the standard wage rate per hour for direct labor, the variance is a __________ variance

rate

A company using a lean manufacturing system wall likely debit materials purchases to

raw and in process inventory

The target costing method of assumes that

the selling price is set by the marketplace

If at the end of the fiscal year, the variances from standard are significant, the variances should be transferred to the

work in progress, cost of good sold, and finish goods accounts