Accounting II Final
The standard costs and actual costs for direct labor for the manufacture of 2,500 actual units of product are as follows: Standard Costs Direct labor7,500 hours @ $11.80 Actual Costs Direct labor7,400 hours @ $11.40 The amount of the direct labor rate variance is:
$2,960 favorable
If sales total $2,000,000, fixed costs total $800,000, and variable costs are 60% of sales, the contribution margin ratio is 60%. True or False
False
Process cost systems use job order cost cards to accumulate cost data. True or False
False
The direct materials costs and direct labor costs incurred by a production department are referred to as conversion costs. True or False
False
Which of the following statements is true regarding fixed and variable costs?
Fixed costs are constant in total, and variable costs are constant per unit.
The primary difference between a static budget and a flexible budget is that a static budget
is a plan for a single level of production, whereas a flexible budget can be converted to any level of production.
For purposes of analysis, mixed costs are generally:
separated into their variable and fixed cost components
Cameron Manufacturing Co.'s static budget at 5,000 units of production includes $40,000 for direct labor and $5,000 for variable electric power. Total fixed costs are $20,000. At 8,000 units of production, a flexible budget would show:
variable costs of $72,000 and $20,000 of fixed costs
Budgets are prepared in the Accounting Department and monitored by various department managers. True or False
False
Conversion costs include materials, direct labor, and factory overhead. True or False
False
Which of the following budgets provides the starting point for the preparation of the direct labor cost budget?
Production Budget
The debits to Work in Process--Assembly Department for April, together with data concerning production, are as follows: April 1, work in process: Materials cost, 3,000 units$ 8,000 Conversion costs, 3,000 units, 66.7% completed6,000Materials added during April, 10,000 units30,000Conversion costs during April31,000Goods finished during April, 11,500 units---April 30 work in process, 1,500 units, 50% completed--- All direct materials are placed in process at the beginning of the process and the first-in, first-out method is used to cost inventories. The materials cost per equivalent unit for April is:
$3.00
Next year's sales forecast shows that 20,000 units of Product A and 22,000 units of Product B are going to be sold for prices of $10 and $12 per unit, respectively. The desired ending inventory of Product A is 20% higher than its beginning inventory of 2,000 units. The beginning inventory of Product B is 2,500 units. The desired ending inventory of B is 3,000 units.Total budgeted sales of both products for the year would be:
$464,000
Department S had no work in process at the beginning of the period. 12,000 units of direct materials were added during the period at a cost of $84,000, 9,000 units were completed during the period, and 3,000 units were 30% completed as to labor and overhead at the end of the period. All materials are added at the beginning of the process. Direct labor was $49,500 and factory overhead was $9,900.The total conversion costs for the period were:
$59,400
Assume that Corn Co. sold 8,000 units of Product A and 2,000 units of Product B during the past year. The unit contribution margins for Products A and B are $30 and $60 respectively. Corn has fixed costs of $378,000. The break-even point in units is:
10,500 units
If Department K had 2,000 units, 40% completed, in process at the beginning of the period, 12,000 units were completed during the period, and 1,200 units were 25% completed at the end of the period, what was the number of equivalent units of production for conversion costs for the period if the first-in, first-out method is used to cost inventories?
11,500
The Western Division of Bestboot Company has a rate of return on investment of 15% and an investment turnover of 1.2. What is the profit margin?
12.5%
Mason Corporation had $650,000 in invested assets, sales of $700,000, income from operations amounting to $99,000, and a desired minimum rate of return of 15%.The profit margin for Mason is:
14.1%
Department B had 3,000 units in Work in Process that were 25% completed at the beginning of the period at a cost of $12,500. 13,700 units of direct materials were added during the period at a cost of $28,700. 15,000 units were completed during the period, and 1,700 units were 95% completed at the end of the period. All materials are added at the beginning of the process. Direct labor was $32,450 and factory overhead was $18,710.The number of equivalent units of production for the period for conversion if the first-in, first-out method is used to cost inventories was:
15,865
A company is preparing its their Cash Budget. The following data has been provided for cash receipts and payments. JanuaryFebruaryMarchCash Receipts$1,061,200$1,182,400$1,091,700Cash Payments$984,500$1,210,000$1,075,000 The company's cash balance at January 1st is $290,000. This company desires a minimum cash balance of $340,000.What is the amount of excess cash or deficiency of cash (after considering the minimum cash balance required) for January?
267,000 excess`
If fixed costs are $300,000, the unit selling price is $31, and the unit variable costs are $22, what is the break-even sales (units) if fixed costs are reduced by $30,000?
30,000 units
Below is budgeted production and sales information for Flushing Company for the month of December: Product XXX Product ZZZ Estimated beginning inventory 32,000 units 20,000 unitsDesired ending inventory 34,000 units 17,000 unitsRegion I, anticipated sales320,000 units260,000 unitsRegion II, anticipated sales180,000 units140,000 units The unit selling price for product XXX is $5 and for product ZZZ is $15.Budgeted production for product ZZZ during the month is:
397,000 units
The management of Nebraska Corporation is considering the purchase of a new machine costing $490,000. 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 fromOperations Net CashFlow 1 $100,000 $180,000 2 40,000 120,000 3 40,000 100,000 4 10,000 90,000 5 10,000 120,000 The cash payback period for this investment is:
4 years
If Department H had 600 units, 60% completed, in process at the beginning of the period, 6,000 units were completed during the period, and 700 units were 30% completed at the end of the period, what was the number of equivalent units of production for conversion costs for the period, if the first-in, first-out method is used to cost inventories?
5,850
Below is budgeted production and sales information for Flushing Company for the month of December: Product XXX Product ZZZ Estimated beginning inventory 32,000 units 20,000 unitsDesired ending inventory 34,000 units 17,000 unitsRegion I, anticipated sales320,000 units260,000 unitsRegion II, anticipated sales180,000 units140,000 units The unit selling price for product XXX is $5 and for product ZZZ is $15.Budgeted production for product XXX during the month is:
502,000
If sales are $820,000, variable costs are 45% of sales, and operating income is $260,000, what is the contribution margin ratio?
55%
Which of the following conditions normally would not indicate that standard costs should be revised?
Actual costs differed from standard costs for the preceding week.
Which of the following entities would probably use a process costing system?
An oil refinery
Which of the following describes the behavior of the fixed cost per unit?
Decreases with increasing production
The budgeting process does not involve which of the following activities:
Increase in sales by increasing marketing efforts.
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 in this situation: Year Income fromOperations Net CashFlow 1 $18,750 $93,750 2 18,750 93,750 3 18,750 93,750 4 18,750 93,750 5 18,750 93,750 The net present value for this investment is:
Positive $19,875
If the actual direct labor hours spent producing a commodity differs from the standard hours, the variance is termed a:
Time Varience
If the principal products of a manufacturing process are identical, a process cost system is more appropriate than a job order cost system. True or False
True
Standards are performance goals used to evaluate and control operations. True or False
True
The budget process involves doing all the following except:
dismissing all managers who fail to achieve operational goals specified in the budget
