Accounting Test #3

Marigold has a standard of 1.5 pounds of materials per unit, at $6 per pound. In producing 1200 units, Marigold used 1900 pounds of materials at a total cost of $11115. Marigold's total variance is

$315 U

How to fund total materials variance

(Actual Quantity x Actual Price) - (Standard Quantity x Standard Price)

how to find materials quantity variance

(Actual Quantity x Standard Price)- (Standard Quantity x Standard Price)

how to find the total labor variance

(Actual hours x Actual rate) - (Standard hours x Standard rate)

how to find labor price variance

(Actual hours x Actual rate) - (actual hours x standard rate)

how to find labor quantity variance

(Actual hours x standard rate) - Standard hours x Standard rate)

How to find expected units to sell

(Fixed Cost + Target NI)/(Unit Selling Price - Unit Variable Cost)

find units to be sold

(Sales price - Variable costs)*(X) = Fixed costs + Profit

what are correct statements about a budget?

- it is a formal written statement of managements plans for a specified future time period - it becomes an important basis for evaluating performance - it promotes efficiency efficiency and serves as a deterrent to waste and inefficiency

how to find materials price variance

= (Actual Quantity x Actual Price) - (Actual Quantity x Standard Price)

Of the following items, which one is not obtained from an individual operating budget? - COGS - S&A Expenses - Accounts Recievable - Sales

Accounts receivable

The direct labor quantity standard should make allowances for all of the following except - rest periods - cleanup - machine downtime - all of these options

All of these options

How should intangible benefits be included in the net present value calculation of an investment?

At their discounted cash flow amount

Which of the following statements about budget acceptance in an organization is true?

Budgets have a greater chance of acceptance if all levels of management have provided input into the budgeting process.

Which of the following is not an operating budget? - Sales budget - Production Budget - Direct Labor Budget - Cash budget

Cash budget

Which of the following is the formula for computing the cash payback period?

Cost of capital investment ÷ Net annual cash flow.

Which of the following would not be considered an internal user of accounting data for a company? - President of the company - Controller of the company - Production manager - Internal Revenue Service

Internal Revenue Service

Which statement is true concerning the balanced scorecard?

It links performance measures to a company's strategic goals.

Which of the following is incorrect about a standard cost accounting system? - It keeps separate accounts for each variance - It is applicable to job order costing - It is applicable to process costing - It reports only favorable variances

It reports only favorable variances

Standard Costs include:

Manufacturing OH, Direct materials, and direct labor

Which of the following is not one of the career opportunities in accounting? - Governmental accounting - Public accounting - Private accounting - Personal accounting

Personal accounting

The historical cost principle dictates that companies originally record assets at their cost. True or False

TRUE

The three most common forms of business organization, proprietorship, partnership, and corporation, are used in countries that use IFRS. TRUE or FALSE

TRUE

how to find beginning finished goods

X% of Quarterly Sales

A profit center is

a responsibility center that incurs costs and generates revenues.

If net present value is zero or positive what should you do?

accept proposal

If internal rate of return is equal to or greater than the required rate of return, what should you do?

accept the proposal

The formula for computing the total overhead variance is

actual overhead less overhead applied.

All of the following methods use cash inflows except the: - annual rate of return method - net present value method - internal rate of return method - cash payback method

annual rate of return method

how to find ending finished goods

anticipated next quarter sales * X%

how to find present value

assumed net annual * discount factor

On the last day of the period, Jim Otto Company buys a $900 machine on credit. This transaction will affect the

balance sheet only.

In the merchandise purchases budget, required merchandise purchases are computed by adding

budgeted cost of goods sold and desired ending merchandise inventory together and deducting beginning merchandise inventory.

how to find internal rate of return factor- even cash flows

capital investment / net annual cash flows

The internal rate of return factor is computed by dividing the

capital investment by the net annual cash flow

required production units

expected sales + desired ending finished goods - beginning finished goods

how to find present value at %

go to the amount of periods down and across to the % needed, then multiply by companys net annual cash flow

If a company's required rate of return is 9%, and in using the profitability index method, a project's index is greater than 1, this indicates that the project's rate of return is

greater than 9%.

If project A has a lower payback period than project B, this may indicate that project A may have a

higher NPV and be more profitable

Revenues and expenses are reported on the

income statement

Performing services on account will have the following effects on the components of the basic accounting equation:

increase assets and increase stockholders' equity.

All of the following variances would be reported to the production department that did the work except the

materials price variance.

A static budget report

may be appropriate in evaluating a manager's effectiveness in controlling costs when the behavior of the costs in response to changes in activity is fixed.

Management by exception

means that material differences will be investigated.

how to find NPV

present value of net cash flows - capital investment

A negative net present value indicates that the

present value of the cash inflows was less than the present value of the cash out flows.

how to find NPV internal rate of return

present value total- initial investment

A total materials variance is analyzed in terms of

price and quantity variances.

Which one of the following budgets would not be prepared for a merchandising company? - production budget - merchandise purchases budget - cash budget - capital expenditures budget

production budget

A positive net present value means that the:

project's rate of return exceeds the required rate of return.

The first step in solving an ethical dilemma is to

recognize an ethical situation and the ethical issues involved

The accounting process involves all of the following except: - analyzing and interpreting financial reports - identifying economic transactions that are relevant to the business - communicating financial information to users by preparing financial reports - recording non-quantifiable economic events

recording non-quantifiable economic events

If internal rate of return is less than the required rate of return, what should you do?

reject the proposal

If net present value is negative what do you do?

reject the proposal

A project should be accepted if its internal rate of return exceeds:

the company's required rate of return.

When applying the net present value method with unequal cash flows,

the present value of a single future amount must be applied to each annual cash flow.

Essentials of effective budgeting do not include: - top-down budgeting - sound organizational structure - research and analysis - management acceptance

top-down budgeting

The formula for computing the direct labor budget is to multiply the direct labor cost per hour by the

total required direct labor hours

Standard costs may be used by

universities. governmental agencies. charitable organizations.