exam 3 (adaptive practice)

The Gabbana Company's maintenance costs are a mixed cost. At the low level of activity (40 direct labor hours), maintenance costs are $600. At the high level of activity (100 direct labor hours), maintenance costs are $1,100. Using the high-low method, the variable maintenance cost per unit would be ________ and the total fixed maintenance cost would be

$8.33; $267.

Katie's Cleaning Service has cleaning contracts for 15 apartments, 45 family homes, and 25 office buildings. She estimates that an apartment takes 4 hours to clean, a home takes 6 hours to clean, and an office building takes 10 hours to clean. Katie pays her cleaning staff $12.50/hour. If each location is cleaned once per week, how much does Katie need to budget for direct labor each month? Assume there are four weeks per month.

29,000

Dobbins Resources pays sales commissions of $2 per unit and shipping costs of $0.75 per unit. If Dobbins expects to sell 12,000 units in the third quarter, what will their total variable expenses be?

33,000

The Crawford Company has 3,000 units in beginning finished goods. The sales budget shows expected sales to be 12,000 units. If the production budget shows that 14,000 units are required for production, what was the desired ending finished goods?

5,000 (3,000-12,000+14,000).

The Eccleston Company has the following budgeted sales: January $40,000, February $60,000, and March $50,000. 40% of the sales are for cash and 60% are on credit. For the credit sales, 50% are collected in the month of sale, and 50% the next month. The total expected cash receipts during March are

53,000

The Burlington Company has 12,000 units in beginning finished goods. If sales are expected to be 60,000 units for the year and Burlington desires ending finished goods of 15,000 units, how many units must Burlington produce?

63,000. Why? (12,000-60,000+15,000).

________ is an underlying assumption of cost-volume-profit analysis.

All costs can be classified as either variable or fixed with reasonable accuracy

When unit selling price remains the same and ________, then the contribution margin per unit decreases.

variable costs per unit increase

If a product's variable cost per unit increases but its unit selling price remains constant, then the product's unit contribution margin

will decrease.

Duck Manufacturing sells rubber rain boots for $50 per pair. In the coming year, the firm expects to have fixed costs of $312,000 and variable costs of $24 per pair. If Duck wants to earn net income of $364,000 in the year ahead, what are the firm's required sales in dollars?

$1,300,000

The Brenneman Company's direct materials budget shows total cost of direct materials purchases for January $125,000, February $150,000 and March $175,000. Cash payments are 60% in the month of purchase and 40% in the following month. The budgeted cash payments for March are

$165,000

Rose Company is preparing its direct labor budget for May. Projections for the month are that 8,350 units are to be produced and that direct labor time is three hours per unit. If the labor cost per hour is $9, what is the total budgeted direct labor cost for May?

$225,450. Why? (8,350 x 3) = 25,050 (25,050 x 9) = 225,450

Daniel is planning to rent a car for an upcoming four-day business trip. The car rental agency charges a flat fee of $29 per day plus $0.12 per mile driven. Daniel plans to drive 140 miles on Day 1 of his trip, 15 miles on Day 2, 15 miles on Day 3, and 140 miles on Day 4. What are Daniel's total variable costs for the car rental?

$37.20

Toledo Manufacturing has the following variable overhead costs: Indirect materials: $2.18/hour Indirect labor: $3.26/hour Utilities: $0.90/hour Maintenance: $0.33/hour Direct labor hours: 14,500 If Toledo decides that they need to increase their indirect materials to $2.25 per hour, how much will this increase their total variable costs?

1,015

Duck Manufacturing sells rubber rain boots for $50 per pair. In 20x4, the firm had fixed costs of $312,000 and variable costs of $24 per pair, and it expects these figures to remain the same in 20x5. In 20x4, Duck's total sales were $900,000, and the company expects this amount to increase to $925,000 in 20x5. If this sales increase does indeed occur, Duck's margin of safety ratio will increase by about ________ percent.

1.8

In the Progressa Company required production for June is 44,000 units. To make one unit of finished product, three pounds of direct material Z are required. Actual beginning and desired ending inventories of direct material Z are 100,000 and 110,000 pounds, respectively. How many pounds of direct material Z must be purchased?

142,000. Why? (44,000 x 3) = 132,000. (100,000 - 132,000) = -32,000. (-32,000 + 32,000 + 32,000 + 110,000) = 142,000.

Livingston Co. has fixed costs of $60,000 and a contribution margin ratio of 30%. To break even, Livingston Co. needs ________ in dollar sales.

200,000

Which best describes what happens to the variable cost per unit if it is within the relevant range?

It remains constant at each activity level.

A purchases budget is used instead of a production budget by

Merchandising companies

City Mission is a not-for-profit organization that provides hot meals, living quarters, and showers for homeless people. Based on their yearly budget, they expect to spend $450,000 on food expenses, $350,000 on housing expenses, $280,000 on staff salaries, $90,000 on utilities, and $118,000 on other expenses. How much will City Mission need to raise in donations?

at least $1,288,000

Coordinating the preparation of the budget is the responsibility assigned to the

budget committee

In order to remain competitive, Big Bus Lines must reduce its average ticket price by 15%. However, the firm still wants to remain profitable. Which of the following options would allow Big Bus Lines to remain profitable while dropping its ticket prices?

decreasing its variable costs by at least 15%

Which line items of the budgeted balance sheet are calculated based on operating budgets?

finished goods inventory, raw materials inventory, and retained earnings

Which of the following is a formula for break-even point in sales dollars?

fixed costs divided by contribution margin ratio

: BrewCo sells coffeemakers for $120 each. The firm currently has variable costs per unit of $65. If BrewCo is able to reduce its variable cost per unit to $58, its contribution margin ratio will

increase by about 6 percent.

In order to assure better management acceptance, the flow of input data for budgeting should begin with the

lower level of management

If ________, then the contribution margin ratio will increase.

variable costs as a percentage of sales decrease

On January 1, Scarlett Company has a beginning cash balance of $21,000. During the year, the company expects cash disbursements of $170,000 and cash receipts of $145,000. If Scarlett requires an ending cash balance of $20,000, the Scarlett Company must borrow

24,000

Lagerfeld Company had actual sales of $800,000 when break-even sales were $600,000. The margin of safety ratio is

25%

James Company determines that 13,500 pounds of direct materials are needed for production in July. There are 800 pounds of direct materials on hand at July 1 and the desired ending inventory is 700 pounds. If the cost per pound of direct materials is $3, what is the budgeted total cost of direct materials purchases?

$40,200

When they made their master budget, Vann Enterprises had direct material per unit costs of $12.43, direct labor per unit costs of $8.46, and manufacturing overhead per unit costs of $14.29. They planned to sell 16,000 units in the first quarter. However, in the first week of the first quarter, the direct material per unit costs rose to $16.12, which increased the selling price of the finished product. Therefore, Vann Enterprises only sold 15,500 units. What would the difference in cost of goods sold be between the budgeted income statement and the actual income statement?

39,605 increase

Gulph Company reported the following results from the sale of 5,000 hammers in May: sales $200,000, variable costs $120,000, fixed costs $60,000, and net income $20,000. If Gulph increases the selling price of hammers by 10% on June 1, then ________ hammers will have to be sold in June to maintain the same level of net income.

4,000

Which of the following represents the flow of budget data under participative budgeting?

Department Manager to Plant Manager to Vice President of Production