Managerial Accounting Chapter 5 and Chapter 8 Quiz Practice

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The manufacturing overhead budget at Franklyn Corporation is based on budgeted direct labor-hours. The direct labor budget indicates that 2,300 direct labor-hours will be required in January. The variable overhead rate is $7 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $43,030 per month, which includes depreciation of $3,730. All other fixed manufacturing overhead costs represent current cash flows. The January cash disbursements for manufacturing overhead on the manufacturing overhead budget should be: A. $55,400 B. $39,300 C. $16,100 D. $59,130

A. $55,400

Mishoe Corporation has provided the following contribution format income statement. Assume that the following information is within the relevant range. The break-even point in unit sales is closest to: (Round your immediate calculations to 2 decimal places.) Sales (1,000 units) = $50,000 Variable expenses = $32,500 Contribution margin = $17,500 Fixed expenses = $12,250 Net operating income = $5,250 A. 700 units B. 0 units C. 895 units D. 650 units

A. 700 units

Which of the following statements is NOT correct concerning the Cash Budget? A. It is not necessary to prepare any other budgets before preparing the Cash Budget. B. The Cash Budget should be prepared before the Budgeted Income Statement. C. The Cash Budget builds on earlier budgets and schedules as well as additional data. D. The Cash Budget should be prepared before the Budgeted Balance Sheet.

A. It is not necessary to prepare any other budgets before preparing the Cash Budget.

Sedita Incorporated is working on its cash budget for July. The budgeted beginning cash balance is $12,000. Budgeted cash receipts total $181,000 and budgeted cash disbursements total $180,000. The desired ending cash balance is $37,000. The excess (deficiency) of cash available over disbursements for July will be: A. $193,000 B. $13,000 C. $1,000 D. $11,000

B. $13,000

Stefanovich Corporation makes one product. The company has provided the following information concerning its raw material needs: The ending raw materials inventory should equal 20% of the following month's raw materials production needs: - Each unit of finished goods requires 2 pounds of raw materials. - The raw materials cost $3.00 per pound. - The company will need 26,440 pounds of raw material to satisfy production needs in March. The raw materials inventory balance at the end of February should be closest to: A. $88,704 B. $15,864 C. $14,568 D. $74,136

B. $15,864

Jeanclaude Corporation produces and sells one product. The budgeted selling price per unit is $105. Budgeted unit sales for July, August, September, and October are 7,400, 7,500, 13,800, and 15,300 units, respectively. All sales are on credit. Regarding credit sales, 40% are collected in the month of the sale and 60% in the following month. The budgeted accounts receivable balance at the end of August is closest to: A. $525,000 B. $472,500 C. $787,500 D. $315,000

B. $472,500

If a company increases its selling price by $2 per unit due to an increase in its variable labor cost of $2 per unit, the break-even point in units will: A. change but direction cannot be determined. B. not change. C. increase. D. decrease.

B. not change.

Schister Systems uses the following data in its Cost-Volume-Profit analyses: Sales = $350,000 Variable expenses = $210,000 Contribution margin = $140,000 Fixed expenses = $110,000 Net operating income = $30,000 What is total contribution margin if sales volume increases by 20%? A. $140,000 B. $36,000 C. $168,000 D. $24,000

C. $168,000

All of Gaylord Corporation's sales are on account. Thirty-five percent of the sales on account are collected in the month of the sale, 45% in the month following sale, and the remained are collected in the second month following sale. The following are budgeted sales data for the company: January = $50,000 February = $60,000 March = $40,000 April = $30,000 What is the amount of cash that should be collected in March? A. $41,000 B. $24,000 C. $51,000 D. $37,000

C. $51,000

Bristo Corporation has sales of 2,000 units at $35 per unit. Variable expenses are 40% of the selling price. If total fixed expenses are $22,000, the degree of operating leverage is: A. 0.79 B. 1.40 C. 2.10 D. 3.50

C. 2.10

Which of the following would not affect the break-even point? A. selling price per unit B. variable expense per unit C. number of units sold D. total fixed expense

C. number of units sold

Which of the following is correct? The break-even point occurs on the Cost-Volume-Profit graph where: A. total profit equals total expenses. B. total profit equals total fixed expenses. C. total contribution margin equals total fixed expenses. D. total variable expenses equal total contribution margin.

C. total contribution margin equals total fixed expenses.

Knappert Corporation makes one product and has provided the following information: Each unit of finished goods requires 3 pounds of raw materials. The raw materials cost $5.00 per pound. - The direct labor wage rate is $24.00 per hour. Each unit of finished goods requires 2.8 direct labor-hours. - Manufacturing overhead is entirely variable and is $11.00 per direct labor-hour. - The variable selling and administrative expense per unit sold is $3.80. The fixed selling and administrative expense per month is $50,000. The unit product cost is closest to: A. $30.80 B. $82.20 C. $93.20 D. $113.00

D. $113.00

Pabon Corporation makes one product. Budgeted unit sales for August and September are 11,100 and 12,600 units, respectively. The ending finished goods inventory equals 40% of the following month's sales. The direct labor wage rate is $19.10 per hour. Each unit of finished goods requires 2.5 direct labor-hours. The estimated direct labor cost for August is closest to: A. $222,300 B. $389,000 C. $29,250 D. $555,750

D. $555,750

The selling and administrative expense of Choo Corporation is based on budgeted unit sales, which are 4,600 units for August. The variable selling and administrative expense is $7.30 per unit. The budgeted fixed selling and administrative expense is $51,980 per month, which includes depreciation of $6,440 per month. The remainder of the fixed selling and administrative expense represents current cash flows. The cash disbursements for selling and administrative expenses on the August selling and administrative expense budget should be: A. $85,560 B. $33,580 C. $45,540 D. $79,120

D. $79,120

Sparks Corporation has a cash balance of $15,900 on April 1. The company must maintain a minimum cash balance of $13,000. During April, expected cash receipts are $62,000. Cash disbursements during the month are expected to total $73,000. Ignoring interest payments, during April the company will need to borrow: A. $13,000 B. $4,900 C. $11,000 D. $8,100

D. $8,100

Parwin Corporation plans to sell 36,000 units during August. If the company has 14,500 unit on hand at the start of the month, and plans to have 15,500 units on hand at the end of the month, how many units must be produced during the month? A. 35,000 B. 51,500 C. 50,500 D. 37,000

D. 37,000

There are various budgets within the master budget. One of these budgets is the production budget. Which of the following BEST describes the production budget? A. It details the required raw materials purchases. B. It summarizes the costs of producing units for the budget period. C. It details the required direct labor hours. D. It is calculated based on the sales budget and the desired ending inventory.

D. It is calculated based on the sales budget and the desired ending inventory.

Which of the following is true regarding the contribution margin ratio of a company that produces only a single product? A. The contribution margin ratio equals the selling price per unit less the variable expense ratio. B. As fixed expenses decrease, the contribution margin ratio increases. C. The contribution margin ratio will decline as unit sales decline. D. The contribution margin ratio multiplied by the selling price per unit equals the contribution margin per unit.

D. The contribution margin ratio multiplied by the selling price per unit equals the contribution margin per unit.

When preparing a direct materials budget, the required purchases of raw materials in units equals: A. raw materials needed to meet the production schedule - desired ending inventory of raw materials - beginning inventory of raw materials. B. raw materials needed to meet the production schedule + desired ending inventory of raw materials + beginning inventory of raw materials. C. raw materials needed to meet the production schedule - desired ending inventory of raw materials + beginning inventory of raw materials. D. raw materials needed to meet the production schedule + desired ending inventory of raw materials - beginning inventory of raw materials.

D. raw materials needed to meet the production schedule + desired ending inventory of raw materials - beginning inventory of raw materials.

In two companies making the same product and with the same total sales and total expenses, the contribution margin ratio will be lower in the company with a higher proportion of fixed expenses in its cost structure. True or False?

False

The production budget is typically prepared prior to the sales budget. True or False?

False

The selling and administrative expense budget lists all costs of production other than direct materials and direct labor. True or False?

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. True or False?

False

Cash collections in a schedule of cash collections typically consist of collections on sales made to customers in prior periods plus collections on sales made in the current budget period. True or False?

True

If the variable expense per unit decreases, and all other factors remain the same, the contribution margin ratio will increase. True or False?

True

In a Cost-Volume-Profit graph (sometimes called a break-even chart), unit volume is represented on the horizontal (X) axis and dollars on the vertical (Y) axis. True or False?

True

In the manufacturing overhead budget, the non-cash charges (such as depreciation) are deducted from the total budgeted manufacturing overhead to determine the expected cash disbursements for manufacturing overhead. True or False?

True

The direct labor budget begins with the required production in units from the production budget. True or False?

True

The selling and administrative budget is typically prepared before the cash budget. True or False?

True


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