REVIEW CH 5,7,8

Lester Company has a single product. The selling price is $50 and the variable cost is $35.00 per unit. The company's fixed expense is $100,000 per month. What is the company's unit contribution margin? (Round your answer to 2 decimal places.)

$15

SanFran Sales has projected the following balances for the end of the fiscal period: Sales $ 234,000 Cash 14,900 Cost of Goods Sold 149,000 Accounts Receivable 37,000 Inventory 54,000 Selling expenses 44,000 Interest expenses 22,000 Equipment 134,000 Accumulated depreciation 72,000 What are total assets at the end of the period?

$167,900

Houghton Company maintains warehouses that stock items carried by its e-retailer clients. When one of Houghton's clients receives an order from an online customer, the order is forwarded to Houghton. Houghton then pulls the item from the warehouse, packs it and ships it to the customer. Houghton uses a predetermined variable overhead rate based on direct labor-hours. According to the company's records, 0.04 direct labor-hours are required to fulfill an order for one item and the variable overhead rate is $7.20 per direct-labor hour. During July, Houghton shipped 310,000 orders using 12,000 direct labor-hours. The company incurred a total of $85,200 in variable overhead costs. The variable overhead rate variance during July was:

$1,200 favorable

Let q1 represents client visits and q2 represents hours of operations. The electricity cost for Blissful Spa depends on both client-visits and the hours of operations and its cost formula is $470 + $0.20q1 + $2.70 q2. If the actual number of client visits is 870 and the salon was open for 270 hours during the month, the flexible budget amount for electricity is:

$1,373

Parker Company has provided the following data for the most recent year: net operating income, $45,000; fixed expense, $93,000; sales, $230,000; and CM ratio, 60%. What is the company's total contribution margin?

$138,000

Khan Corporation has budgeted the unit sales for April to be 5,000 units. The sales price is $25 per unit, and production costs are $10 per unit. Monthly utility expenses are estimated to be $2,000 plus $2 per unit, whereas selling expenses are estimated to be $12,000. The company pays a monthly rent of $2,000. What would be the utility expenses on the company's flexible budget if actual unit sales for April were 6,000 units?

$14,000 The amount of utility expenses on the flexible budget for 6,000 units would be $14,000. $14,000 = $2,000 + ($2 × 6,000 units).

Waggoner Company has a cash balance of $39,500 on April 1. The company is required to maintain a cash balance of $25,000. During April expected cash receipts are $187,000. Expected cash disbursements during the month total $216,400. During April the company will need to borrow:

$14,900

Base Corporation has sales of $100,000, variable costs of $40,000, and fixed costs of $30,000 currently. The company is expecting a $36,000 increase in sales. What is the change in contribution margin for the company?

$21,600

Mochel Company employs a standard cost system in which direct materials inventory is carried at standard cost. The company has established the following standard for the direct labor costs of one unit of product: Standard Hours Standard Rate Standard Cost 1.3 hours $23.00/hour $29.90 The total factory wages for June were $1,316,000, 80 percent of which were for direct labor. The company manufactured 35,000 units of product during June using 44,800 direct labor hours. The direct labor rate variance for June is: (Do not round intermediate calculations.)

$22,400 unfavorable

Budget Solutions has determined from its flexible budget that selling costs for actual level activity for a period should have been $25,000. Actual selling costs incurred during the period were $28,000. What is the amount and direction of variance in selling costs?

$3,000 unfavorable The amount of variance in selling costs is $3,000 ($28,000 - $25,000). Because the actual costs are higher, the variance is unfavorable.

Irwin Company has budgeted direct labor hours for the coming three months as follows: July, 6,100 hours; August, 7,700 hours; and September, 7,900 hours. Manufacturing overhead is budgeted at $12,900 per month plus $2.90 per direct labor hour. What is the budgeted manufacturing overhead for August?

$35,230

Khan Corporation has budgeted the unit sales for April to be 5,000 units. The sales price is $25 per unit, and production costs are $10 per unit. Monthly utility expenses are estimated to be $2,000 plus $2 per unit, whereas selling expenses are estimated to be $12,000. The company pays a monthly rent of $2,000. What is the net operating income in the company's planning budget?

$49,000

Fausto Company employs a standard cost system in which direct materials inventory is carried at standard cost. The company has established the following standard for the materials costs of one unit of product: Standard Quantity Standard Price Standard Cost 6.0 pounds $6.80/pound $40.80 During June, the company purchased 163,000 pounds of direct material at a total cost of $1,124,700. The company manufactured 23,000 units of product during June using 138,920 pounds of direct materials. The direct material quantity variance for June is:

$6,256 unfavorable

Simpson Company makes and sells a single product. Budgeted sales for April are $1,130,000. Gross margin is budgeted at 20% of sales. If the net income for April is budgeted at $153,000, budgeted selling and administrative expenses must be:

$73,000

Gamma Inc. has forecast sales as follows: July, 12,500 units; August, 11,000 units; September, 9,000 units; and October, 6,500 units. Each unit sells for $11. Gamma's selling and administrative budget is $1,800 fixed per month plus $1.25 per unit sold. What is the budgeted selling and administrative expense for October?

$9,925

The management of Nicto Company plans to have an inventory at the end of each month equal to 20% of the next month's sales. Budgeted sales in units over the next three months are 79,000 in October, 119,000 in November, and 99,000 in December. Budgeted production for November would be:

115,000 units

Herman Corp. has two products, A and B, with the following total sales and total variable costs: Product A Product B Sales $ 6,500 $ 23,000 Variable expenses $ 4,140 $ 20,640 What is the overall contribution margin ratio?

16%

Assume that Dollar-town Toys has fixed costs of $145,530. Each unit generates variable costs of $.34 and sells for $1.00. What is the break-even point in units?

220,500 units

Parker Company has provided the following data for the most recent year: net operating income, $35,400; fixed expense, $95,400; sales, $218,000; and CM ratio, 60%. The margin of safety in percentage form is: (Round your answer to 2 decimal places.)

27.06%

Team Corporation has sales of $1 million, fixed expenses of $200,000, and variable expenses of $650,000 for the month of March. What is the contribution margin ratio of the company for the month of March?

35%

Dakota Products has a production budget as follows: May, 15,500 units; June, 18,500 units; and July, 23,500 units. Each unit requires 4 pounds of raw material and 3 direct labor hours. Dakota desires to keep an inventory of 10% of the next month's requirements on hand. On May, 1 there were 6,200 pounds of raw material in inventory. Direct labor hours required in May would be:

46,500 hours

Atlas Corporation sells 100 bicycles during a month at a price of $500 per unit. The variable expenses amount to $300 per bicycle. How much does profit increase if it sells one more bicycle?

500/U - 300/U = UNIT CONTRIBUTION MARGIN = 200/U

Dakota Products has a production budget as follows: May, 20,000 units; June, 23,000 units; and July, 28,000 units. Each unit requires 3 pounds of raw material. Dakota desires to keep an inventory of 10% of the next month's requirements on hand. On May 1, there was 6,000 pounds of material in inventory. Material purchases in May would be:

60,900 lbs

If sales increase from $470,000 to $532,040, and if the degree of operating leverage is 6.70, net operating income should increase by: (Do not round your intermediate calculations and round your final answer to 2 decimal places.)

88.44%

Sales Volume Present sales - $100,000 var expenses- $50,000 contrib margin- $50,000 fixed expenses- $20,000 net operating income- $30,000 If sales increase by $50,000, what will be the net operating income for the company?

Profit = (CM Ratio × Sales) - Fixed Expenses = (50% × $150,000) - $20,000= $55,000 cm RATIO = 100,000-50,000=50,000/100,000 = 50%

Identify the major sections of the cash budget from the following.

The cash excess or deficiency section The disbursements section The financing section The receipts section The cash budget is composed of four major sections: the receipts section, the disbursements section, the cash excess or deficiency section, and the financing section.

A planning budget is prepared to determine the costs that should have been incurred for the actual level of activity during the period.

false

Marino Company is currently selling 10,000 units of its product per month at $9.90 per unit for total monthly sales of $99,000. The company's variable expenses are $3.95 per unit and its monthly fixed expenses total $9,900. An increase in the advertising budget of $3,900 is expected to increase its monthly sales by 1,000 units for total monthly sales of $108,900. This proposal will cause net operating income to:

increase by $2,050

A company's static budget estimate of total overhead costs was $387,600 based on the assumption that 17,000 units would be produced and sold. The company estimates that 25% of its overhead is variable and the remainder is fixed. The total overhead cost according to the flexible budget if 21,000 units were produced and sold is: (Do not round intermediate calculations.)

$410,400