Accounting final

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If the total cost function is y​ = 6,500​ + 9X, calculate the variable cost for​ 4,400 units.

JUST 9 x X VARIABLE COST ONLY

A budget serves as much as a control tool as a planning tool because​ ________.

it is a benchmark against which actual performance can be compared

Which of the following is a component of operating​ budgets?

production budget

A manufacturing plant produces two product​ lines: golf equipment and soccer equipment. An example of indirect cost for the soccer equipment line is the​ ________.

property taxes paid on the land and building​ (plant)

Advantage Inc. employs 29 professional cleaners. Budgeted costs total​ $1,955,000 of which​ $1,702,000 is direct costs. Budgeted indirect costs are​ $839,500 and actual indirect costs were​ $795,600. Budgeted professional​ labor-hours are​1,150,000 and actual hours were​ 1,221,875. What is the budgeted direct​ cost-allocation rate?

$1.48 = budgeted direct costs / budgeted labor hours

Which of the following statements is true of activity−based ​costing?

Activity based costing is more suited to companies with high product diversity than companies with single product line.

Blistre Company operates on a contribution margin of​ 30% and currently has fixed costs of​ $550,000. Next​ year, sales are projected to be​ $3,100,000. An advertising campaign is being evaluated that costs an additional​ $120,000. How much would sales have to increase to justify the additional​ expenditure?

400,000= 120,000/.30 additional cost/cmu%

Puritan Apparels is a clothing retailer. Unit costs associated with one of its​ products, Product DCF​ 130, are as​ follows: Direct materials ​$120 Direct manufacturing labor 40 Variable manufacturing overhead 15 Fixed manufacturing overhead 33 Sales commissions​ (2% of​ sales) 5 Administrative salaries 24 Total ​$237 What are the indirect nonmanufacturing variable costs per unit associated with Product​ DCF130?

$5

Which of the following companies will use a process costing​ system?

an oil refining company

Crandle Corp. applies manufacturing overhead costs to products at a budgeted indirectcost rate of​ $60 per direct manufacturing​ labor-hour. A retail outlet has requested a bid on a special order of a necklace. Estimates for this order​ include: Direct materials of​ $40,000; 400 direct manufacturing​ labor-hours at​ $15 per​ hour; and a​ 50% markup rate on total manufacturing costs. Estimated total product costs for this special order equal​ ________.

$7,000: (40,000 + 400x15) x1.5

Which of the following is true of planning in decision​ making?

It helps an organization to select goals and strategies.

Which of the following is true of management accounting​ information?

It helps with the coordination of elements of the value chain.

Sky High sells helicopters. During the current​ year, 130 helicopters were sold resulting in​ $840,000 of sales​ revenue, $260,000 of variable​ costs, and​ $350,000 of fixed costs. The number of helicopters that must be sold to achieve​ $320,000 of operating income is​ ________.

151 - use master equation = x = FC+OI/ CMU

Dartmouth Corporation manufactures two models of office​ chairs, a standard and a deluxe model. The following activity and cost information has been​ compiled: Product Number of Setups Number of Components Number of Direct Labor Hours Standard 18 9 275 Deluxe 32 14 215 Overhead Costs ​$75,000 ​$87,400 Number of setups and number of components are identified as activity−cost drivers for overhead. Assuming an activity−based costing system is​ used, what is the total amount of overhead costs assigned to the standard​ model?

61,200, setups= 20,000/(22+28)=400 components=40,000/(8+12)=2000 (400 x 22)+(2000 x 8)= 24,800

Rally Synthesis Inc. manufactures and sells 100 bottles per day. Fixed costs are​ $22,000 and the variable costs for manufacturing 100 bottles are​ $30,000. Each bottle is sold for​ $1,200. How would the daily profit be affected if the daily volume of sales drop by​ 10%?

9,000 - make sure to find profit and factor in variable cost

Which of the following statements is true of direct​ costs?

A direct cost of one cost object can be an indirect cost of another cost object

Budgets incorporate managements goals and

Express management's operating and financial plan for a specified period - usually a fiscal year

Comfort Corporation manufactures two models of office​ chairs, a standard and a deluxe model. The following activity and cost information has been​ compiled: Product Number of Setups Number of Components Number of Direct Labor Hours Standard 18 6 265 Deluxe 29 12 200 Overhead Costs ​$61,100 ​$64,800 Assume a traditional costing system applies the overhead costs based on direct labor hours. What is the total amount of overhead costs assigned to the standard​ model? (Do not round interim calculations. Round the final answer to the nearest whole​ dollar.)

TRADITIONAL 71,749 [overhead cost/(direct labor hours standard+direct labor hours deluxe)] x direct labor hours standard

Sales Volume Variance

actual budget <-- master budget

Managers use management accounting information to​ ________.

communicate, develop, and implement strategies

​________ is the process of assigning indirect costs to products.

cost allocation

W.T. Ginsburg Engine Company manufactures part ACT31107 used in several of its engine models. Monthly production costs for​ 1,000 units are as​ follows: Direct materials ​$42,000 Direct labor ​10,500 Variable overhead costs ​32,500 Fixed overhead costs ​18,000 Total costs ​$103,000 It is estimated that​ 6% of the fixed overhead costs assigned to ACT31107 will no longer be incurred if the company purchases ACT31107 from the outside supplier. W.T. Ginsburg Engine Company has the option of purchasing the part from an outside supplier at​ $94.75 per unit. If W.T. Ginsburg Engine Company purchases​ 1,000 ACT31107 parts from the outside supplier per​ month, then its monthly operating income will​ ________. (Round any intermediary calculations and your final answer to the nearest​ cent.)

decrease 8,670

In a​ cost-benefit approach, managers should spend resources if the​ ________.

expected benefits to the company exceed the expected costs

Which of the following is true if the production volume​ decreases?

fixed cost per unit increases

Annette has been recently promoted to head of her department. She is responsible for activities that influence revenues and is responsible for controlling the expenses of her department. She is held responsible for maximizing the profits of the department and to ensure that the earnings are ploughed back into the business. Annette is most likely to head a​ (n) ________.

investment center

Which of the following departments is most likely to be a profit​ center?

the consulting department of a law firm

Product−cost cross−subsidization means​that:

when a company undercosts one of its​ products, it will overcost at least one of its other products

Classifying a cost as either direct or indirect depends upon​ ________.

whether the cost can be traced to a particular cost object in an economically feasible way

A favorable efficiency variance for direct labor might indicate that​ ________.

work is scheduled efficiently

Extreme Manufacturing Company provides the following ABC costing​ information: Activities Total Costs Activity−cost drivers Account inquiry ​$320,000 ​16,000 hours Account billing ​$220,000 ​4,000,000 lines Account verification accounts ​$182,000 ​80,000 accounts Correspondence letters ​$25,000 ​4,000 letters Total costs ​$747,000 The above activities are used by Departments A and B as​ follows: Department A Department B Account inquiry hours ​2,200 hours ​3,700 hours Account billing lines ​600,000 lines ​450,000 lines Account verification accounts ​5,000 accounts ​3,000 accounts Correspondence letters ​1,000 letters ​1,400 letters How much of the account billing cost will be assigned to Department​ B?

​$24,750 = total cost / cost driver x department amount


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