Accounting FINAL YGG

Cainas Cookies wants to lease new kitchen space at a cost of $12,000 a year for the next 5 years. The new space will cost an upfront renovation of $5,000. In the third year there will be maintenance required on the walk in coolers, for an estimated cost of $3,000. At the end of the lease, Cainas feels she can sell the leasehold improvements for $4,000. Assuming a 10% rate of return, to solve for the present value of the lease, Cainas needs to solve for:

$12,000 (PV ann n = 5 I = 10%) + $5,000 + $3,000 (PV ss n = 3 I = 10%) + $4,000 (PV ss n = 5 I = 10%)

A bakery decides to lease a commercial stove with the following payments:Years 1-3: $3,000 per year Years 4 -6 $4,000 per year Assuming an 8% rate, what is this lease worth today?A.

$3,000 (PV ann n = 3 I = 8%) + $4,000 (PV ann n = 6 I = 8% - PV ann n = 3 I = 8%)

Balance scorecard matching problem

(memorize)

All of the following are relevant to decision to replace equipment EXCEPT:

cost of the old equipment

A balanced scorecard is used by management to provide a more comprehensive look at the company's performance. It includes all but which of the following aspects?

customer service

which of the following are expenses that would not affect the cash payments budget

depreciation expense

A balanced scorecard can be used to replace a company's income statement to measure more aspects of the company's performance than just financial performance and provides investors and creditors a more comprehensive view of the organization.

false

depreciation expense affects the budgeted income statement but not the budgeted balance sheet

false

Short- term decisions

generally covers a short time period (a year or less) using "relevant" information regarding cost behavior to make decisions

The Pumpkin Patch is thinking of discontinuing its white pumpkin line. The line currently has a contribution margin of $50,000, and fixed costs are $65,000, of which $5,000 are not avoidable. What would be the impact on operating income by getting rid of the white pumpkin line?

increase income by 10,000

"Number of new products developed" would be a key performance indicator (KPI) for which of the four balanced scorecard perspectives?

internal business

Cainas Cookies purchases Gigi's Cupcakes for $10,000,000 to expand operations and expects to earn a 12% return each year. When evaluating Gigi's Cupcakes, Cainas will most likely evaluate it as a:

investment center

employee retention rates would be a key performance in which of the four balanced scorecard perspectives

learning and growth

hours of training would be a key performance indicator for which of the four balanced scorecard perspective?

learning and growth

which of the following is a potential disadvantage of participative budgeting?

managers may build slack into their budgets

the legal department for Coca-Cola would be considered a

cost center

A bakery is trying to determine if it should purchase new kitchen equipment or refurbish it's old equipment. If it purchases new equipment it feels revenues will increase $20,000 for the next 3 years, with an increase in annual maintenance costs of $3,000 per year. It can purchase the equipment today for $15,000. At the end of the three years it expects it can sell the equipment for $1,500. Assuming it wants a 5% return, it needs to solve for:

+$17,000 (PV ann n = 3 I = 5%) - $15,000 + $1,500 (PV ss n = 3 I = 5%)

A bakery decides it is going to purchase a $20,000 stove. If it buys the stove, it expects revenue to increase by $15,000 with maintenance costs to increase by $2,000 per year. If the stove has an estimated life of 5 years and salvage value of $2,000, assuming an 8% rate, how can we determine if it should by the stove?

-$20,000 +$13,000 (PV ann n = 5 I = 8%) + $2,000 (PV ss n = 5 I = 8%)

You are given the following budgeted information:Direct materials: $5.00 per lb, 2 lbs. per unit Direct Labor $15 per hour, 1 hr to make a unit The company purchased 2,000 lbs. of material for $9,000 and used 1,800 lbs. to make 950 units. The direct materials price variance is:

1,000 F

You are given the following budgeted information:Direct materials: $3.00 per lb, 3 lbs. per unit Direct Labor $15 per hour, 2 hrs to make a unit The company purchased 3,500 lbs. of material for $12,250. The company used 3,200 lbs. of material and produced 1,000 units. The direct materials price variance is:

1750 U

ABC Company estimated the following sales for the first quarter of 2016: January: 1,000 units, February: 1,500 units, March: 1,800 units. The sales price is budgeted at $5 per unit. All sales are on credit, with 40% of the sale collected in the same month and 60% collected the following month. The sales budget for the first quarter is:

21,500

Selena's Sweets is preparing cash budgets for the first two months of 2016. Purchases of materials in December were $23,500. Budgeted purchases are $20,500 for January and $26,000 for February. All are credit purchases, and 10% paid in the same month, 60% the following month, and 30% two months after the purchase. The cash disbursements for February are budgeted to be:

21950

You are given the following budgeted information:Direct materials: $3.00 per lb, 3 lbs. per unit Direct Labor $15 per hour, 2 hrs to make a unit The company produced 1,000 units, and worked a total of 2,200 hours for a cost of $30,800. The direct labor rate variance is:

2200 F

Suppose Bookholders sells 1,000 used textbooks per day at an average price of $30, with a 20% increase in sales on Fridays and Saturdays. Assume that Bookholders cost is 75% of the selling price it charges retail customers. What is Bookholder's Budgeted Sales for the next week (7 days):

222,000

Suppose Bookholders sells 1,000 used textbooks per day at an average price of $30. Assume that Bookholders cost is 75% of the selling price it charges retail customers. They have no beginning inventory, but it wants to have a three day supply of ending inventory. Assume that Selling and admin expenses are $1,000 per day. What is Bookholder's Budgeted purchases for the next week (7 days):

225,000

Cainas Company has the following information:Actuals:Direct materials: Purchased 1,000 lbs at $2.00 per lb. Used 8,000 lbs. to produce 4,200 units.Standard costs:Direct materials, 2 lbs. of material per unit at $2.25 per lb.The DM price variance is:

250 F

ABC Company began operations on 1/1/15. Budgeted sales are as follows: January $25,000, February $30,000 and March: $32,000. 10% are expected to be cash sales, with the remaining 90% on credit. Of the credit sales, 50% are expected to be collected in the same month, 40% the following month, and 10% collected two months after the sale. What are the predicted cash collections for February?

25500

You are given the following budgeted information:Direct materials: $3.00 per lb, 3 lbs. per unit Direct Labor $15 per hour, 2 hrs to make a unit The company produced 1,000 units, and worked a total of 2,200 hours for a cost of $30,800. The direct labor efficiency variance is:

3,000 U

Cainas Cookies wants to have an ending inventory equal to 10% of the next month's sales. In January, they have a beginning inventory of 5,000 units and expect to sell 32,000 units in January. February's sales are expected to be 35,000 units and March's are expected to be 38,000 units. How many units should Cainas Cookies produce in February?

35300

Cainas predicts the following sales: January $20,000, February $30,000 March $40,000. 20% of the sales are made in cash, with the remaining credit sales collected 50% in the current month and 50% the following month. The budgeted cash collections for March are:

36000

Doggie Days wants to have an ending inventory equal to 20% of the next month's sales. In January, they have a beginning inventory of 9,000 units and expect to sell 33,000 units in January. February's sales are expected to be 35,000 units and March's are expected to be 40,000 units. How many units should Doggie Days produce in February?

36000 units

Loyal Pet Company expects to sell 5,000 dog treats in January and expects a 10% increase each month. If selling price is $3 each, what is the total sales revenue reflected in the sales budget for the first quarter?

49,650

You are given the following budgeted information:Direct materials: $5.00 per lb, 2 lbs. per unit Direct Labor $15 per hour, 1 hr to make a unit The company purchased 2,000 lbs. of material for $9,000 and used 1,800 lbs. to make 950 units. The direct materials quantity variance is:

500 F

How do managers make a decision?

6 steps: 1. define business goals: determine what they are trying to achieve 2. identify alternative course of action 3. gather and analyze RELEVANT information. relevant for short term decision making includes: -expected future benefits vs costs -differences between alternatives -the information must have impact on the decision

You are given the following budgeted information:Direct materials: $3.00 per lb, 3 lbs. per unit Direct Labor $15 per hour, 2 hrs to make a unit The company purchased 3,500 lbs. of material for $12,250. The company used 3,200 lbs. of material and produced 1,000 units. The direct materials quantity variance is:

600 U

The Disney store expects to sell 2,000 stuffed animals in November and 5,000 in December. It also wants to have 10% ending inventory on hand at the end of each month. If the cost per stuffed animal is $3 each, what is the purchases budget for Disney for the month of November?

6900

following sales for the first quarter of 2016: January: 1,000 units, February: 1,500 units, March: 1,800 units. The sales price is budgeted at $5 per unit. All sales are on credit, with 40% of the sale collected in the same month and 50% collected the following month, and 10% 2 months after the sale. The cash collections anticipated in March are:

7850

Cainas Company has the following information:Actuals:Direct materials: Purchased 1,000 lbs at $2.00 per lb. Used 8,000 lbs. to produce 4,200 units.Standard costs:Direct materials, 2 lbs. of material per unit at $2.25 per lb.The DM quantity variance is:

900 F

Financial Perspective

Common KPIs: -sales revenue growth -sales margin -gross margin percentage -capital turnover -ROI -residual income -earnings per share

Customer Perspective

Common KPIs: -average customer satisfaction rating -percentage of market share -increase in the number of customers -number of repeat customers -rate of on-time deliveries

Learning and Growth perspective

Common KPIs: -hours of employee training -employee satisfaction -employee turnover -percentage of processes with real-time feedback -percentage of employees with access to realtime data -number of employee suggestions implemeneted -percentage of employees involved in problem solving teams -employee rating of communication and corporate culture

Internal Business Perspective

Common KPIs: -number of new products developed -new product development time -defect rate -manufacturing lead time -yield rate -number of warranty claims received -average customer wait time for customer service -average repair time

which of the following is not an advantage of decentralization?

achieving goal congruence

which of the following expenses do not appear on the budget

bad debts expense

which term describes where a manager intentionally over budgets expenses and under budgets revenues

budgetary slack

the sales budget is used to prepare all but which of the following budgets?

capital expenditures budget

The legal department for Apple, Inc. files for patents and is general counsel for any litigation affected the company. The costs incurred include salaries for attorneys, paralegals, and any filing fees incurred for patents, court costs, etc. This is an example of a:

cost center

A company is trying to decide whether or not to accept a special order. Normal selling price per unit is $40 per unit, with variable costs per unit of $15 and fixed costs per unit of $10. If the company accepts the special order for 500 units, the selling price will be $20 per unit. How will operating income be affected?

operating income will increase by 2500

if a special order is accepted for 500 units, with a selling price of $20 per unit and a variable cost per unit of $15, how will operating income be affected?

operating income will increase by 2500

Costs of rework of defective parts or costs of machine downtime for Toyota would be a typical measure for which of the following aspects of the balanced scorecard?

operational efficiency

the manager of the Target store in New Tampa is most likely in a charge of

profit center

budgets are used to accomplish all of the following EXCEPT:

recording actual results

which of the budgets is prepared first

sales budget

which of the following budgets must be prepared first?

sales budget

Annie's Apple Orchard harvests Granny Smith Apples and incurs joint costs of $2,000. Once they are picked, she can either sell the apples or produce apple cider. She gives you the following information:Sales price of apples: $.30 each, quantity of 10,000 apples Sales price after processing to apple cider: $.35 per gallon. Annie can sell 9,000 gallons but the additional costs to process it further are $250What should Annie do?

sell the apples at split off, because net realizable value is higher

which of the following is not an advantage of standard costs?

standards can cause unintended behavioral consequences

TOP HAT questions

study 'em

You are trying to decide if you should trade in your old car for a new one. You can transfer your tags from the old car to the new one, and your car insurance is currently $100 per month but will increase to $125 per month. Which of the following costs are relevant to your decision?

the $25 difference in cost you will now pay for insurance

the person most likely responsible for the direct labor variance is

the production manager

a manager should always reject a special order if

the special order price is less than the variable cost of the order

what is true of price setters?

they use a cost plus approach to pricing their products

Having a bonus based on the direct materials price variance can motivate purchasing agents to buy inferior goods

true