acct 2302 final review

The manufacturing overhead budget at Polich Corporation is based on budgeted direct labor-hours. The direct labor budget indicates that 9,000 direct labor-hours will be required in February. The variable overhead rate is $8.90 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $116,100 per month, which includes depreciation of $18,260. All other fixed manufacturing overhead costs represent current cash flows. The company recomputes its predetermined overhead rate every month. The predetermined overhead rate for February should be:

$21.80 per direct labor-hour labor hours x var. man. OH rate = 9000 x 8.9 = 80100 + fixed man. OH (80100 + 116100) = 196,100 / direct labor hours (196,100 / 9000) = 21.8

Sedita Inc. is working on its cash budget for July. The budgeted beginning cash balance is $22,000. Budgeted cash receipts total $194,000 and budgeted cash disbursements total $193,000. The desired ending cash balance is $38,000. The excess (deficiency) of cash available over disbursements for July will be:

$23,000 beginning cash balance + all cash receipts - cash disbursements

In August, one of the processing departments at Tsuzuki Corporation had beginning work in process inventory of $24,100 and ending work in process inventory of $13,100. During the month, $284,000 of costs were added to production. In the department's cost reconciliation report for August, the total cost to be accounted for would be:

$308,100 total cost to be accounted for = beginning work in progress inventory + cost added to production

Management of Plascencia Corporation is considering whether to purchase a new model 370 machine costing $470,000 or a new model 220 machine costing $423,000 to replace a machine that was purchased 5 years ago for $436,000. The old machine was used to make product I43L until it broke down last week. Unfortunately, the old machine cannot be repaired. Management has decided to buy the new model 220 machine. It has less capacity than the new model 370 machine, but its capacity is sufficient to continue making product I43L. Management also considered, but rejected, the alternative of simply dropping product I43L. If that were done, instead of investing $423,000 in the new machine, the money could be invested in a project that would return a total of $450,000. In making the decision to buy the model 220 machine rather than the model 370 machine, the sunk cost was:

$436,000 sunk cost = cost of old machine

Which of the following budgets are prepared before the sales budget?

Budgeted income statement: No Direct labor budget: No

Which of the following is the correct formula to compute the predetermined overhead rate?

Predetermined overhead rate = Estimated total manufacturing overhead costs ÷ Estimated total units in the allocation base

All of the following statements are correct when referring to process costing except:

Process costing would be appropriate for a jeweler who makes custom jewelry to order.

Which of the following is unlikely to be classified as a fixed cost with respect to the number of units produced and sold?

Production supplies.

Which of the following is true regarding the contribution margin ratio of a company that produces only a single product?

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

In a flexible budget, what will happen to fixed costs as the activity level increases?

The fixed cost per unit will decrease.

All of the following are examples of product costs except

depreciation on the company's retail outlets