Managerial Accounting Exam 2

Alyeski Tours operates day tours of coastal glaciers in Alaska on its tour boat the Blue Glacier. Management has identified two cost drivers—the number of cruises and the number of passengers—that it uses in its budgeting and performance reports. The company publishes a schedule of day cruises that it may supplement with special sailings if there is sufficient demand. Up to 80 passengers can be accommodated on the tour boat. Data concerning the company's cost formulas appear below: Fixed Cost per MonthCost per CruiseCost per PassengerVessel operating costs $5,200 $480.00 $2.00 Advertising $1,700 Administrative costs$4,300 $24.00 $1.00 Insurance$2,900

"Actual cruises" IS 24 "Actual passengers" IS 1,400-- In that order, first and second . . . everything else is correct https://www.chegg.com/homework-help/questions-and-answers/chapter-9-3-alyeski-tours-operates-day-tours-coastal-glaciers-alaska-tour-boet-blue-glacie-q29496574

Film Studio, Inc. has beginning retained earnings of $80,000 and expects to earn net income of $70,000 during the budget period. What would be the budgeted ending balance in retained earnings if the company declares and pays dividends of $50,000?

$100,000

Activity Cost PoolTotal CostTotal ActivityActivity RateMachine setups$20,000 200setups$100per setupSpecial processing$150,000 10,000MHs$15per machine-hourGeneral factory$200,000 20,000direct labour-hours$10per direct labour-hourTotal overhead costs$370,000 Assuming Product A used 100 setups, no special processing, and 10,000 direct labor-hours, what is the total overhead cost assigned to Product A?

$110,000

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

. Fuson Corporation makes one product and has provided the following information to help prepare the master budget for the next four months of operations: Budgeted selling price per unit $ 118 Budgeted unit sales (all on credit): October 9,600 November 10,100 December 13,700 January 11,300 The ending finished goods inventory should equal 10% of the following month's sales. The ending raw materials inventory should equal 10% of the following month's raw materials production needs. The estimated finished goods inventory balance at the end of November is closest to:

$145,905

Pinnacle Corporation is a manufacturing company operating numerous machines, which require regular maintenance to keep them operational. The fixed portion of maintenance expense is $3,000 per month. Maintenance costs are also incurred at the rate of $5 per batch and $0.50 per unit produced. The company produced 23,000 units in 800 batches during a particular month. What budgeted maintenance expense for this month?

$18,500

Annika Company uses activity-based costing. The company has two products: A and B. The annual production and sales of Product A is 4,000 units and of Product B is 1,000 units. There are three activity cost pools, with total cost and activity as follows. The activity-based costing cost per unit of Product A is closest to:

$18.15

Ostler Hotel bases its budgets on guest-days. The hotel's static budget for April appears below: Budgeted number of guest-days 8,700 Budgeted variable overhead costs: Supplies (@$7.00 per guest-day) $ 60,900 . . . . The total overhead cost at an activity level of 9,700 guest-days per month should be:: _

$223,950

Bippus Corporation manufactures two products: Product X08R and Product P56L. The company uses a plantwide overhead rate based on direct labor-hours. It is considering implementing an activity-based costing (ABC) system that allocates its manufacturing overhead to four cost pools. The following additional information is available for the company as a whole and for Products X08R and P56L.Using the plantwide overhead rate, how much manufacturing overhead cost would be allocated to Product P56L?

$249,200

The activity rate for machine setups is ________.

$25 per setup

Striker Company estimates its expected cash receipts for the period to be $80,000 and its expected cash disbursements to be $70,000. The beginning cash balance for the period was $5,000. The management wants to maintain a minimum cash balance of $40,000. How much cash will the company need to borrow?

$25,000

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

Stut Corporation, a retailer, plans to sell 28,000 units of Product X during the month of August. If the company has 6,000 units on hand at the start of the month, and plans to have 9,000 units on hand at the end of the month, how many units of Product X must be purchased from the supplier during the month?

$31,000

Pro Clean Company, a manufacturer of hand sanitizers, intends to produce 40,000 units in the third quarter and 35,000 units in the fourth quarter. Each unit requires 0.50 direct labor-hours (DLHs) and the cost of direct labor per hour is $18. What would be the total direct labor cost for the fourth quarter?

$315,000

Annual Overhead Costs of Max CorporationProduction overhead $800,000 Selling and administrative overhead 400,000 Activity Cost Pools of Max Corporation Assembling UnitsProcessing OrdersSupporting CustomersOtherProduction overhead 40% 35% 10% 15%Selling and administrative overhead 5% 50% 25% 20% What is the amount of production overhead allocated to the assembling unit cost pool?

$320,000

5. Sioux Corporation is estimating the following sales for the first four months of next year:Sales are normally collected 60% in the month of sale and 40% in the month following the sale. Based on this information, how much cash should Sioux expect to collect during the month of April?

$358,000

For the budget period ending December 31 of the current year, Aaron Corporation estimates its ending balances for cash as $4,000, accounts receivable as $16,000, finished goods inventory as $12,000, and raw materials inventory as $8,000. Invoices relating to raw materials in the amount of $14,000 are expected to be unpaid as of December 31. What is the amount of total current assets that will be reported on the budgeted balance sheet?

$40,000

Smarton Company is in the process of preparing its budgeted income statement. It has determined its estimated gross margin to be $90,000. The company also expects to incur selling and administrative expenses of $30,000 and interest expense of $12,000. What is Smarton's budgeted net income?

$48,000

William Corporation has a contract with the labor union which guarantees its workers pay for at least 40,000 hours every quarter. Based on its direct labor budget for the current year, the company estimated it will need 39,000 direct labor-hours during the fourth quarter to produce 13,000 units of finished goods. Each unit requires 3 direct labor-hours (DLHs) and the cost of direct labor per hour is $12 per hour. What is the total direct labor cost for the fourth quarter?

$480,000

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 is the net operating income in the company's planning budget?

$49,000

Bailey Corporation manufactures orange safety suits for road workers. The following information relates to the corporation's purchases and use of material for April: Material purchased 12,000 yards Material used in production 10,000 yards Standard material allowed for suits produced 10,800 yards The company's materials price variance for April was $3,000 Favorable. Its materials quantity variance for April was $5,000 Favorable. What does the company use as a standard price per yard of material for its safety suits?

$6.25 per yard

Dustman Manufacturing Corporation's most recent production budget indicates the following required production: January February March April Required production (units) 4,000 6,000 5,500 5,000 Each unit of finished product requires 3 feet of raw materials. The company maintains raw materials inventory equal to 2,000 feet plus 10% of the next month's expected production needs. The raw material used in Dustman Manufacturing Corporation's product costs $4.50 per foot. What is the value of raw material that Dustman Manufacturing should plan on purchasing for the month of February?

$80,325

Bellue Incorporated manufactures a single product. Variable costing net operating income was $92,400 last year and its inventory decreased by 3,100 units. Fixed manufacturing overhead cost was $1 per unit for both units in beginning and in ending inventory. What was the absorption costing net operating income last year?

$89,300

Jannusch Corporation makes one product. Budgeted unit sales for July, August, September, and October are 10,000, 11,600, 13,300, and 12,700 units, respectively. The ending finished goods inventory should equal 20% of the following month's sales. The budgeted required production for August is closest to

11,940 Units

The BRS Corporation makes collections on sales according to the following schedule: 45% in month of sale 48% in month following sale 7% in second month following sale April: 120,000 May 100,000 June 140,000 budgeted cash collection in june would be:

119,400

Vineyard Corporation, a manufacturer of fine wines, began the year with 20,000 bottles in inventory. The company estimated the budgeted sales for the four quarters of the current year to be 200,000 bottles, 150,000 bottles, 250,000 bottles, and 400,000 bottles, respectively. The management feels that an ending inventory of 10% of the subsequent quarter's sales is appropriate. What are the production needs for the first quarter?

195,000 Bottles

Precision Company estimates its machine-hour requirements for the four quarters to be 35,000 hours, 20,000 hours, 15,000 hours, and 30,000 hours respectively. The variable manufacturing overhead rate is $4 per machine-hour. The fixed manufacturing overhead is $50,000 per quarter, which includes $20,000 of depreciation expense. What is the budgeted variable manufacturing overhead for the year? What is the predetermined overhead rate for the year?

1: $400,000 2: $6 per machine hour

Vineyard Corporation, a manufacturer of fine wines, began the year with 20,000 bottles in inventory. The company estimated the budgeted sales for the four quarters of the current year to be 200,000 bottles, 150,000 bottles, 250,000 bottles, and 400,000 bottles, respectively. The management feels that an ending inventory of 10% of the subsequent quarter's sales is appropriate. What is the desired ending inventory for the second quarter?

25,000 bottles

The Fime Corporation uses a standard costing system. The following data have been assembled for December: Actual direct labor-hours worked 5,300 hours Standard direct labor rate $8 per hour Labor efficiency variance $3,200 Unfavorable The standard hours allowed for December's production is:

4,900 hours

Which of the following scenarios demonstrates the leverage effect on net operating income due to the existence of fixed costs?

A 25% increase in sales resulting in a 30% increase in net operating income.

All of the following are reasons for revenue variances EXCEPT ________.

A change in input prices

Which of the following is true when a company determines that its costs should be explained by more than one cost driver?

A flexible budget performance report that is based on more than one cost driver will be more accurate than a flexible budget performance report that is based on just one cost driver.

All of the following are differences between activity-based costing (ABC) and traditional absorption costing except ________.

ABC allocates all manufacturing costs to products

In the second-stage allocation of overhead costs, we use ________ to assign costs to cost objects.

Activity Rates

Paradise Company's planning budget for 10,000 units showed sales of $500,000. The flexible budget for 12,000 units showed sales of $600,000. What is the variance of $100,000 called if this variance was due only to an increase in unit sales?

Activity Variance

An unfavorable variance of $5,000 in sales is determined by comparing the flexible budget (9,000 units) and the planning budget (10,000 units). What type of variance is described?

Activity variance

Which of the following would be classified as a product-level activity?

Advertising a product

In a budgeted income statement, _________ is subtracted from sales to arrive at gross margin.

COGS

Which of the following explains why operating budgets generally span a period of one year?

Companies choose a span of one year to correspond to their fiscal years.

Which of the following will usually be found on an income statement prepared using absorption costing

Contribution Margin: No Gross Margin: Yes

Which of the following is a major factor that should be taken into consideration while planning the desired level of inventories?

Costs of carrying inventory

Which of the following costs at a manufacturing company would be treated as a product cost under variable costing?

Direct Material costs

Which of the following is an allocation base commonly used under the traditional methods for allocation of overhead costs?

Direct labor-hours.

Which of the following costs would not be allocated using ABC?

Direct labor.

There are various budgets within the master budget. One of these is the production budget. Which of the following BEST describes the production budget?

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

Which of the following is not a benefit of self-imposed budgets?

Lower-level managers are encouraged to create budgetary slack since they are more knowledgeable of day-to-day operations.

Which of the following is NOT a column on a flexible budget performance report?

Net Operating Income

Durban Metal Products, Ltd., of the Republic of South Africa makes specialty metal parts used in applications ranging from the cutting edges of bulldozer blades to replacement parts for Land Rovers. The company uses an activity-based costing system for internal decision-making purposes. The company has four activity cost pools as listed below: Activity Cost Pool Activity Measure Activity Rate Order size Number of direct labor-hours $16.85 per direct labor-hour Customer orders Number of customer orders $320.00 per customer order Product testing Number of testing hours $89.00 per testing hour Selling Number of sales calls $1,090.00 per sales call The managing director of the company would like information concerning the cost of a recently completed order for heavy-duty trailer axles. The order required 200 direct labor-hours, 4 hours of product testing, and 2 sales calls. Required: What is the total overhead cost as

Order size: $3,370 Customer Orders: 320 Product Testing: 356 Selling: 2180 Total OH Cost: $6,226

Which of the following costs would not be allocated to products or customers?

Other

The difference between the actual total revenue and budgeted total revenue at the actual level of activity is called a(n) ________.

Revenue Variance

Silver Company makes a product that is very popular as a Mother's Day gift. Thus, peak sales occur in May of each year, as shown in the company's sales budget for the second quarter given below: AprilMayJuneTotalBudgeted sales (all on account)$300,000$500,000$200,000$1,000,000 From past experience, the company has learned that 20% of a month's sales are collected in the month of sale, another 70% are collected in the month following sale, and the remaining 10% are collected in the second month following sale. Bad debts are negligible and can be ignored. February sales totaled $230,000, and March sales totaled $260,000. Required: 1. Prepare a schedule of expected cash collections from sales, by month and in total, for the second quarter. 2. What is the accounts receivable balance on June 30th?

SEE CHEGG FOR PT 1 AR @JUNE 30: $210,000

The budgeting process begins with the preparation of the ______ budget.

Sales

The usual starting point for the master budget is the:

Sales forecast/sales budget

Gig Harbor Boating is the wholesale distributor of a small recreational catamaran sailboat. Management has prepared the following summary data to use in its annual budgeting process: Budgeted unit sales 460Selling price per unit$1,950Cost per unit$1,575Variable selling and administrative expense (per unit)$75Fixed selling and administrative expense (per year)$105,000Interest expense for the year$14,000 Required: Prepare the company's budgeted income statement for the year.

Sales$897,000 Cost of goods sold(724,500) Gross margin 172,500 Selling and administrative expenses(139,500) Net operating income33,000 Interest expense(14,000) Net incomet$19,000

Down Under Products, Ltd., of Australia has budgeted sales of its popular boomerang for the next four months as follows: Unit SalesApril 50,000 May 75,000 June 90,000 July 80,000 The company is now in the process of preparing a production budget for the second quarter. Past experience has shown that end-of-month inventory levels must equal 10% of the following month's unit sales. The inventory at the end of March was 5,000 units. Required: Prepare a production budget by month and in total, for the second quarter.

See bookmarks in Chegg

An unfavorable variance of $5,000 in cost of goods sold is determined by comparing the actual results (10,000 units) and the flexible budget (10,000 units). What type of variance is described?

Spending Variance

The difference between the actual cost and budgeted cost at the actual level of activity is called a(n) ________.

Spending Variance

The operations vice president of Security Home Bank has been interested in investigating the efficiency of the bank's operations. She has been particularly concerned about the costs of handling routine transactions at the bank and would like to compare these costs at the bank's various branches. If the branches with the most efficient operations can be identified, their methods can be studied and then replicated elsewhere. While the bank maintains meticulous records of wages and other costs, there has been no attempt thus far to show how those costs are related to the various services provided by the bank. The operations vice president has asked your help in conducting an activity-based costing study of bank operations. In particular, she would like to know the cost of opening an account, the cost of processing deposits and withdrawals, and the cost of processing other customer transactions.The Westfield branch of Se

Teller wages: Opening accounts = $160,000 × 5% = $8,000 Processing deposits and withdrawals = $160,000 × 65% = $104,000 Processing other customer transactions = $160,000 × 20% = $32,000 Other activities = $160,000 × 10% = $16,000 Assistant branch manager salary: Opening accounts = $75,000 × 15% = $11,250 Processing deposits and withdrawals = $75,000 × 5% = $3,750 Processing other customer transactions = $75,000 × 30% = $22,500 Other activities = $75,000 × 50% = $37,500 Branch manager salary: Opening accounts = $80,000 × 5% = $4,000 Processing deposits and withdrawals = $80,000 × 0% = $0 Processing other customer transactions = $80,000 × 10% = $8,000 Other activities = $80,000 × 85% = $68,000

Which of the following is not one of the reasons that organizations use budgets?

The budgeting process enables managers to uncover bottlenecks as they occur.

The value of the ending inventory is calculated by multiplying the number of units in ending inventory by the ________.

Unit Product cost

The following is a schedule of the projected unit sales of Western Company, which manufactures casual wear. Each unit sells for $25. The company began the period with a beginning accounts receivable balance of $10,000. Choose the correct answer from the options provided. Quarter FirstSecondThirdFourth Year Budgeted unit sales1,5001,3001,4001,300 5,500 Percentage of sales collected in the quarter of the sale75%Percentage of sales collected in the quarter after the sale25% Knowledge Check 01 What is the amount of budgeted sales revenue for the fourth quarter?

What is the amount of budgeted sales revenue for the fourth quarter? $32,500 What is the amount of cash that is expected to be collected during the second quarter as a result of sales made during the first quarter? $9,375 What is the total amount of expected cash collections for the third quarter? $34,375

Companies prepare direct labor budgets to ________.

avoid labor shortages

Shipping orders to a grocery store would be considered a(n) ________.

batch-level activity

For a production budget, the ______ is the beginning inventory for the year.

beginning inventory for the first quarter

Ordering materials, setting up machines, assembling products, and inspecting products are examples of ________.

cost pools

First-stage allocation of overhead costs to each cost pool is accomplished using all of the following except________.

grouping batch and unit level activities

The direct labor budget of Yuvwell Corporation for the upcoming fiscal year contains the following details concerning budgeted direct labor-hours: 1st Quarter2nd Quarter3rd Quarter4th QuarterBudgeted direct labor-hours8,0008,2008,5007,800 The company uses direct labor-hours as its overhead allocation base. The variable portion of its predetermined manufacturing overhead rate is $3.25 per direct labor-hour and its total fixed manufacturing overhead is $48,000 per quarter. The only noncash item included in fixed manufacturing overhead is depreciation, which is $16,000 per quarter. Required: 1. Prepare the company's manufacturing overhead budget for the upcoming fiscal year. 2. Compute the company's predetermined overhead rate (including both variable and fixed manufacturing overhead) for the upcoming fiscal year.

http://www.bus.tu.ac.th/usr/anchalee/ac202/531/ex9-5.pdf PDOH rate: $9.16

Weller Company's budgeted unit sales for the upcoming fiscal year are provided below: 1st Quarter2nd Quarter3rd Quarter4th QuarterBudgeted unit sales15,00016,00014,00013,000 The company's variable selling and administrative expense per unit is $2.50. Fixed selling and administrative expenses include advertising expenses of $8,000 per quarter, executive salaries of $35,000 per quarter, and depreciation of $20,000 per quarter. In addition, the company will make insurance payments of $5,000 in the first quarter and $5,000 in the third quarter. Finally, property taxes of $8,000 will be paid in the second quarter. Required: Prepare the company's selling and administrative expense budget for the upcoming fiscal year.

https://www.chegg.com/homework-help/budgeted-unit-sales-weller-company-upcoming-fiscal-year-prov-chapter-7-problem-7be-solution-9780073527079-exc

You have just been hired by FAB Corporation, the manufacturer of a revolutionary new garage door opening device. The president has asked that you review the company's costing system and "do what you can to help us get better control of our manufacturing overhead costs." You find that the company has never used a flexible budget, and you suggest that preparing such a budget would be an excellent first step in overhead planning and control. After much effort and analysis, you determined the following cost formulas and gathered the following actual cost data for March: Cost FormulaActual Cost in MarchUtilities$20,600 + $0.10 per machine-hour$24,200Maintenance$40,000 + $1.60 per machine-hour$78,100Supplies$0.30 per machine-hour$8,400Indirect labor$130,000 + $0.70 per machine-hour$149,600Depreciation$70,000$71,500 During March, the company worked 26,000 machine-hours and produced 15,000 units. The company had originally p

https://www.chegg.com/homework-help/hired-fab-corporation-manufacturer-revolutionary-new-garage-chapter-8-problem-23pa-solution-9780077386214-exc

The production manager of Rordan Corporation has submitted the following quarterly production forecast for the upcoming fiscal year: 1st Quarter2nd Quarter3rd Quarter4th QuarterUnits to be produced8,0006,5007,0007,500 Each unit requires 0.35 direct labor-hours, and direct laborers are paid $15.00 per hour.

https://www.chegg.com/homework-help/production-manager-rordan-corporation-submitted-following-fo-chapter-7-problem-4e-solution-9781259300165-exc

Jake's Roof Repair has provided the following data concerning its costs: Fixed Costper Month Cost perRepair-HourWages and salaries$23,200 $16.30Parts and supplies $8.60Equipment depreciation$1,600 $0.40Truck operating expenses$6,400 $1.70Rent$3,480 Administrative expenses$4,500 $0.80 For example, wages and salaries should be $23,200 plus $16.30 per repair-hour. The company expected to work 2,800 repair-hours in May, but actually worked 2,900 repair-hours. The company expects its sales to be $44.50 per repair-hour.

https://www.chegg.com/homework-help/questions-and-answers/jake-s-roof-repair-provided-following-data-concerning-costs-fixed-cost-per-month-cost-per--q7512861 (Act. Variance is far right column)

Vulcan Flyovers offers scenic overflights of Mount St. Helens, the volcano in Washington State that explosively erupted in 1982. Data concerning the company's operations in July appear below: Vulcan FlyoversOperating DataFor the Month Ended July 31 ActualResultsFlexibleBudgetPlanningBudgetFlights (q) 48 48 50 Revenue ($320.00q) $13,650 $15,360 $16,000

https://www.chegg.com/homework-help/questions-and-answers/vulcan-flyovers-offers-scenic-overflights-mount-st-helens-volcano-washington-state-explosi-q11311935

Three grams of musk oil are required for each bottle of Mink Caress, a very popular perfume made by a small company in western Siberia. The cost of the musk oil is $1.50 per gram. Budgeted production of Mink Caress is given below by quarters for Year 2 and for the first quarter of Year 3: Year 2 Year 3 FirstSecondThirdFourth First Budgeted production, in bottles60,00090,000150,000100,000 70,000 The inventory of musk oil at the end of a quarter must be equal to 20% of the following quarter's production needs. Some 36,000 grams of musk oil will be on hand to start the first quarter of Year 2. Required: Prepare a direct materials budget for musk oil, by quarter and in total, for Year 2.

https://www.studymode.com/essays/Problem-8-3-74917825.html

All of the following are reasons for preparing a flexible budget with multiple cost drivers EXCEPT ________.

it eliminates the need for performing variance analysis

A reason why absorption costing income statements are sometimes difficult to interpret is that:

they shift portions of the FMFOH from period to period according to the changing inventory levels

The costing method that treats all fixed costs as period costs is

variable costing

A cost that would be included in product costs under both absorption and variable costing is

variable manufacturing costs