AC 303 Mid Term

Pederson Company reported the following: Manufacturing costs $1,750,000 Units manufactured 50,000 Units sold 45,000 units sold for $70 per unit Beginning inventory 0 units What is the amount of gross profit margin?

$1,575,000

A company reported revenues of $377,000, cost of goods sold of $122,000, selling expenses of $12,000, and total operating costs of $72,000. Gross margin for the year is ________.

$255,000

Lancelot Manufacturing is a small textile manufacturer using machine-hours as the single indirect-cost rate to allocate manufacturing overhead costs to the various jobs contracted during the year. The following estimates are provided for the coming year for the company and for the Case High School band jacket job. CompanyCase High School Job Direct materials $40,000 $2,000 Direct labor $10,000 $400 Manufacturing overhead costs $45,000 Machine-hours 100,000mh 900mh What are the total manufacturing costs of this job?

$2805

Fixed costs equal $16,000, unit contribution margin equals $35, and the number of units sold equal 1,300. Operating income is ________.

$29,500

The following information is for the Jeffries Corporation: Product A: Revenue$18.00 Variable Cost$14.00 Product B: Revenue$21.00 Variable Cost$13.00 Total fixed costs$143,000 What is the operating income of Jeffries Corporation, assuming actual sales total 35,600 units, and the sales mix is three units of Product A and one unit of Product B?

$35,000

The Marietta Company has fixed costs of $75,000 and variable costs are 75% of the selling price. To realize operating income of $10,000 from sales of 80,000 units, the selling price per unit ________. (Round the answer to the nearest cent.)

$4.25

Manton Manufacturing applies manufacturing overhead costs to products at a budgeted indirect-cost rate of $60 per direct manufacturing labor-hour. A retail outlet has requested a bid on a special order of the Toy Bear product. Estimates for this order include: Direct materials of $79,000; 680 direct manufacturing labor-hours at $25 per hour; and a 25% markup rate on total manufacturing costs. Manufacturing overhead cost estimates for this special-order total ________.

$40,800

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

Andy worked 60 hours last week for Bread Works Manufacturing. Of the 60 hours 10 hours were considered overtime, and also Tony was idle for 8 of the 60 hours due to an equipment malfunction. Andy makes $90 per hour and is paid $135 an hour (time and a half) for overtime. Andy's total compensation for that week would be ________, and assuming Bread Works charges overtime premium and idle time to indirect labor, the amount of this compensation credited to indirect labor would be ________.

$5,850; $1,170

Tally Corp. sells software during the recruiting seasons. During the current year, 10,000 software packages were sold resulting in $470,000 of sales revenue, $130,000 of variable costs, and $48,000 of fixed costs. If sales increase by $80,000, operating income will increase by _______. (Round interim calculations to two decimal places and the final answer to the nearest whole dollar.)

$57,872

Sales of Blistre Autos are 380,000, variable cost is 230,000, fixed cost is 90,000 tax rate is 40%. Calculate the operating leverage of the company.

2.50 times

Slickware sells porcelain cups. The breakeven point is 5,000 units. The variable cost per unit is $18 and the fixed costs are $20,000. What is the contribution margin at 5,000 units?

20,000

Sparkle Jewelry sells 600 units resulting in $75,000 of sales revenue, $32,000 of variable costs, and $26,000 of fixed costs. Breakeven point in units is ________. (Round to the nearest whole unit.)

363

Rapid Cabinet Makers Inc. provided the following information for last month: Sales $25,000 Variable costs 10,000 Fixed costs 3,000 Operating income $12,000 If sales reduce to half the amount in the next month, what is the projected operating income?

4,500

What is the breakeven point in units, assuming a product's selling price is $300, fixed costs are $18,000, unit variable costs are $20, and operating income is $6,000?

65 Units

SaleCo sells 8,400 units resulting in $120,000 of sales revenue, $35,000 of variable costs, and $45,000 of fixed costs. The contribution margin percentage is ________.

70.83%

Ruben is a travel agent. He intends to sell his customers a special round-trip airline ticket package. He is able to purchase the package from the airline for $140 each. The round-trip tickets will be sold for $230 each and the airline intends to reimburse Ruben for any unsold ticket packages. Fixed costs include $5,500 in advertising costs. How many ticket packages will Ruben need to sell in order to achieve $60,000 of operating income?

728

The following information is for High Corp: Selling price $60 per unit Variable costs $40 per unit Total fixed costs $135,000 The number of units that High Corp must sell to reach targeted operating income of $25,000 is ________. (Round up to the nearest unit.)

8,000 units

Rosewood company sells wooden carvings for $300 each. The direct materials cost per unit is $160 and the direct labor is 2 hours at a rate of $26 per hour. Manufacturing overhead is applied on the basis of labor hours at a rate of $36 per hour. Rosewood makes and sells 1,000 units per period. How many units must Rosewood sell to breakeven?

818 units

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.

Place the four business functions in the order they appear along the value chain: Customer service Design Marketing Production

Design, Production, Marketing, Customer Service

Which of the following statements about normal costing is true?

Direct costs are traced using an actual rate, and indirect costs are allocated using a budgeted rate.

Which of the following is not an inventoriable cost of a manufacturer?

Sales commissions paid to sales representatives who sell the products made by the manufacturer

________ describes the flow of goods, services, and information from the purchase of materials to the delivery of products to consumers, regardless of whether those activities occur in the same organization or with other organizations.

Supply chain

Which of the following is true of cost-volume-profit analysis?

The theory assumes that units manufactured equal units sold.

________ aims to improve operations throughout the value chain and to deliver products and services that exceed customer expectations.

Total Quality Management

A job-cost record uses information from ________.

a labor-time card to record an employee's wage rate and hours spent on a particular job

A cost system determines the cost of a cost object by ________.

accumulating and then assigning costs

Which of the following is a fixed cost for an automobile manufacturing plant?

administrative salaries

Job-costing is likely to be used by________.

advertising agencies

Fixed costs depend on the ________.

amount of unchanged costs for a given time period

The Standards of Ethical Conduct for management accountants include concepts related to ________.

competence, confidentiality, integrity, and credibility

If each motorcycle requires a belt that costs $20 and 2,000 motorcycles are produced for the month, the total cost for belts is ________.

considered to be a direct variable cost

The collection of cost data in an organized way, such as in various categories such as materials, labor, and manufacturing overhead, is called:

cost accumulation

All of the following are factors affecting direct versus indirect cost classification except:

cost accuracy

________ is the process of assigning indirect costs to products.

cost allocation

A ________ is anything for which a measurement of costs is desired.

cost object

Assigning direct costs to a cost object is called ________.

cost tracing

Which of the following is a period cost?

costs incurred to provide customer service such as the operation of a 800 phone line to trouble shoot product problems and to answer questions about product warranties

When costs can be traced to a particular cost object in an economically feasible way, the cost is a:

direct cost

A job-cost sheet details the ________.

direct labor costs incurred

Total manufacturing costs are comprised of ________.

direct materials costs, direct manufacturing labor costs, and manufacturing overhead costs

Line management includes ________.

distribution managers

Which one of the following is a variable cost for an insurance company?

electricity expenses

One of the first steps to take when using CVP analysis to help make decisions is ________.

identifying the variable and fixed costs

A company would use multiple cost-allocation bases ________.

if managers believed the benefits exceeded the additional costs of that costing system

Which of the following will increase a company's breakeven point?

increasing variable cost per unit

Which of the following statements about the direct/indirect cost classification is true?

indirect costs are always allocated

The advantage of using normal costing instead of actual costing is ________.

indirect costs are assigned to a job on a timely basis

Costs that are initially recorded as assets and expensed when goods sold are called ________.

inventoriable costs

In a normal costing system, the Manufacturing Overhead Control account ________.

is debited with actual overhead costs

The basic source document for direct manufacturing labor is the ________.

labor-time record

Staff management includes ________.

management accountants

Which of the following is a responsibility of the CFO?

managing short-term and long-term financing

For a manufacturing-sector company, the cost of factory depreciation is classified as a ________.

manufacturing overhead cost

Which of the following is a fixed cost with respect to units produced in a factory?

monthly rent payment for the building

Financial accounting ________.

must comply with GAAP (generally accepted accounting principles)

The most likely cost driver of direct labor costs is the ________.

number of production hours

In multiproduct situations, when sales mix shifts toward the product with the lowest contribution margin then ________.

operating income will decrease

Tony Manufacturing produces a single product that sells for $80. Variable costs per unit equal $50. The company expects total fixed costs to be $82,000 for the next month at the projected sales level of 2,800 units. In an attempt to improve performance, management is considering a number of alternative actions. Each situation is to be evaluated separately. Suppose that management believes that a 14% reduction in the selling price will result in a 14% increase in sales. If this proposed reduction in selling price is implemented ________.

operating income will decrease by $23,990

Which of the following influences the make or buy decision to the company?

opportunity cost

Which of the following is a manufacturing overhead cost?

overtime premiums paid to plant workers

Costs expensed on the income statement in the accounting period incurred are called ________.

period costs

Which of the following is an area that customers want to see improved levels of performance?

quality of the product

Gross margin is ________.

sales revenue less cost of goods sold

For merchandising companies, inventoriable costs include ________.

shipping (incoming) costs to acquire merchandise

Managers and accountants collect most of the cost information that goes into their systems through ________.

source documents

Direct materials inventory costs would normally include ________.

the cost of materials in stock are part of the cost object (product) and can be traced to that cost object in an economically feasible way

Which of the following is a cost driver for a company's human resource costs?

the number of job applications processed

R&D costs are treated as period costs because ________.

these costs may increase revenues in the future period

Managers use cost-volume-profit (CVP) analysis to ________.

to study the behavior of and relationship among the elements such as total revenues, total costs, and income

Which of the following is true of CVP analysis?

total revenues and total costs are linear in relation to output units

Which of the following is true if the volume of sales increases (within a relevant range)?

total variable cost increases

A cost is considered direct if it can be traced to a particular cost object in a cost effective way which means it can be

traced in an economically feasible way

When 24,000 units are produced, variable costs are $12.00 per unit. Therefore, when 18,000 units are produced ________.

variable costs will remain at $12.00 per unit

Inventoriable costs are expensed on the income statement ________.

when the products are sold

Outside the relevant range, variable costs, such as direct material costs ________.

will not change proportionately with changes in production volumes

In CVP analysis, focusing on target net income rather than operating income ________.

will not change the breakeven point

Family Furniture sells a table for $900. Its fixed costs are $30,000, while its variable costs are $600 per table. It currently plans to sell 175 tables this month. What is the budgeted revenue for the month assuming that Family Furniture sells 175 tables?

157,500

Sparkle Jewelry sells 800 units resulting in $85,000 of sales revenue, $32,000 of variable costs, and $26,000 of fixed costs.The number of units that must be sold to achieve $41,000 of operating income is ________.

1012 units

Ralph Johnson is paid $30 an hour for straight-time and $40 an hour for overtime. One week he worked 39 hours, which included 9 hours of overtime, and 4 hours of idle time caused by material shortages. What is the direct labor cost incurred to the company?

1050

What is operating income for 2018? Beginning finished good, 1/1/2018 $50,000 Ending finished goods, 12/31/2018 35,000 Cost of goods sold 251,000 Sales revenue 485,000 Operating expenses 109,000

125,000

Tony Manufacturing produces a single product that sells for $100. Variable costs per unit equal $45. The company expects total fixed costs to be $78,000 for the next month at the projected sales level of 3,000 units. In an attempt to improve performance, management is considering a number of alternative actions. Each situation is to be evaluated separately. Suppose management believes that a $85,000 increase in the monthly advertising expense will result in a considerable increase in sales. Sales must increase by ________ to justify this additional expenditure?

1546

Better Products Company manufactures insulation and applies manufacturing overhead costs to production at a budgeted indirect-cost rate of $18 per direct labor-hour. The following data are obtained from the accounting records for October 2018: Direct materials$370,000 Direct labor (3,300 hours @ $17/hour)56,100 Indirect labor22,000 Plant facility rent53,000 Depreciation on plant machinery and equipment41,000 Sales commissions17,000 Administrative expenses29,000 The actual amount of manufacturing overhead costs incurred in October 2018 totals ________.

$116,000

Buildz Manufacturing currently produces 2,000 tables per month. The following per unit data for 2,000 tables apply for sales to regular customers: Direct materials $75 Direct manufacturing labor 20 Variable manufacturing overhead 20 Fixed manufacturing overhead 40 Total manufacturing costs $155 What is the per unit cost when producing 4,000 tables?

$135.00

Bell Company sells several products. Information of average revenue and costs is as follows: Selling price per unit$33.00 Variable costs per unit: Direct material$6.00 Direct manufacturing labor$1.50 Manufacturing overhead$0.30 Selling costs$2.25 Annual fixed costs$113,000 The company sells 10,000 units.The contribution margin per unit is ________.

$22.95

Frazer Corp sells several products. Information of average revenue and costs is as follows: Selling price per unit$28.5 Variable costs per unit: Direct material$6.00 Direct manufacturing labor$1.45 Manufacturing overhead$0.85 Selling costs$2.60 Annual fixed costs$125,000 What is the operating income earned if the company sells 20,000 units?

$227,000

Which of the following statements about actual costing is true?

Actual costing uses actual indirect-cost rates calculated annually.

Which of the tools shown below would be the most effective planning tool?

Budget

The formula for the predetermined indirect cost rate is:

Budgeted annual indirect costs divided by actual quantity of cost-allocation base

Arrangement of long-term financing is an integral part of the ________ function in an organization.

CFO's

Which of the following differentiates confidentiality and credibility under the Standards of Ethical Conduct?

Confidentiality deals with refraining from the usage of critical information for unethical or illegal advantage, while credibility ensures disclosing the relevant information that would help the intended user's understanding.

Which of the following formulas determine cost of goods sold in a manufacturing entity?

Cost of goods manufactured + Beginning finished goods inventory - Ending finished goods inventory = Cost of goods sold

Which of the following companies is part of the service sector of our economy?

KPMG

Examining past performance and exploring alternative ways to make better informed decisions in the future is ________.

LEARNING

Which item is an indication of competence under the Standards of Ethical Conduct?

Maintain an appropriate level of professional expertise by continually developing knowledge and skills.

Which of the following statements about net income (NI) is true?

NI = operating income less income taxes.

Which one of the following items is a direct cost?

Printing costs incurred for payroll check processing; payroll check processing is the cost object.

Which of the following would be considered an actual cost of a current period?

The $25 of materials in a manufactured chair that is ready to be shipped to the customer

Which of the following statements is true of performance reports?

The performance report shows actual performance as compared to the budget.