Acc 2023 Final Exam

If fixed costs are $240,000, the unit selling price is $120, and the unit variable cost are $73, what is the break-even points in sales units (rounded to a whole number)?

240,000 / (120-73) = Break-even sales (units) = fixed costs/unit contribution margin

The following data relate to direct labor costs for October: Actual costs 5500 hours @ $25 per hour Standard costs 5000 hours @ $23.50 per hour Determine the direct labor rate variance. (actual rate per hour - standard rate per hour) x actual hours

25-23.50) x 5500 = 8250 so unfavorable

What are normal standards?

normal standards are standards that represent levels of operation that can be attained with reasonable effort

Operating decisions of management focus on a narrow range of activity called the

relevant range of production

The manner in which a cost changes as the related activity changes refers to

cost behavior

As production increases, what happened to the fixed cost per unit?

decreases

Which costs remain constant in total dollar amount as the level of activity changes?

fixed costs

Toyo Co. manufactures and sells pot and pans. Because of current trends, it expects to increase sales by 10% next year. If this expected level of production and sales occurs and plant expansion is not needed, how should this increase affect next year's total amounts for the following costs?

increase no change increase

Define "sales mix":

the relative distribution of sales among the various products sold by a business

Which condition could cause the break-even point to decrease?

unit variable cost decreases

ABC Corp. has the following data related to direct materials costs for October: Actual costs for 5,000 pounds of material at $4.50 per pound Standard costs for 4,800 pounds of material at $5 per pound Determine the direct materials price variance. (actual price - standard price) x actual quantity

(actual price-standard price) x actual quantity = (4.50-5) x 5000 = -2500 so favorable

Saxson Corp. has the following data related to direct labor costs for August: Actual costs are 10,200 hours at $15.65 per hourStandard costs are 10,800 hours at $15.55 per hour What is the direct labor time variance? (actual direct labor hours - standard direct labor hours) x standard rate per hr

(5-6.10) x 4650 = -5115 so favorable

ABC Corp. has the following data related to direct materials costs for October: Actual costs for 4,650 pounds of material at $5 per pound Standard costs for 4,410 pounds of material for $6.10 per pound Determine the direct materials price variance. (actual price - standard price) x actual quantity

(actual direct labor hours - standard direct labor hours) x standard rate per hour(10,200 - 10,800) x $15.55 = -9330 so favorable

How are managerial accounting reports prepared?

According to management needs

How is the finished goods inventory reported?

Balance sheet as a current asset

The point where the sales line and the total costs line intersect on the cost-volume-profit chart represents what?

Break-even point

When reaching the end of a fiscal year, variances from standard costs are usually transferred to

Cost of goods sold account (expenses)

What are varible costs?

Costs that vary in total in direct proportion to changes in an actual level

Name the 3 categories of manufacturing costs that comprise the total work in process.

Direct labor, direct materials, and factory overhead

Which cost varies in total as the number of units produced changes.

Direct materials cost

Why are the standard price and quantity of direct materials separated?

Direct materials prices are controlled by the Purchasing Dept and quantity used is controlled by the Production Dept.

The most common cost behavior Classifications

Fixed, variable, and mixed

Financial accounting should be prepared in accordance with

GAAP

Variances from standard costs are reported to

Management

If a business had sales of $4,000,000 and a margin of safety of 25%, the break-even point in sales in dollars would be?

Margin of Safety = (Sales - Sales at Break-Even Point) ÷ Sales Let X = Sales at Break-Even Point 25% = ($4,000,000 - X) ÷ $4,000,000 25% × $4,000,000 = $4,000,000 - X $1,000,000 = $4,000,000 - X X = $3,000,000

Costs that appear on the income statement for BOTH a merchandiser and a manufacturer would be

Operating expenses

1) Carter Co. sells two products, arks and bins. Last year, Carter sold 12,000 units of arks and 58,000 units of bins. Related data are as follows: Unit Selling Price (USP) Unit Variable Cost (UVC) Unit Contribution Margin (UCM) product (USP) (UVC) (UCM) --------------------------------------- Arks $120 $80 $40 Bins 80 60 20 What was Carter Co.'s unit selling price of E, with E representing one overall "enterprise" product? What was Carter Co's sales mix last year?

Percentage of Arks = 12,000 ÷ (12,000 + 58,000) = 17% Percentage of Bins = 58,000 ÷ (12,000 + 58,000) = 83% Unit Selling Price of E = (17% × $120) + (83% × $80) = $20 + $66 = $86 Sales Mix? Percentage of Arks = 12,000 ÷ (12,000 + 58,000) = 17% Percentage of Bins = 58,000 ÷ (12,000 + 58,000) = 83%

Give an example of a mixed cost

Rental costs of 10,000/month plus 1$ per machine hour of use

The principle of exceptions allows managers to focus on correcting variances between which 2 types of costs?

Standard costs and Actual costs

ABC Co. manufactures office furniture. During the most productive months of the year, 3,000 desks were manufactured at a total cost of $60,000. In the month of lowest production, the company made 1,125 desks at a cost of $40,000. Use the high-low method of cost estimation to calculate total fixed costs:

The difference in total cost = Total cost (highest level) - total cost - (lowest level) = 59,000 - 38,000 = 21,000. Variable Cost per Unit = Difference in Total Cost ÷ Difference in Units Produced = $21,000 ÷ 1,875 = $11.20 Total Fixed Costs (Highest Level) = Total Costs - (Variable Cost per Unit × Units Produced) = $59,000 - ($11.20 × 3,000) = $25,400

What does the controllable variance measure?

The efficiency of using variable overhead resources

What is the contribution margin?

The excess of sales over variable costs

When are favorable volume variances harmful?

When production is in excess of normal capacity and cannot be sold

When does a favorable cost variance occur

When standard costs are more than actual costs