Acc 3000 Exam 2 prep

Sophie Company has decided that direct labor hours is a good basis on which to apply overhead to production. The following data are for the most recent year. Budgeted number of direct labor hours worked = 20,000 hours Budgeted amount of manufacturing overhead = $100,000 Actual number of direct labor hours worked = 25,000 hours Actual amount of manufacturing overhead = $115,000 How much manufacturing overhead is APPLIED during the year? $100,000 $125,000 $80,000 $115,000

$125,000

Wynne Company has a predetermined overhead rate of $15 per direct labor hour. The following data are for the current year Actual number of units sold = 2,000 units Actual number of direct labor hours worked = 10,000 hours Actual amount of manufacturing overhead = $145,000What is the total amount of manufacturing overhead APPLIED to the different production jobs during the year? $150000 $295000 $30000 $145000 $130000

$150000

Sophie Company has decided that direct labor hours is a good basis on which to apply overhead to production. Budgeted manufacturing overhead for the coming year is $500,000. Budgeted direct materials purchases is $400,000. Budgeted direct labor cost is $720,000. Budgeted direct labor hours for the coming year is 20,000 hours. What is Sophie Company's PREDETERMINED OVERHEAD RATE? $20 per hour $61 per hour $25 per hour $56 per hour $36 per hour

$25 per hour

The Smith Company manufactures insulated windows. Costs for March were as follows. Direct labor $53,000 Indirect labor 18,000 Salary of corporate vice president for advertising 25,000 Direct materials 48,000 Indirect materials 4,000 Interest expense 7,500 Salary of factory supervisor 3,000 Insurance on manufacturing equipment 2,000 What is Smith Company's actual manufacturing overhead for March? $9,000 $27,000 $5,000 $75,000

$27,000

What is ONE danger in focusing a financial analysis solely on the data found in the historical financial statements? Financial statements reflect both fixed and variable costs. Financial statements don't contain all the relevant information. Financial statements reflect fair values rather than leveraged values. Financial statements are based on divisional data rather than segment data.

Financial statements don't contain all the relevant information.

When determining the amount of cash payments for manufacturing overhead, which costs are removed from the budgeted manufacturing overhead? indirect materials depreciation direct materials indirect labor direct labor

depreciation

Which ONE of the following is NOT in the selling and administrative budget? advertising expense sales commissions factory building depreciation office supplies

factory building depreciation

Which ONE of the following budgets is based on the expected sales volume and the desired ending inventory of finished goods and is adjusted for the expected beginning inventory of finished goods? production budget sales budget advertising budget building acquisition budget

production budget

Below are the forecasted cash receipts and cash payments for Kaden Company for the first four months of the year. January February March April Budgeted cash collections 100,000 80,000 75,000 146,000 Budgeted cash payments: Operating expenses 127,000 105,000 92,000 120,000 Dividends 0 20,000 0 0 Equipment purchase 0 40,000 0 0 Total budgeted cash payments 127,000 165,000 92,000 120,000 On January 1, Kaden Company had a cash balance of $50,000. Kaden has a policy of maintaining a cash balance of at least $10,000 at the end of each month. How much must Kaden Company plan to borrow in March? $17,000 $24,000 $14,000 $4,000 $7,000

$17,000

It is January 1 of Year 2. Sales for Harry Company for January, February, and March are forecasted to be as follows: January, $200,000; February $400,000; March, $500,000. 80% of sales are credit sales; the remaining 20% of sales are cash sales. Of these credit sales, 10% are collected during the month of sale, 30% in the following month, and 60% in the second following month. TOTAL sales for November and December of Year 1 were $200,000 and $400,000, respectively. What is the forecasted amount of total CASH COLLECTIONS FROM SALES in January? $248,000 $260,000 $272,000 $236,000 $254,000

$248,000

It is January 1 of Year 2. Purchases for Yosef Company for January, February, and March are forecasted to be as follows: January, $200,000; February $400,000; March, $500,000. 20% of purchases are for cash. Of the credit purchases, 30% are paid during the month of the purchase, 50% in the month following the purchase, and 20% in the second month following the purchase. TOTAL purchases for November and December of Year 1 were $200,000 and $400,000, respectively. What is the forecasted amount of total CASH PAYMENTS FOR PURCHASES in January? Note: This is the sum of immediate payments from cash purchases, same-month cash payments of credit purchases, and cash payments for credit purchases made in prior months. $290,000 $250,000 $270,000 $260,000 $280,000

$280,000

It is January 1 of Year 2. Sales for Harry Company for January, February, and March are forecasted to be as follows: January, $200,000; February $400,000; March, $500,000. ALL sales are credit sales. Of these credit sales, 10% are collected during the month of sale, 30% in the following month, and 60% in the second following month. TOTAL sales for November and December of Year 1 were $200,000 and $400,000, respectively. What is the forecasted amount of total CASH COLLECTIONS FROM SALES in March? $270,000 $300,000 $290,000 $280,000 $310,000

$290,000

Dotsero Technology, Inc., has a job-order costing system. The company uses predetermined overhead rates in applying manufacturing overhead cost to individual jobs. The predetermined overhead rate is based on machine-hours. At the beginning of the most recent year, the company's management made the following estimates for the year. Machine-hours. . . . . . . . . . . . . . . 30,000 Manufacturing overhead cost. . . . $420,000 Job 243 entered into production on April 1 and was completed on May 12. The company's actual cost records show the following information about the job. Dept. A Machine-hours. . . . . . . . . . . . . . . . . . . 250 Direct materials cost. . . . . . . . . . . . . . . $840 Direct labor cost. . . . . . . . . . . . . . . . . . $610 Compute the total manufacturing cost of Job 243. Note: "Total manufacturing cost" is the sum of direct materials, direct labor, and applied manufacturing overhead cost. $5,580 $10,240 $10,530 $7,100 $7,770 $4,950 $10,630 $11,17

$4,950

It is January 1 of Year 2. Purchases for Yosef Company for January, February, and March are forecasted to be as follows: January, $200,000; February $400,000; March, $500,000. 40% of purchases are for cash. Of the credit purchases, 30% are paid during the month of the purchase, 50% in the month following the purchase, and 20% in the second month following the purchases. TOTAL purchases for November and December of Year 1 were $200,000 and $400,000, respectively. What is the forecasted amount of total CASH PAYMENTS FOR PURCHASES in March? Note: This is the sum of immediate payments from cash purchases, same-month cash payments of credit purchases, and cash payments for credit purchases made in prior months. $374,000 $472,000 $348,000 $460,000 $434,000

$434,000

Derrald Company manufactures snowboards. Costs for January were as follows. Indirect labor........................................................................................ $11,000 Direct materials...................................................................................... 36,000 Income tax expense.............................................................................. 14,000 Indirect materials..................................................................................... 5,000 Property taxes on the factory building.............................................. 18,000 Direct labor............................................................................................. 31,000 Salespersons commissions..................................................................... 9,000 Interest expense..................................................................................... 17,000 Insurance on manufacturing equipment.......................................... 12,000 What is Derrald Company's actual manufacturing overhead for January? $60,000 $86,000 $55,000 $34,000 $16,000 $77,000 $46,000

$46,000

The Smith Company manufactures insulated windows. Costs for March were as follows. Salary of factory supervisors $25,000 Insurance on salespersons' automobiles 2,000 Indirect materials 4,000 Interest expense 7,500 Direct labor 53,000 Indirect labor 18,000 Salary of corporate vice president for advertising 3,000 Direct materials 48,000 What is Smith Company's actual manufacturing overhead for March? $5000 $9000 $47000 $95000

$47000

The Smith Company manufactures insulated windows. Costs for March were as follows. Indirect materials $ 4,000 Interest expense 7,500 Salary of factory supervisors 25,000 Insurance on manufacturing equipment 2,000 Direct labor 53,000 Indirect labor 18,000 Salary of corporate vice president for advertising 3,000 Direct materials 48,000 What is Smith Company's actual manufacturing overhead for March? $9,000 $5,000 $49,000 $97,000

$49,000

Sophie Company has decided that direct labor hours is a good basis on which to apply overhead to production. The following data are for the most recent year. Budgeted number of direct labor hours worked = 20,000 hours Budgeted amount of manufacturing overhead = $100,000 Actual number of direct labor hours worked = 25,000 hours Actual amount of manufacturing overhead = $115,000 What is Sophie Company's PREDETERMINED OVERHEAD RATE? $4.00 per hour $4.60 per hour $5.75 per hour $5.00 per hour $4.50 per hour

$5.00 per hour

Below are the forecasted cash receipts and cash payments for Kaden Company for the first four months of the year. January February March April Budgeted cash collections 100,000 75,000 75,000 146,000 Budgeted cash payments: Operating expenses 127,000 67,000 92,000 120,000 Dividends 0 0 20,000 0 Equipment purchase 0 0 40,000 0 Total budgeted cash payments 127,000 67,000 152,000 120,000 On January 1, Kaden Company had a cash balance of $50,000. Kaden has a policy of maintaining a cash balance of at least $10,000 at the end of each month. How much must Kaden Company plan to have in its loan balance in April? $56,000 $46,000 $40,000 $30,000 $20,000

$56,000

Credit sales are $92,000 in June and $80,500 in July; 80% are collected in the month of sale and 20% collected in the following month. What are the total July cash collections? $27,600 $64,400 $82,800 $80,500

$82,800

Norm's Furniture Company manufactures custom furniture only and uses a job order costing system to accumulate costs. Actual direct materials and direct labor costs are accumulated for each job, but a predetermined overhead rate is used to apply manufacturing overhead costs to individual jobs. Manufacturing overhead is applied on the basis of direct labor hours. In computing a predetermined overhead rate, the controller estimated that manufacturing overhead costs for the year would be $200,000 and direct labor hours would be 20,000. The following summary information is available for the year. Note: This summary information represents cost data related to hundreds of different job orders started or completed during the year. a. Raw materials purchased during the year were $250,000. b. Raw materials used in production during the year were $230,000. c. Wages paid to the furniture craftsmen during the year totaled $440,000 (22,000 hours). d. Wages paid to factory maintenance workers during the year totaled $65,000. e. Depreciation on machinery and equipment during the year was $100,000. f. Rent and utilities for the factory building during the year totaled $30,000. g. Manufacturing overhead was applied to Work-in-Process Inventory using the predetermined overhead rate. h. Work-in-Process Inventory costing $800,000 was completed and transferred to Finished Goods Inventory. i. Goods costing $750,000 were sold. Assume that the beginning balance in the Work-in-Process Inventory account was $0. What is the ENDING balance in the Work-in-Process Inventory account? $70,000 $890,000 $65,000 $115,000 $50,000 $90,000 $20,000 $800,000

$90,000

Using the data below, compute Asset Turnover. Accounts Payable 210 Accounts Receivable 1,600 Capital Stock 120 Cash 50 Cost of Goods Sold 300 Inventory 190 Long-term Debt 1,820 Net Income 140 Property, Plant, and Equipment (net) 700 Retained Earnings 390 Sales 1,500 Market value of shares 3,000 18.14 0.50 2.00 0.59 1.69

0.59

Using the data below, compute Return on Equity. Accounts Payable 1,300 Accounts Receivable 1,500 Capital Stock 2,000 Cash 200 Cost of Goods Sold 8,000 Inventory 2,100 Long-term Debt 4,000 Net Income 650 Property, Plant, and Equipment (net) 5,000 Retained Earnings 1,500 Sales 12,000 Market value of shares 12,000 12.3% 18.6% 38.6% 15.3% 7.4%

18.6%

Using the data below, compute Asset Turnover. Accounts Payable 1,300 Accounts Receivable 1,500 Capital Stock 2,000 Cash 200 Cost of Goods Sold 8,000 Inventory 2,100 Long-term Debt 4,000 Net Income 650 Property, Plant, and Equipment (net) 5,000 Retained Earnings 1,500 Sales 12,000 Market value of shares 12,000 13.54 1.36 1.00 0.83 0.73

1.36

Using the data below, compute Asset Turnover. Accounts Payable 800 Accounts Receivable 1,100 Capital Stock 2,000 Cash 50 Cost of Goods Sold 6,000 Inventory 1,500 Long-term Debt 1,820 Net Income 950 Property, Plant, and Equipment (net) 3,000 Retained Earnings 1,030 Sales 10,000 Market value of shares 12,000 1.77 1.20 0.83 5.95 0.57

1.77

Using the data below, compute Price-Earnings Ratio. Accounts Payable 800 Accounts Receivable 1,100 Capital Stock 2,000 Cash 50 Cost of Goods Sold 6,000 Inventory 1,500 Long-term Debt 1,820 Net Income 950 Property, Plant, and Equipment (net) 3,000 Retained Earnings 1,030 Sales 10,000 Market value of shares 12,000 6.9 12.6 6.3 11.7 15.0

12.6

Using the data below, compute Price-Earnings Ratio. Accounts Payable 1,300 Accounts Receivable 1,500 Capital Stock 2,000 Cash 200 Cost of Goods Sold 8,000 Inventory 2,100 Long-term Debt 4,000 Net Income 650 Property, Plant, and Equipment (net) 5,000 Retained Earnings 1,500 Sales 12,000 Market value of shares 12,000 8.9 17.1 7.5 8.0 18.5

18.5

On September 30 of Year 1, JayBob Company had a raw materials inventory of 5,000 pounds. Starting in October, JayBob intends to have an inventory policy of maintaining ending raw materials inventory at the end of every month equal to the next TWO months' production needs. For example, ending inventory at the end of October should be equal to forecasted raw materials needs for November production plus forecasted raw materials needs for December production. Four pounds of raw materials are needed in the production of one finished unit. Forecasted PRODUCTION for the months October, Year 1 through December, Year 1 is as follows.] October 4,300 units November 1,000 units December 700 units What is the amount of budgeted RAW MATERIALS PURCHASES for October? 21,200 pounds 19,000 pounds 24,000 pounds 17,200 pounds 17,000 pounds

19,000 pounds

Using the data below, compute CURRENT RATIO. Accounts Payable 1,300 Accounts Receivable 1,500 Capital Stock 2,000 Cash 200 Cost of Goods Sold 8,000 Inventory 2,100 Long-term Debt 4,000 Net Income 650 Property, Plant, and Equipment (net) 5,000 Retained Earnings 1,500 Sales 12,000 Market value of shares 12,000 0.72 6.77 1.09 2.92 0.34

2.92

Using the data below, compute Price-Earnings Ratio. Accounts Payable 210 Accounts Receivable 1,600 Capital Stock 120 Cash 50 Cost of Goods Sold 300 Inventory 190 Long-term Debt 1,820 Net Income 140 Property, Plant, and Equipment (net) 700 Retained Earnings 390 Sales 1,500 Market value of shares 3,000 21.4 27.3 12.0 10.0 7.7

21.4

Using the data below, compute Return on Equity. Accounts Payable 210 Accounts Receivable 1,600 Capital Stock 120 Cash 50 Cost of Goods Sold 300 Inventory 190 Long-term Debt 1,820 Net Income 140 Property, Plant, and Equipment (net) 700 Retained Earnings 390 Sales 1,500 Market value of shares 3,000 9.8% 27.5% 5.5% 6.9% 49.0%

27.5%

Using the data below, compute CURRENT RATIO. Accounts Payable 800 Accounts Receivable 1,100 Capital Stock 2,000 Cash 50 Cost of Goods Sold 6,000 Inventory 1,500 Long-term Debt 1,820 Net Income 950 Property, Plant, and Equipment (net) 3,000 Retained Earnings 1,030 Sales 10,000 Market value of shares 12,000 3.31 1.01 0.30 0.87 7.06

3.31

Using the data below, compute Return on Equity. Accounts Payable 800 Accounts Receivable 1,100 Capital Stock 2,000 Cash 50 Cost of Goods Sold 6,000 Inventory 1,500 Long-term Debt 1,820 Net Income 950 Property, Plant, and Equipment (net) 3,000 Retained Earnings 1,030 Sales 10,000 Market value of shares 12,000 16.8% 57.8% 31.4% 36.3% 31.0%

31.4%

If Hardy Company plans to sell 350 monitors during the month of October, has 21 monitors on hand on October 1, and wants to maintain an inventory at month-end of 30 monitors, how many monitors must Hardy Company produce during October? 359 350 341 329

359

On September 30 of Year 1, Julian Company had a finished goods inventory of 1,000 units. Starting in October, Julian intends to have an inventory policy of maintaining ending inventory at the end of every month equal to the next month's sales. For example, ending inventory at the end of October should be equal to forecasted sales in November. Forecasted sales for the months October, Year 1 through January, Year 2 are as follows. October 2,300 units November 3,000 units December 1,000 units January 700 units What is the amount of budgeted PRODUCTION for October? 4,300 units 5,300 units 3,300 units 3,000 units 2,000 units

4,300 units

Using the data below, compute DEBT RATIO. Accounts Payable 800 Accounts Receivable 1,100 Capital Stock 2,000 Cash 50 Cost of Goods Sold 6,000 Inventory 1,500 Long-term Debt 1,820 Net Income 950 Property, Plant, and Equipment (net) 3,000 Retained Earnings 1,030 Sales 10,000 Market value of shares 12,000 21.8% 46.4% 115.6% 215.6% 32.2%

46.4%

What is BUDGETARY SLACK? Process prioritizing, also known as profit planning Top-down planning of budgetary goals Bottom-up planning of budgetary goals Constructive response to budget deviations Intentionally creating easy budget targets

Intentionally creating easy budget targets

Using the data below, compute Return on Sales. Accounts Payable 1,300 Accounts Receivable 1,500 Capital Stock 2,000 Cash 200 Cost of Goods Sold 8,000 Inventory 2,100 Long-term Debt 4,000 Net Income 650 Property, Plant, and Equipment (net) 5,000 Retained Earnings 1,500 Sales 12,000 Market value of shares 12,000 18.6% 33.3% 11.3% 13.3% 5.4%

5.4%

On September 30 of Year 1, JayBob Company had raw materials inventory of 5,000 pounds. Starting in October, JayBob intends to have an inventory policy of maintaining ending raw materials inventory at the end of every month equal to the next TWO months' production needs. For example, ending inventory at the end of October should be equal to forecasted raw materials needs for November production plus forecasted raw materials needs for December production. Five pounds of raw materials are needed in the production of one finished unit. Forecasted PRODUCTION for the months October, Year 1 through December, Year 1 is as follows. October 4,500 units November 6,000 units December 2,000 units What is the amount of budgeted RAW MATERIALS PURCHASES for October? 67,500 pounds 52,500 pounds 40,000 pounds 62,500 pounds 57,500 pounds

57,500 pounds

Using the data below, compute DEBT RATIO. Accounts Payable 1,300 Accounts Receivable 1,500 Capital Stock 2,000 Cash 200 Cost of Goods Sold 8,000 Inventory 2,100 Long-term Debt 4,000 Net Income 650 Property, Plant, and Equipment (net) 5,000 Retained Earnings 1,500 Sales 12,000 Market value of shares 12,000 45.5% 166.0% 44.2% 60.2% 66.0%

60.2%

On September 30 of Year 1, Lily Company had finished goods inventory of 1,000 units. Starting in October, Lily intends to have an inventory policy of maintaining ending inventory at the end of every month equal to the next TWO months' sales. For example, ending inventory at the end of October should be equal to forecasted sales in November plus forecasted sales in December. Forecasted sales for the months October, Year 1 through January, Year 2 are as follows. October 2,300 units November 3,000 units December 1000 units January 700 units What is the amount of budgeted PRODUCTION for November? 3,300 units 4,700 units 700 units 3,000 units 1,700 units 2,000 units

700 units

Using the data below, compute DEBT RATIO. Accounts Payable 210 Accounts Receivable 1,600 Capital Stock 120 Cash 50 Cost of Goods Sold 300 Inventory 190 Long-term Debt 1,820 Net Income 140 Property, Plant, and Equipment (net) 700 Retained Earnings 390 Sales 1,500 Market value of shares 3,000 67.7% 125.1% 71.7% 79.9% 25.1%

79.9%

Using the data below, compute CURRENT RATIO. Accounts Payable 210 Accounts Receivable 1,600 Capital Stock 120 Cash 50 Cost of Goods Sold 300 Inventory 190 Long-term Debt 1,820 Net Income 140 Property, Plant, and Equipment (net) 700 Retained Earnings 390 Sales 1,500 Market value of shares 3,000 8.76 3.61 0.11 12.10 0.91

8.76

Using the data below, compute Return on Sales. Accounts Payable 210 Accounts Receivable 1,600 Capital Stock 120 Cash 50 Cost of Goods Sold 300 Inventory 190 Long-term Debt 1,820 Net Income 140 Property, Plant, and Equipment (net) 700 Retained Earnings 390 Sales 1,500 Market value of shares 3,000 16.7% 80.0% 27.5% 9.3% 20.0%

9.3%

Using the data below, compute Return on Sales. Accounts Payable 800 Accounts Receivable 1,100 Capital Stock 2,000 Cash 50 Cost of Goods Sold 6,000 Inventory 1,500 Long-term Debt 1,820 Net Income 950 Property, Plant, and Equipment (net) 3,000 Retained Earnings 1,030 Sales 10,000 Market value of shares 12,000 19.0% 31.4% 40.0% 9.5% 17.5%

9.5%

Which ONE of the following is NOT one of the factors that can reduce comparability among financial statements? Companies classify items differently. A company reports both net income AND retained earnings. Companies use different accounting methods. A company is composed of a variety of different lines of business.

A company reports both net income AND retained earnings.

Which ONE of the following is the BEST description of JOB ORDER COSTING? A system in which period costs are systematically allocated to weekly budget reports A system commonly used in the home construction industry in order to generate market-wide selling price information A system commonly used in the oil exploration industry in order to generate world-wide oil and natural gas information A system in which manufacturing costs are accumulated by separate product orders or batches

A system in which manufacturing costs are accumulated by separate product orders or batches

The following data are taken from the comparative balance sheet prepared for Route 13 Company. Year 2 Year 1 Cash 200,000 120,000 Accounts receivable 360,000 144,000 Inventories 300,000 180,000 Property, plant, and equipment 750,000 450,000 Total assets $1,610,000 $894,000 Sales for Year 2 were $2,000,000. Sales for Year 1 were $1,200,000. Overall, Route 13 Company is less efficient at using its assets to generate sales in Year 2 than in Year 1. What asset is responsible for this decreased efficiency? Inventory Accounts receivable Property, plant, and equipment Cash

Accounts receivable

Derrald Company manufactures snowboards. Estimated costs for Year 1 were as follows: Direct labor........................................................................................... $31,000 Bonuses paid to factory supervisors.................................................... 9,000 Interest expense..................................................................................... 32,000 Depreciation on manufacturing equipment..................................... 18,000 Indirect labor.......................................................................................... 11,000 Direct materials...................................................................................... 36,000 Income tax expense.............................................................................. 26,000 Indirect materials................................................................................... 14,000 Property taxes on the corporate office building............................... 18,000 Estimated direct labor hours were 40,000. Actual data for Year 1 are as follows: Total manufacturing overhead: $120,000 Direct labor hours: 60,000 hours The predetermined manufacturing overhead rate is determined on the basis of direct labor hours. Which ONE of the following statements is TRUE? Applied overhead was MORE than actual overhead by $42,000 Applied overhead was LESS than actual overhead by $22,000 Applied overhead was MORE than actual overhead by $22,000 Applied overhead was MORE than actual overhead by $68,000 Applied overhead was MORE than actual overhead by $52,000 Applied overhead was LESS than actual overhead by $42,000 Applied overhead was LESS than actual overhead by $68,000 Applied overhead was LESS than actual overhead by $52,000

Applied overhead was LESS than actual overhead by $42,000

Sophie Company has decided that direct labor hours is a good basis on which to apply overhead to production. The following data are for the most recent year. Budgeted number of direct labor hours worked = 20,000 hours Budgeted amount of manufacturing overhead = $100,000 Actual number of direct labor hours worked = 25,000 hours Actual amount of manufacturing overhead = $115,000Which ONE of the following statements is TRUE?

Applied overhead was MORE than actual overhead by $15,000 Applied overhead was MORE than actual overhead by $20,000 Applied overhead was MORE than actual overhead by $10,000 Applied overhead was MORE than actual overhead by $25,000 Applied overhead was LESS than actual overhead by $10,000 Applied overhead was LESS than actual overhead by $15,000 Applied overhead was LESS than actual overhead by $20,000 Applied overhead was LESS than actual overhead by $25,000

Estimated data for Lorien Company for Year 1 are as follows. Total manufacturing overhead $650,000 Direct labor hours 130,000 hours Actual data for Lorien Company for Year 1 are as follows. Total manufacturing overhead $500,000 Direct labor hours 110,000 hours The manufacturing overhead rate is determined on the basis of direct labor hours. Which ONE of the following statements is TRUE? Applied overhead was MORE than actual overhead by $150,000 Applied overhead was LESS than actual overhead by $50,000 Applied overhead was MORE than actual overhead by $10,000 Applied overhead was LESS than actual overhead by $10,000 Applied overhead was MORE than actual overhead by $50,000 Applied overhead was LESS than actual overhead by $150,000

Applied overhead was MORE than actual overhead by $50,000

Which ONE of the following is NOT one of the three general categories of product costs? Direct materials CEO and other executive salaries Manufacturing overhead Direct labor

CEO and other executive salaries

Which ONE of the following statements is TRUE? Operations budgeting is the planning for how to obtain the financing for both short-term and long-term projects. Operations budgeting is the planning for the acquisition of property, plant, and equipment. Capital budgeting is the planning for how to obtain the financing for both short-term and long-term projects. Capital budgeting is the planning for the acquisition of property, plant, and equipment.

Capital budgeting is the planning for the acquisition of property, plant, and equipment.

Seth Company manufactures financial calculators. Which ONE of the following is NOT a PERIOD cost? Commissions paid to company salespersons Wages paid to typesetters in the company's advertising department Salary of the chief financial officer Property taxes on the executive office building Wages of the janitors in the executive office building Cost of the electricity used in the executive officers' copy room Depreciation on the automobiles used by the company salespersons Bonuses paid to the calculator assemblers who work on the production line

Commissions paid to company salespersons

Which ONE of the following is the most common sequence of the FLOW of costs through a job order cost system? First, purchase raw materials; then transfer raw materials to production; then add direct labor and manufacturing overhead costs; then transfer the cost of completed goods to finished goods inventory; finally, sell goods and transfer cost to cost of goods sold First, add direct labor and manufacturing overhead costs; then transfer the cost of completed goods to finished goods inventory; then purchase raw materials; then transfer raw materials to production; finally, sell goods and transfer cost to cost of goods sold First, transfer the cost of completed goods to finished goods inventory; then purchase raw materials; then transfer raw materials to production; then sell goods and transfer cost to cost of goods sold; finally, add direct labor and manufacturing overhead costs First, purchase raw materials; then sell goods and transfer cost to cost of goods sold; then transfer the cost of completed goods to finished goods inventory; then transfer raw materials to production; finally, add direct labor and manufacturing overhead costs

First, purchase raw materials; then transfer raw materials to production; then add direct labor and manufacturing overhead costs; then transfer the cost of completed goods to finished goods inventory; finally, sell goods and transfer cost to cost of goods sold

Low levels of raw materials inventory may cause which ONE of the following? High incidence of work stoppage High inventory spoilage High borrowing costs High storage costs

High incidence of work stoppage

Comparative income statements for South Drive Company for Year 2 and Year 1 are given below. Year 2 Year 1 Sales 900,000 500,000 Cost of goods sold (432,000) (240,000) Gross profit on sales 468,000 260,000 Wage expense (54,000) (30,000) Rent expense (90,000) (50,000) Operating income 324,000 180,000 Interest expense (80,000) (30,000) Net income 244,000 150,000 Return on sales for South Drive is lower in Year 2 than in Year 1. What expense is causing this lower profitability? Wage expense Rent expense Interest expense Cost of goods sold

Interest expense

The following data are taken from the comparative balance sheet prepared for Route 13 Company. Year 2 Year 1 Cash 39,063 25,000 Accounts receivable 62,500 40,000 Inventories 67,000 30,000 Property, plant, and equipment 156,250 100,000 Total assets $324,813 $195,000 Sales for Year 2 were $1,250,000. Sales for Year 1 were $800,000. Overall, Route 13 Company is less efficient at using its assets to generate sales in Year 2 than in Year 1. What asset is responsible for this decreased efficiency? Property, plant, and equipment Inventory Accounts receivable Cash

Inventory

For the year, Jay Bug Company had actual manufacturing overhead of $117,000. Based on its estimated predetermined overhead rate, Jay Bug Company applied a total of $100,000 in manufacturing overhead cost to its customer orders during the year. Which ONE of the following statements is MOST LIKELY to be TRUE? Jay Bug Company spent $17,000 LESS on manufacturing overhead during the year than was added to the cost of customer orders. Jay Bug probably set its selling prices too LOW. Jay Bug Company spent $17,000 LESS on manufacturing overhead during the year than was added to the cost of customer orders. Jay Bug probably set its selling prices too HIGH. Jay Bug Company spent $17,000 MORE on manufacturing overhead during the year than was added to the cost of customer orders. Jay Bug probably set its selling prices too HIGH. Jay Bug Company spent $17,000 MORE on manufacturing overhead during the year than was added to the cost of customer orders. Jay Bug probably set its selling prices too LOW.

Jay Bug Company spent $17,000 MORE on manufacturing overhead during the year than was added to the cost of customer orders. Jay Bug probably set its selling prices too LOW.

The data below are for Julian Company and Standard Company. Standard Company is the best company in Julian's industry; all companies in the industry strive to do things the way that Standard does them. Julian Standard Cash 500 3,250 Accounts Receivable 5,000 15,000 Inventory 3,000 19,500 Property, Plant, and Equipment 12,000 40,000 Total Assets 20,500 77,750 Total Liabilities 13,000 37,000 Total Equity 7,500 40,750 Sales 20,000 130,000 Cost of Goods Sold (6,000) (39,000) Wage Expense (10,000) (65,000) Research Expense (2,000) (13,000) Advertising Expense (1,600) (6,000) Net Income 400 7,000 Which ONE of the following statements is TRUE regarding Julian's income statement? Remember, Standard Company represents the standard of performance in Julian's industry. Julian Company has a problem with its advertising expense. Julian Company has a problem with its cost of goods sold. Julian Company has a problem with its wage expense. Julian Company's profitability is better than Standard Company's profitability. Julian Company has a problem with its research expense.

Julian Company has a problem with its advertising expense.

The data below are for Julian Company and Standard Company. Standard Company is the best company in Julian's industry; all companies in the industry strive to do things the way that Standard does them. Julian Standard Cash 500 3,250 Accounts Receivable 5,000 15,000 Inventory 3,000 19,500 Property, Plant, and Equipment 12,000 40,000 Total Assets 20,500 77,750 Total Liabilities 13,000 37,000 Total Equity 7,500 40,750 Sales 40,000 200,000 Cost of Goods Sold (18,000) (80,000) Wage Expense (12,000) (60,000) Research Expense (5,000) (25,000) Advertising Expense (1,600) (8,000) Net Income 3,400 27,000 Which ONE of the following statements is TRUE regarding Julian's income statement? Remember, Standard Company represents the standard of performance in Julian's industry. Julian Company's profitability is better than Standard Company's profitability. Julian Company has a problem with its wage expense. Julian Company has a problem with its research expense. Julian Company has a problem with its cost of goods sold. Julian Company has a problem with its advertising expense

Julian Company has a problem with its cost of goods sold.

The data below are for Julian Company and Standard Company. Standard Company is the best company in Julian's industry; all companies in the industry strive to do things the way that Standard does them. Julian Standard Cash 500 3,250 Accounts Receivable 5,000 15,000 Inventory 3,000 19,500 Property, Plant, and Equipment 12,000 40,000 Total Assets 20,500 77,750 Total Liabilities 13,000 37,000 Total Equity 7,500 40,750 Sales 30,000 150,000 Cost of Goods Sold (18,000) (90,000) Wage Expense (7,500) (30,000) Research Expense (2,000) (10,000) Advertising Expense (1,600) (8,000) Net Income 900 12,000 Which ONE of the following statements is TRUE regarding Julian's income statement? Remember, Standard Company represents the standard of performance in Julian's industry. Julian Company has a problem with its research expense. Julian Company's profitability is better than Standard Company's profitability Julian Company has a problem with its advertising expense. Julian Company has a problem with its wage expense. Julian Company has a problem with its cost of goods sold.

Julian Company has a problem with its wage expense.

INDIRECT materials costing $1,000 were transferred from the materials warehouse to be used in production. At this point, how are these INDIRECT materials reported in the production cost records? Period Cost Manufacturing Overhead Cost of Goods Sold Direct Labor

Manufacturing Overhead

The following data are taken from the comparative balance sheet prepared for Route 13 Company. Year 2 Year 1 Cash 75,000 45,000 Accounts receivable 225,000 135,000 Inventories 375,000 225,000 Property, plant, and equipment 900,000 450,000 Total assets $1,575,000 $855,000 Sales for Year 2 were $1,500,000. Sales for Year 1 were $900,000. Overall, Route 13 Company is less efficient at using its assets to generate sales in Year 2 than in Year 1. What asset is responsible for this decreased efficiency? Property, plant, and equipment Inventory Accounts receivable Cash

Property, plant, and equipment

Comparative income statements for South Drive Company for Year 2 and Year 1 are given below. Year 2 Year 1 Sales 1,000,000 600,000 Cost of goods sold (700,000) (420,000) Gross profit on sales 300,000 180,000 Wage expense (50,000) (30,000) Rent expense (110,000) (50,000) Operating income 140,000 100,000 Interest expense (50,000) (30,000) Net income 90,000 70,000 Return on sales for South Drive is lower in Year 2 than in Year 1. What expense is causing this lower profitability? Wage expense Rent expense Cost of goods sold Interest expense

Rent expense

The production budget is computed as: (Sales budget × Beginning inventory) − Desired ending inventory Beginning inventory + Desired ending inventory − Sales budget Beginning inventory + Sales budget − Desired ending inventory Sales budget + Desired ending inventory − Beginning inventory (Sales budget × Beginning inventory) − Desired ending inventory Beginning inventory + Desired ending inventory − Sales budget Beginning inventory + Sales budget − Desired ending inventory Sales budget + Desired ending inventory − Beginning inventory

Sales budget + Desired ending inventory − Beginning inventory

What is the danger in focusing a financial analysis solely on the data found in the historical financial statements? The analysis might ignore current-year data. The analysis might reflect fair values rather than leveraged values. The analysis might be based on divisional data rather than segment data. The analysis might reflect both fixed and variable costs.

The analysis might ignore current-year data.

Todd Company APPLIED manufacturing overhead totaling $75,000 to various customer orders during the year. This $75,000 in applied manufacturing overhead was added directly to Finished Goods Inventory Cost of Goods Sold Work-in-Process Inventory Raw Materials Inventory

Work-in-Process Inventory

Comparative income statements for South Drive Company for Year 2 and Year 1 are given below. Year 2 Year 1 Sales 1,000,000 600,000 Cost of goods sold (400,000) (240,000) Gross profit on sales 600,000 360,000 Wage expense (70,000) (30,000) Rent expense (83,333) (50,000) Operating income 446,667 280,000 Interest expense (50,000) (30,000) Net income 396,667 250,000 Return on sales for South Drive is lower in Year 2 than in Year 1. What expense is causing this lower profitability? Rent expense Interest expense Wage expense Cost of goods sold

Wage expense

Lorien Company manufactures baby car seats. Which ONE of the following is NOT a PRODUCT cost? Property taxes on the car seat manufacturing building Wages of the janitors in the executive office building Wages of the janitors in the car seat manufacturing building Salary of the factory quality control inspector Salary of the manufacturing production supervisor Cost of the electricity used in the car seat manufacturing building Cost of plastic used in the construction of the car seats

Wages of the janitors in the executive office building

Which ONE of the following is a PRODUCT cost? Wages paid to company accounts receivable clerk Supplies used in corporate headquarters Depreciation on salesperson's automobiles Salary paid to sales manager Wages paid to factory workers

Wages paid to factory workers