ACCT 2302 Exam #2

If a company has adopted continuous budgeting, the budget will show plans for a) the current year and the next year. b) every day. c) at least five years. d) a full year ahead.

d) a full year ahead.

Nielson Corp. sells its product for $6,600 per unit. Variable costs per unit are:manufacturing overhead, and $24,000 selling and administrative. There was no beginning inventory at 1/1/15. Production was 20 units per year in 2015-2017. Sales were 20 units in 2015, 16 units in 2016, and 24 units in 2017. For the three years 2015-2017, a) variable costing income exceeds absorption costing income by $8,000. b) absorption costing income may be greater than, equal to, or less than variable costing income, depending on the situation. c) absorption costing income exceeds variable costing income by $8,000. d) absorption costing income equals variable costing income.

d) absorption costing income equals variable costing income.

When production exceeds sales, a) ending inventory under absorption costing will be equal to ending inventory under variable costing. b) ending inventory under absorption costing may exceed, be equal to, or be less than ending inventory under variable costing. c) ending inventory under variable costing will exceed ending inventory under absorption costing. d) ending inventory under absorption costing will exceed ending inventory under variable costing.

d) ending inventory under absorption costing will exceed ending inventory under variable costing.

When production exceeds sales, a) variable and fixed manufacturing overhead costs are deferred until a future period under absorption costing. b) some fixed manufacturing overhead costs are deferred until a future period under variable costing. c) variable and fixed manufacturing overhead costs are deferred until a future period under variable costing. d) some fixed manufacturing overhead costs are deferred until a future period under absorption costing.

d) some fixed manufacturing overhead costs are deferred until a future period under absorption costing.

The one primary difference between variable and absorption costing is that under a) absorption costing, companies charge the fixed manufacturing overhead as an expense in the current period. b) variable costing, companies charge the variable manufacturing overhead as an expense in the current period. c) absorption costing, companies charge the variable manufacturing overhead as an expense in the current period. d) variable costing, companies charge the fixed manufacturing overhead as an expense in the current period.

d) variable costing, companies charge the fixed manufacturing overhead as an expense in the current period.

Curtis Corporation's contribution margin is $25 per unit for Product A and $30 for Product B. Product A requires 2 machine hours and Product B requires 4 machine hours. How much is the contribution margin per unit of limited resource for each product? A B a) $12.50 $8.33 b) $10.00 $8.33 c) $12.50 $7.50 d) $10.00 $7.50

A B c) $12.50 $7.50

Under absorption costing and variable costing, how are variable manufacturing costs treated? Absorption Variable a) Period Cost Product Cost b) Product Cost Product Cost c) Product Cost Period Cost d) Period Cost Period Cost

Absorption Variable b) Product Cost Product Cost ~Remember~ **Absorption costing:** all manufacturing costs (variable and fixed) are product costs. **Variable costing:** only variable manufacturing costs are product costs (fixed manufacturing costs are period costs).

Under absorption costing and variable costing, how are fixed manufacturing costs treated? Absorption Variable a) Period Cost Product Cost b) Product Cost Product Cost c) Product Cost Period Cost d) Period Cost Period Cost

Absorption Variable c) Product Cost Period Cost

For Pierce Company, sales is $500,000, variable expenses are $340,000, and fixed expenses are $140,000. Pierce's contribution margin ratio is a) 4%. b) 28%. c) 32%. d) 68%.

Formula: (Sales - Variable Expenses) / Sales Steps: ($500,000 - $340,000) / $500,000 160,000 / 500,000 = 0.32 = 32%

Crawford Company has the following equivalent units for July: materials 20,000 and conversion costs 18,000. Production cost data are: Materials Conversion Work in process, July 1 $ 6,400 $ 3,000 Costs added in July 50,400 42,000 The unit production costs for July are: Materials Conversion Costs a) 2.84 2.50 b) $2.52 $2.50 c) 2.52 2.33 d) 2.84 2.33

Materials Conversion Costs a) 2.84 2.50

Sprinkle Co. sells its product for $60 per unit. During 2016, it produced 60,000 units and sold 50,000 units (there was no beginning inventory). Costs per unit are: direct materials $15, direct labor $9, and variable overhead $3. Fixed costs are: $720,000 manufacturing overhead, and $90,000 selling and administrative expenses. Cost of goods sold under absorption costing is a) $1,950,000. b) $1,620,000. c) $1,560,000. d) $1,350,000.

a) $1,950,000.

A company can sell all the units it can produce of either Product A or Product B but not both. Product A has a unit contribution margin of $16 and takes two machine hours to make and Product B has a unit contribution margin of $30 and takes three machine hours to make. If there are 5,000 machine hours available to manufacture a product, income will be a) $10,000 less if Product A is made. b) the same if either product is made. c) $10,000 less if Product B is made. d) $10,000 more if Product A is made.

a) $10,000 less if Product A is made.

Sprinkle Co. sells its product for $60 per unit. During 2016, it produced 60,000 units and sold 50,000 units (there was no beginning inventory). Costs per unit are: direct materials $15, direct labor $9, and variable overhead $3. Fixed costs are: $720,000 manufacturing overhead, and $90,000 selling and administrative expenses. Under absorption costing, what amount of fixed overhead is deferred to a future period? a) $120,000 b) $720,000 c) $150,000 d) $30,000

a) $120,000

Nielson Corp. sells its product for $6,600 per unit. Variable costs per unit are: manufacturing, $3,600, and selling and administrative, $75. Fixed costs are: $18,000 manufacturing overhead, and $24,000 selling and administrative. There was no beginning inventory at 1/1/15. Production was 20 units per year in 2015-2017. Sales were 20 units in 2015, 16 units in 2016, and 24 units in 2017. Income under absorption costing for 2017 is a) $24,600. b) $23,400. c) $28,200. d) $19,800.

a) $24,600.

Sprinkle Co. sells its product for $60 per unit. During 2016, it produced 60,000 units and sold 50,000 units (there was no beginning inventory). Costs per unit are: direct materials $15, direct labor $9, and variable overhead $3. Fixed costs are: $720,000 manufacturing overhead, and $90,000 selling and administrative expenses. The per unit manufacturing cost under variable costing is a) $27. b) $24. c) $39. d) $40.

a) $27

Sprinkle Co. sells its product for $60 per unit. During 2016, it produced 60,000 units and sold 50,000 units (there was no beginning inventory). Costs per unit are: direct materials $15, direct labor $9, and variable overhead $3. Fixed costs are: $720,000 manufacturing overhead, and $90,000 selling and administrative expenses. Ending inventory under variable costing is a) $390,000. b) $600,000. c) $270,000. d) $1,350,000.

a) $270,000.

Nielson Corp. sells its product for $6,600 per unit. Variable costs per unit are: manufacturing, $3,600, and selling and administrative, $75. Fixed costs are: $18,000 manufacturing overhead, and $24,000 selling and administrative. There was no beginning inventory at 1/1/15. Production was 20 units per year in 2015-2017. Sales were 20 units in 2015, 16 units in 2016, and 24 units in 2017. Income under variable costing for 2016 is a) $4,800. b) $8,400. c) $9,600. d) $13,200.

a) $4,800

Swanson Company has two divisions; Sporting Goods and Sports Gear. The sales mix is 65% for Sporting Goods and 35% for Sports Gear. Swanson incurs $6,660,000 in fixed costs. The contribution margin ratio for Sporting Goods is 30%, while for Sports Gear it is 50%. What will be the total contribution margin at the break-even point? a) $6,660,000 b) $6,720,000 c) $5,730,699 d) $7,740,000

a) $6,660,000

In 2016, Teller Company sold 3,000 units at $600 each. Variable expenses were $420 per unit, and fixed expenses were $270,000. The same selling price, variable expenses, and fixed expenses are expected for 2017. What is Teller's break-even point in sales dollars for 2017? a) $900,000 b) $2,700,000 c) $1,800,000 d) $2,571,429

a) $900,000

Comma Co. makes and sells widgets. The company is in the process of preparing its selling and administrative expense budget for the month. The following budget data are available: Item Variable Cost Per Unit Sold Monthly Fixed Cost Sales commissions $1 $10,000 Shipping $3 Advertising $4 Executive salaries $120,000 Depreciation on office equipment $4,000 Other $2 $6,000 Expenses are paid in the month incurred. If the company has budgeted to sell 80,000 widgets in October, how much is the total budgeted selling and administrative expenses for October? a) $940,000 b) $930,000 c) $140,000 d) $800,000

a) $940,000

In 2016, Teller Company sold 3,000 units at $600 each. Variable expenses were $420 per unit, and fixed expenses were $270,000. The same selling price, variable expenses, and fixed expenses are expected for 2017. What is Teller's break-even point in units for 2017? a) 1,500 b) 750 c) 643 d) 450

a) 1,500

In 2016, Carow sold 3,000 units at $500 each. Variable expenses were $250 per unit, and fixed expenses were $500,000. The same selling price is expected for 2017. Carow is tentatively planning to invest in equipment that would increase fixed costs by 20%, while decreasing variable costs per unit by 20%. What is Carow's break-even point in units for 2017? a) 2,000 b) 3,000 c) 2,400 d) 2,500

a) 2,000

The direct materials budget shows: Desired ending direct materials 48,000 pounds Total materials required 69,000 pounds Direct materials purchases 63,200 pounds The total direct materials needed for production is a) 21,000 pounds. b) 5,800 pounds. c) 15,200 pounds. d) 132,200 pounds.

a) 21,000 pounds.

The direct materials budget shows: Units to be produced 3,000 Total pounds needed for production 9,000 Total materials required 9,900 What are the direct materials per unit? a) 3.0 pounds b) 3.3 pounds c) Cannot be determined from the data provided d) .33 pounds

a) 3.0 pounds

The following information is taken from the production budget for the first quarter: Beginning inventory in units 1,200 Sales budgeted for the quarter 426,000 Capacity in units of production facility 472,000 How many finished goods units should be produced during the quarter if the company desires 3,200 units available to start the next quarter? a) 428,000 b) 424,000 c) 474,000 d) 429,200

a) 428,000

The Molding Department of Kennett Company has the following production data: beginning work in process 25,000 units (60% complete), started into production 475,000 units, completed and transferred out 450,000 units, and ending work in process 50,000 units (40% complete). Assuming conversion costs are incurred uniformly during the process, the equivalent units for conversion costs are: a) 470,000. b) 450,000. c) 500,000. d) 455,000.

a) 470,000.

For Sanborn Co., sales is $1,000,000, fixed expenses are $300,000, and the contribution margin per unit is $60. What is the break-even point? a) 5,000 units b) $500,000 sales dollars c) 16,667 units d) $1,666,667 sales dollars

a) 5,000 units Formula: (Fixed Costs / Contribution Margin per Unit) Steps: ($300,000 / $60) = 5,000 units

The production budget shows expected unit sales of 32,000. Beginning finished goods units are 3,600. Required production units are 33,600. What are the desired ending finished goods units? a) 5,200 b) 6,400 c) 2,000 d) 3,600

a) 5,200

A department adds raw materials to a process at the beginning of the process and incurs conversion costs uniformly throughout the process. For the month of January, there were no units in the beginning work in process inventory; 90,000 units were started into production in January; and there were 20,000 units that were 40% complete in the ending work in process inventory at the end of January. What were the equivalent units of production for conversion costs for the month of January? a) 78,000 equivalent units. b) 82,000 equivalent units. c) 90,000 equivalent units. d) 70,000 equivalent units.

a) 78,000 equivalent units.

A department adds raw materials to a process at the beginning of the process and incurs conversion costs uniformly throughout the process. For the month of January, there were no units in the beginning work in process inventory; 90,000 units were started into production in January; and there were 20,000 units that were 40% complete in the ending work in process inventory at the end of January. What were the equivalent units of production for materials for the month of January? a) 90,000 equivalent units. b) 70,000 equivalent units. c) 82,000 equivalent units. d) 98,000 equivalent units.

a) 90,000 equivalent units.

Why are budgets useful in the planning process? a) They help communicate goals and provide a basis for evaluation. b) They enable the budget committee to earn their paycheck. c) They guarantee the company will be profitable if it meets its objectives. d) They provide management with information about the company's past performance.

a) They help communicate goals and provide a basis for evaluation.

Cost-volume-profit analysis is the study of the effects of a) changes in costs and volume on a company's profit. b) cost, volume, and profit on various ratios. c) changes in costs and volume on a company's profitability ratios. d) cost, volume, and profit on the cash budget.

a) changes in costs and volume on a company's profit.

Long-range planning a) generally encompasses a longer period of time than an annual budget. b) generally presents more detailed information than an annual budget. c) is usually more accurate than an annual budget. d) is prepared on a quarterly basis if the budget is prepared on a quarterly basis.

a) generally encompasses a longer period of time than an annual budget.

A primary driver of overhead costs in continuous manufacturing operations is: a) machine hours. b) machine maintenance dollars. c) direct labor dollars. d) direct labor hours.

a) machine hours

At January 1, 2016, Deer Corp. has beginning inventory of 2,000 surfboards. Deer estimates it will sell 10,000 units during the first quarter of 2016 with a 12% increase in sales each quarter. Deer's policy is to maintain an ending inventory equal to 25% of the next quarter's sales. Each surfboard costs $100 and is sold for $150. How much is budgeted sales revenue for the third quarter of 2016? a) $1,950,000 b) $1,881,600 c) $450,000 d) $12,544

b) $1,881,600

Swanson Company has two divisions; Sporting Goods and Sports Gear. The sales mix is 65% for Sporting Goods and 35% for Sports Gear. Swanson incurs $6,660,000 in fixed costs. The contribution margin ratio for Sporting Goods is 30%, while for Sports Gear it is 50%. What will sales be for the Sporting Goods Division at the break-even point? a) $5,400,000 b) $11,700,000 c) $6,300,000 d) $10,067,442

b) $11,700,000

Teller Co. is planning to sell 900 boxes of ceramic tile, with production estimated at 870 boxes during May. Each box of tile requires 44 pounds of clay mix and a quarter hour of direct labor. Clay mix costs $0.40 per pound and employees of the company are paid $12.00 per hour. Manufacturing overhead is applied at a rate of 110% of direct labor costs. Teller has 3,900 pounds of clay mix in beginning inventory and wants to have 4,500 pounds in ending inventory. What is the total amount to be budgeted for direct labor for the month? a) $41,760 b) $2,610 c) $10,440 d) $2,700

b) $2,610

Strand Company is planning to sell 400 buckets and produce 380 buckets during March. Each bucket requires 500 grams of plastic and one-half hour of direct labor. Plastic costs $10 per 500 grams and employees of the company are paid $15.00 per hour. Manufacturing overhead is applied at a rate of 110% of direct labor costs. Strand has 300 kilos of plastic in beginning inventory and wants to have 200 kilos in ending inventory. How much is the total amount of budgeted direct labor for March? a) $6,000 b) $2,850 c) $5,7000 d) $3,000

b) $2,850

Nielson Corp. sells its product for $6,600 per unit. Variable costs per unit are: manufacturing, $3,600, and selling and administrative, $75. Fixed costs are: $18,000 manufacturing overhead, and $24,000 selling and administrative. There was no beginning inventory at 1/1/15. Production was 20 units per year in 2015-2017. Sales were 20 units in 2015, 16 units in 2016, and 24 units in 2017. Income under variable costing for 2017 is a) $24,600. b) $28,200. c) $19,800. d) $23,400.

b) $28,200.

For Wickham Co., sales is $3,000,000, fixed expenses are $900,000, and the contribution margin ratio is 36%. What is required sales in dollars to earn a target net income of $600,000? a) $1,666,667 b) $4,166,667 c) $8,333,333 d) $2,500,000

b) $4,166,667 Steps: ($600,000 + $900,000) / 0.36 1,500,000 / 0.36 = $4,166,667

In the Shaping Department of Jenkins Company the unit materials cost is $3.00 and the unit conversion cost is $1.80. The department transferred out 8,000 units and had 2,000 units in ending work in process 20% complete. If all materials are added at the beginning of the process, the total cost to be assigned to the ending work in process is a) $6,000. b) $6,720. c) $1,920. d) $9,600.

b) $6,720

The following department data are available: Total materials costs $180,000 Equivalent units of materials 60,000 Total conversion costs $105,000 Equivalent units of conversion costs 30,000 What is the total manufacturing cost per unit? a) $3.00. b) $6.50. c) $3.50. d) $4.75.

b) $6.50

Materials costs of $600,000 and conversion costs of $642,600 were charged to a processing department in the month of September. Materials are added at the beginning of the process, while conversion costs are incurred uniformly throughout the process. There were no units in beginning work in process, 100,000 units were started into production in September, and there were 8,000 units in ending work in process that were 40% complete at the end of September. What was the total amount of manufacturing costs assigned to the 8,000 units in the ending work in process? a) $40,800. b) $69,600. c) $48,000. d) $21,600.

b) $69,600

MacCloud Industries has two divisions—Standard and Premium. Each division has hundreds of different types of tennis racquets and tennis products. The following information is available: Standard Division Premium Division Total Sales $400,000 $600,000 $1,000,000 Variable costs 280,000 360,000 Contribution margin $120,000 $240,000 Total fixed costs $320,000 What is the break-even point in dollars? a) $108,000 b) $833,333 c) $857,143 d) $882,353

b) $833,333

A company determined that the budgeted cost of producing a product is $30 per unit. On June 1, there were 80,000 units on hand, the sales department budgeted sales of 300,000 units in June, and the company desires to have 120,000 units on hand on June 30. The budgeted cost of goods sold for June would be a) $11,400,000. b) $9,000,000. c) $10,200,000. d) $7,800,000.

b) $9,000,000.

In 2016, Raleigh sold 1,000 units at $500 each, and earned net income of $40,000. Variable expenses were $300 per unit, and fixed expenses were $160,000. The same selling price is expected for 2017. Raleigh's variable cost per unit will rise by 10% in 2017 due to increasing material costs, so they are tentatively planning to cut fixed costs by $10,000. How many units must Raleigh sell in 2017 to maintain the same income level as 2016? a) 1,000 b) 1,118 c) 882 d) 1,056

b) 1,118

In the month of June, a department had 20,000 units in beginning work in process that were 70% complete. During June, 90,000 units were transferred into production from another department. At the end of June there were 10,000 units in ending work in process that were 40% complete. Materials are added at the beginning of the process, while conversion costs are incurred uniformly throughout the process. The equivalent units of production for conversion costs for June were a) 90,000 equivalent units. b) 104,000 equivalent units. c) 100,000 equivalent units. d) 110,000 equivalent units.

b) 104,000 equivalent units

Haft Construction Company determines that 54,000 pounds of direct materials are needed for production in July. There are 3,200 pounds of direct materials on hand at July 1 and the desired ending inventory is 2,800 pounds. If the cost per unit of direct materials is $3, what is the budgeted total cost of direct materials purchases? a) 165,600. b) 160,800. c) 158,400. d) 163,200.

b) 160,800

Miller Manufacturing's degree of operating leverage is 1.5. Warren Corporation's degree of operating leverage is 3. Warren's earnings would go up (or down) by ________ as much as Miller's with an equal increase (or decrease) in sales. a) 1.5 times b) 2 times c) 4.5 times d) 1/2

b) 2 times Steps: Warren's degree / Miller's degree 3 / 1.5 = 2 Answer: 2 times

A company budgeted unit sales of 204,000 units for January, 2017 and 240,000 units for February 2017. The company has a policy of having an inventory of units on hand at the end of each month equal to 30% of next month's budgeted unit sales. If there were 61,200 units of inventory on hand on December 31, 2016, how many units should be produced in January, 2017 in order for the company to meet its goals? a) 276,000 units b) 214,800 units c) 204,000 units d) 193,200 units

b) 214,800 units

Dolce Co. estimates its sales at 180,000 units in the first quarter and that sales will increase by 18,000 units each quarter over the year. They have, and desire, a 25% ending inventory of finished goods. Each unit sells for $25. 40% of the sales are for cash. 70% of the credit customers pay within the quarter. The remainder is received in the quarter following sale. Production in units for the third quarter should be budgeted at a) 216,000. b) 220,500. c) 207,000. d) 274,500.

b) 220,500.

Roosevelt Corporation has a weighted-average unit contribution margin of $30 for its two products, Standard and Supreme. Expected sales for Roosevelt are 40,000 Standard and 60,000 Supreme. Fixed expenses are $1,800,000. How many Standards would Roosevelt sell at the break-even point? a) 60,000 b) 24,000 c) 36,000 d) 40,000

b) 24,000

Barnes and Miller Manufacturing is trying to determine the equivalent units for conversion costs with 10,000 units of ending work in process at 80% completion and 32,000 physical units. There are no beginning units in the department. Conversion costs occur evenly throughout the entire production period. What are the equivalent units for conversion costs for the current period? a) 8,000. b) 30,000. c) 42,000. d) 40,000.

b) 30,000 Steps: 32,000 - 10,000 = 22,000 22,000 + (10,000 x 0.8) = 30,000 Answer: 30,000

Teller Co. is planning to sell 900 boxes of ceramic tile, with production estimated at 870 boxes during May. Each box of tile requires 44 pounds of clay mix and a quarter hour of direct labor. Clay mix costs $0.40 per pound and employees of the company are paid $12.00 per hour. Manufacturing overhead is applied at a rate of 110% of direct labor costs. Teller has 3,900 pounds of clay mix in beginning inventory and wants to have 4,500 pounds in ending inventory. What is the total amount to be budgeted in pounds for direct materials to be purchased for the month? a) 37,680 b) 38,880 c) 40,200 d) 38,280

b) 38,880

Mercantile Corporation has sales of $2,000,000, variable costs of $800,000, and fixed costs of $900,000. Mercantile's degree of operating leverage is a) 1.50. b) 4.00. c) 1.33. d) 1.67.

b) 4.00.

The following information is taken from the production budget for the first quarter: Beginning inventory in units 1,200 Sales budgeted for the quarter 456,000 Production capacity in units 472,000 How many finished goods units should be produced during the quarter if the company desires 3,200 units available to start the next quarter? a) 474,000 b) 458,000 c) 459,200 d) 454,000

b) 458,000

In 2016, Hagar Corp. sold 3,000 units at $500 each. Variable expenses were $350 per unit, and fixed expenses were $780,000. The same variable expenses per unit and fixed expenses are expected for 2017. If Hagar cuts selling price by 4%, what is Hagar's break-even point in units for 2017? a) 5,200 b) 6,000 c) 5,416 d) 5,760

b) 6,000

A product requires processing in two departments, the Baking Department and then the Packaging Department, before it is completed. Costs transferred out of the Baking Department will be transferred to: a) Finished Goods Inventory. b) Work in Process-Packaging Department. c) Manufacturing Overhead. d) Cost of Goods Sold.

b) Work in Process-Packaging Department

A process cost system would be used by all of the following except a(n) a) oil company. b) advertising company. c) computer chip company. d) chemical company.

b) advertising company.

The total costs accounted for in a production cost report equal the a) cost of units started into production. b) cost of units completed and transferred out plus the cost of ending work in process. c) cost of units completed and transferred out only. d) cost of beginning work in process plus the cost of units completed and transferred out.

b) cost of units completed and transferred out plus the cost of ending work in process.

Price Company assigns overhead based on machine hours. The Milling Department logs 2,400 machine hours and Cutting Department shows 4,000 machine hours for the period. If the overhead rate is $5 per machine hour, the entry to assign overhead will show a a) debit to Manufacturing Overhead for $32,000. b) credit to Manufacturing Overhead for $32,000. c) credit to Work in Process—Cutting Department for $20,000. d) debit to Work in Process for $20,000.

b) credit to Manufacturing Overhead for $32,000

In a sales mix situation, at any level of units sold, net income will be higher if a) weighted-average unit contribution margin decreases. b) more higher contribution margin units are sold than lower contribution margin units. c) more lower contribution margin units are sold than higher contribution margin units. d) more fixed expenses are incurred.

b) more higher contribution margin units are sold than lower contribution margin units.

A cost structure which relies more heavily on fixed costs makes the company a) have a lower break-even point. b) more sensitive to changes in sales revenue. c) less sensitive to changes in sales revenue. d) either more or less sensitive to changes in sales revenue, depending on other factors.

b) more sensitive to changes in sales revenue.

In the production cost report, the total a) costs charged equals the units to be accounted for. b) physical units accounted for equals the units to be accounted for. c) costs accounted for equals the costs of the units started into production. d) physical units accounted for equals the costs accounted for.

b) physical units accounted for equals the units to be accounted for.

Sales mix is a) the mix of variable and fixed expenses in relation to sales. b) the relative percentage in which a company sells its multiple products. c) a measure of leverage used by the company. d) the trend of sales over recent periods.

b) the relative percentage in which a company sells its multiple products.

Roosevelt Corporation has a weighted-average unit contribution margin of $30 for its two products, Standard and Supreme. Expected sales for Roosevelt are 40,000 Standard and 60,000 Supreme. Fixed expenses are $1,800,000. At the expected sales level, Roosevelt's net income will be a) $(300,000). b) $ 0 . c) $1,200,000. d) $3,000,000.

c) $1,200,000

Astor Manufacturing has the following budgeted sales: January $120,000, February $180,000, and March $150,000. 40% of the sales are for cash and 60% are on credit. For the credit sales, 50% are collected in the month of sale, and 50% the next month. The total expected cash receipts during March are: a) $168,000. b) $157,500. c) $159,000. d) $150,000.

c) $159,000.

Teller Co. is planning to sell 900 boxes of ceramic tile, with production estimated at 870 boxes during May. Each box of tile requires 44 pounds of clay mix and a quarter hour of direct labor. Clay mix costs $0.40 per pound and employees of the company are paid $12.00 per hour. Manufacturing overhead is applied at a rate of 110% of direct labor costs. Teller has 3,900 pounds of clay mix in beginning inventory and wants to have 4,500 pounds in ending inventory. What is the total amount to be budgeted for manufacturing overhead for the month? a) $11,880 b) $2,970 c) $2,871 d) $11,484

c) $2,871

Long Company has recently tried to improve its analysis for its manufacturing process. Units started into production equaled 6,000 and ending work in process equaled 400 units. Long had no beginning work in process inventory. Conversion costs are applied equally throughout production, and materials are applied at the beginning of the process. How much is the materials cost per unit if ending work in process was 25% complete and total materials costs equaled $18,000? a) $3.16. b) $2.81. c) $3.00. d) $11.25.

c) $3.00

Sprinkle Co. sells its product for $60 per unit. During 2016, it produced 60,000 units and sold 50,000 units (there was no beginning inventory). Costs per unit are: direct materials $15, direct labor $9, and variable overhead $3. Fixed costs are: $720,000 manufacturing overhead, and $90,000 selling and administrative expenses. The per unit manufacturing cost under absorption costing is a) $27. b) $24. c) $39. d) $40.

c) $39.

Dolce Co. estimates its sales at 180,000 units in the first quarter and that sales will increase by 18,000 units each quarter over the year. They have, and desire, a 25% ending inventory of finished goods. Each unit sells for $25. 40% of the sales are for cash. 70% of the credit customers pay within the quarter. The remainder is received in the quarter following sale. Cash collections for the third quarter are budgeted at a) $3,051,000. b) $4,428,000. c) $5,319,000. d) $6,156,000.

c) $5,319,000.

A company has budgeted direct materials purchases of $300,000 in July and $480,000 in August. Past experience indicates that the company pays for 70% of its purchases in the month of purchase and the remaining 30% in the next month. During August, the following items were budgeted: Wages Expense $150,000 Purchase of office equipment 72,000 Selling and Administrative Expenses 48,000 Depreciation Expense 36,000 The budgeted cash disbursements for August are a) $426,000. b) $648,000. c) $696,000. d) $732,000.

c) $696,000.

Ramirez Corporation sells two types of computer hard drives. The sales mix is 30% (Q-Drive) and 70% (Q-Drive Plus). Q-Drive has variable costs per unit of $90 and a selling price of $150. Q-Drive Plus has variable costs per unit of $105 and a selling price of $195. The weighted-average unit contribution margin for Ramirez is a) $69. b) $75. c) $81. d) $150.

c) $81 Steps: Q-Drive: ($150 - $90) x 0.30 = $18 Q-Drive Plus: ($195 - $105) x 0.70 = $63 18 + 63 = 81 Answer: $81

Charley Company's Assembly Department has materials cost at $2 per unit and conversion cost at $4 per unit. There are 20,000 units in ending work in process, all of which are 70% complete as to conversion costs and 100% complete as to materials. How much are total costs to be assigned to inventory? a) $120,000. b) $56,000. c) $96,000. d) $84,000.

c) $96,000

In the month of June, a department had 20,000 units in beginning work in process that were 70% complete. During June, 90,000 units were transferred into production from another department. At the end of June there were 10,000 units in ending work in process that were 40% complete. Materials are added at the beginning of the process, while conversion costs are incurred uniformly throughout the process. How many units were transferred out of the process in June? a) 110,000 units. b) 90,000 units. c) 100,000 units. d) 80,000 units.

c) 100,000 units.

In the month of June, a department had 20,000 units in beginning work in process that were 70% complete. During June, 90,000 units were transferred into production from another department. At the end of June there were 10,000 units in ending work in process that were 40% complete. Materials are added at the beginning of the process, while conversion costs are incurred uniformly throughout the process. The equivalent units of production for materials for June were a) 90,000 equivalent units. b) 100,000 equivalent units. c) 110,000 equivalent units. d) 114,000 equivalent units.

c) 110,000 equivalent units.

What is the proper preparation sequencing of the following budgets? 1. Budgeted Balance Sheet 2. Sales Budget 3. Selling and Administrative Budget 4. Budgeted Income Statement a) 2, 3, 1, 4 b) 1, 2, 3, 4 c) 2, 3, 4, 1 d) 2, 4, 1, 3

c) 2, 3, 4, 1

Management may be tempted to overproduce when using a) variable costing, in order to decrease net income. b) variable costing, in order to increase net income. c) absorption costing, in order to increase net income. d) absorption costing, in order to decrease net income.

c) absorption costing, in order to increase net income.

The CVP income statement classifies costs a) by function and computes a contribution margin. b) as variable or fixed and computes gross margin. c) as variable or fixed and computes contribution margin. d) by function and computes a gross margin.

c) as variable or fixed and computes contribution margin.

Companies recognize fixed manufacturing overhead costs as period costs (expenses) when incurred when using a) product costing. b) full costing. c) variable costing. d) absorption costing.

c) variable costing

Materials costs of $600,000 and conversion costs of $642,600 were charged to a processing department in the month of September. Materials are added at the beginning of the process, while conversion costs are incurred uniformly throughout the process. There were no units in beginning work in process, 100,000 units were started into production in September, and there were 8,000 units in ending work in process that were 40% complete at the end of September. What was the total amount of manufacturing costs assigned to those units that were completed and transferred out of the process in September? a) $1,242,600. b) $552,000. c) $1,275,600. d) $1,173,000.

d) $1,173,000

Dart, Inc. makes and sells umbrellas. The company is in the process of preparing its Selling and Administrative Expense Budget for the last half of the year. The following budget data are available: Variable Cost Per Unit Sold Monthly Fixed Cost Sales commissions $0.60 $ 6,000 Shipping 1.20 Advertising 0.30 Executive salaries 40,000 Depreciation on office equipment 8,000 Other 0.35 28,000 Expenses are paid in the month incurred. If the company has budgeted to sell 8,000 umbrellas in October, how much is the total budgeted variable selling and administrative expenses for October? a) $16,800 b) $101,600 c) $18,400 d) $19,600

d) $19,600

For Buffalo Co., at a sales level of 4,000 units, sales is $75,000, variable expenses total $50,000, and fixed expenses are $21,000. What is the contribution margin per unit? a) $12.50 b) $5.25 c) $18.75 d) $6.25

d) $6.25 Formula: (Sales Price per Unit - Variable Costs per Unit) Steps: ($75,000 / 4,000 units) - ($50,000 / 4,000 units) 18.75 - 12.50 = $6.25

Moonwalker's CVP income statement included sales of 5,000 units, a selling price of $100, variable expenses of $60 per unit, and fixed expenses of $110,000. Net income is a) $500,000. b) $190,000. c) $200,000. d) $90,000.

d) $90,000 Steps: 5,000 x $100 = 500,000 500,000 - (5,000 x $60) = 200,000 200,000 - 110,000 = 90,000 Answer: $90,000

A process with no beginning work in process, completed and transferred out 85,000 units during a period and had 50,000 units in the ending work in process inventory that were 30% complete. The equivalent units of production for the period were: a) 85,000 equivalent units. b) 70,000 equivalent units. c) 135,000 equivalent units. d) 100,000 equivalent units.

d) 100,000 equivalent units. Steps: 85,000 + (50,000 x 0.3) = 100,000 Answer: 100,000 equivalent units

Ramirez Corporation sells two types of computer hard drives. The sales mix is 30% (Q-Drive) and 70% (Q-Drive Plus). Q-Drive has variable costs per unit of $90 and a selling price of $150. Q-Drive Plus has variable costs per unit of $105 and a selling price of $195. Ramirez's fixed costs are $891,000. How many units of Q-Drive would be sold at the break-even point? a) 11,000 b) 4,455 c) 7,700 d) 3,300

d) 3,300

MacCloud Industries has two divisions—Standard and Premium. Each division has hundreds of different types of tennis racquets and tennis products. The following information is available: Standard Division Premium Division Total Sales $400,000 $600,000 $1,000,000 Variable costs 280,000 360,000 Contribution margin $120,000 $240,000 Total fixed costs $320,000 What is the weighted-average contribution margin ratio? a) 50% b) 34% c) 35% d) 36%

d) 36%

Capitol Manufacturing sells 4,000 units of Product A annually, and 6,000 units of Product B annually. The sales mix for Product A is a) Cannot determine from information given. b) 60%. c) 67%. d) 40%

d) 40% Steps: 4,000 units / (4,000 units + 6,000 units) 4,000 / 10,000 = 0.40 = 40%

Lion Industries required production for June is 132,000 units. To make one unit of finished product, three pounds of direct material Z are required. Actual beginning and desired ending inventories of direct material Z are 300,000 and 330,000 pounds, respectively. How many pounds of direct material Z must be purchased? a) 378,000. b) 396,000. c) 408,000. d) 426,000.

d) 426,000.

If there were 60,000 pounds of raw materials on hand on January 1, 120,000 pounds are desired for inventory at January 31, and 410,000 pounds are required for January production, how many pounds of raw materials should be purchased in January? a) 350,000 pounds b) 530,000 pounds c) 290,000 pounds d) 470,000 pounds

d) 470,000 pounds

The Molding Department of Kennett Company has the following production data: beginning work in process 25,000 units (60% complete), started into production 475,000 units, completed and transferred out 450,000 units, and ending work in process 50,000 units (40% complete). Assuming materials are entered at the beginning of the process, equivalent units for materials are: a) 525,000. b) 425,000. c) 450,000. d) 500,000.

d) 500,000.

Which one of the following is not a benefit of budgeting? a) It facilitates the coordination of activities. b) It requires all levels of management to plan ahead on a recurring basis. c) It provides definite objectives for evaluating performance. d) It provides assurance that the company will achieve its objectives.

d) It provides assurance that the company will achieve its objectives.