Acct Final Pt 2

Which of the following costs are always irrelevant in decision making?

sunk costs

The average operating assets were $8,000,000. At the beginning of this year, the company has a $900,000 investment opportunity that would involve sales of $2,070,000, a contribution margin ratio of 30% of sales, and fixed expenses of $538,200. The company's minimum required rate of return is 10%. If the company pursues the investment opportunity, this year's combined residual income for the entire company will be closest to:

$104,800

What is the variable overhead efficiency variance for the month?

$15,200 U

Assume that a company's revenue in its flexible budget is $76,000. Its actual amount of revenue is $72,000 and the amount of revenue in the company's planning budget is $78,000. The revenue activity variance is:

$2,000 U.

Assume a company is preparing a budget for its first two months of operations. During the first and second months it expects credit sales of $50,000 and $60,000, respectively. The company expects to collect 40% of its credit sales in the month of the sale and the remaining 60% in the following month. What is the expected cash collections from credit sales during the first month?

$20,000

If the company maintains no beginning or ending inventories, what is the budgeted gross margin for May?

$20,000

Assume a company is preparing a budget for its first two months of operations. During the first and second months it expects credit sales of $50,000 and $60,000, respectively. The company expects to collect 40% of its credit sales in the month of the sale, 55% in the following month, and 5% is deemed uncollectible. What amount of accounts receivable (net) would the company report in its balance sheet at the end of the second month?

$33,000

Assume a company incurs $200,000 of customer service salaries. The employees in the Customer Service Department spend their time performing four activities as follows: 40% of their time is spent in "Problem Resolution," 25% of their time is spent in "New Account Setup," 20% of their time is spent in "Payment Processing," and 15% is spent in "Other" activities. In the company's activity-based costing system, how much of the customer service salaries would be allocated to the "Payment Processing" activity?

$40,000

The labor rate variance for July is:

$764 U

Assume a company's direct labor budget for July estimates 10,000 labor-hours to meet the month's production requirements. The variable manufacturing overhead rate used for budgeting purposes is $3.00 per direct labor-hour. The budgeted fixed manufacturing overhead for July is $60,000 including $8,000 of depreciation. What is the amount of budgeted cash disbursements for manufacturing overhead for July?

$82,000

The raw materials price variance for the month is closest to:

$9,450 U

A study has been conducted to determine if Product A should be dropped. Sales of the product total $500,000; variable expenses total $340,000. Fixed expenses charged to the product total $210,000. The company estimates that $60,000 of these fixed expenses are not avoidable even if the product is dropped. If Product A is dropped, the annual financial advantage (disadvantage) for the company of eliminating this product should be:

($10,000)

In the company's accounting system all fixed expenses of the company are fully allocated to products. Further investigation has revealed that $144,000 of the fixed manufacturing expenses and $93,000 of the fixed selling and administrative expenses are avoidable if product U23N is discontinued. The financial advantage (disadvantage) for the company of eliminating this product for the upcoming year would be:

($143,000)

If the Children's Division is eliminated, $170,000 of the above fixed expenses could be avoided. The annual financial advantage (disadvantage) for the company of eliminating this division should be:

($30,000)

Pankey Incorporated has a $700,000 investment opportunity that would involve sales of $1,050,000, a contribution margin ratio of 40% of sales, and fixed expenses of $325,500. The company's minimum required rate of return is 18%. The residual income for this year's investment opportunity is closest to:

($31,500)

The manufacturing cycle efficiency (MCE) was closest to:

0.16

Piper Corporation's standards call for 1,000 direct labor-hours to produce 250 units of product. During October the company worked 1,250 direct labor-hours and produced 300 units. The standard hours allowed for October would be:

1,200 hours

Last year's margin was closest to:

10%

The manufacturing cycle efficiency (MCE) for Hunt Company is:

25%

The turnover for this year's investment opportunity considered alone is closest to:

3.60

All of the following statements are true

A product-level activity cost is unaffected by the number of units produced. Second-stage allocation assigns activity costs to products or customers. Planning involves developing goals and preparing various budgets to achieve those goals. The activity variance for revenue will be favorable if the actual level of activity is greater than the planned level of activity. The revenue variance will equal zero if the actual revenue earned equals the revenue expected for the actual level of activity. The spending variance for a fixed expense will be favorable if the amount of the expense contained in the flexible budget is greater than the actual amount of the expense.

Which of the following statements is false with respect to the sales budget including a schedule of expected cash collections?

Although the estimated amounts of sales and cash collections may differ from one another on a month-to-month or quarterly basis, these two estimates must equal each other on an annual basis.

Which of the following would not be included in operating assets in return on investment calculations?

Factory building rented to (and occupied by) another company.

Which of the following activity measures correlates with (or moves in tandem with) the allocation bases used in traditional absorption costing systems?

Unit-level activity measures

Assume that a company's planned level of activity is 1,100 hours and its actual level of activity is 1,000 hours. Based on this information, the company's activity variances for its fixed expenses will:

all be zero.

An activity is:

an event that causes the consumption of overhead resources.

he cost of testing incoming materials received from suppliers would be classified as a(n):

appraisal cost.

United Industries manufactures a number of products at its highly automated factory. The products are very popular, with demand far exceeding the factory's capacity. To maximize profit, management should rank products based on their:

contribution margin per unit of the constrained resource

Throughput time is the amount of time required to move a completed unit from the factory floor to the warehouse.

false

A revenue variance is calculated by comparing the:

flexible budget to the actual results.

The cost of labor time required to rework defective units would be classified as a(n):

internal failure cost.

Which of the following measures of performance encourages continued expansion by an investment center so long as it is able to earn a return in excess of the minimum required return on average operating assets?

residual income

The production department should generally be responsible for materials price variances that resulted from:

rush orders arising from poor scheduling.

A favorable labor rate variance indicates that

the standard rate exceeds the actual rate.