Accy 202

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At the beginning of the period, the Cutting Department budgeted direct labor of $155,000, direct materials of $165,000, and fixed factory overhead of $15,000 for 9,000 hours of production. The department actually completed 10,000 hours of production. What is the total budget for the department, assuming it uses flexible budgeting?

$370,556

Compute conversion costs: direct materials, $347,500; direct labor, $196,300; factory overhead, $187,900; selling expenses, $45,290

$383,200

Cash dividends of $50,000 were declared during the year. Cash dividends payable were $10,000 and $5,000 at the beginning and end of the year. The amount of cash for the payment of dividends during the year is

$55,000

Based on the following data for the current year, what is the number of days sales in inventory?**

51.2

Custom made goods would be accounted for using a process cost system

False

Equivalent units should be computed separately for direct materials and conversion costs

True

A plant manager's salary is

an indirect cost

Common allocation bases are

direct labor dollars, direct labor hours, machine hours

Which of the following is not a factory overhead allocation method?

factory costing

Rent expense on a factory building would be treated as a

product cost

Recording jobs completed would include a credit to

work in process

Based on the Privett Company, what is the amount of working capital?**

$113,000

The Roget Factory has determined that its budgeted factory overhead budget for the year is $15,500,000. They plan to produce 2,000,000 units. Budgeted direct labor hours are 1,050,000 and budgeted machine hours are 750,000. Using the single plant wide factory overhead rate based on the direct labor hours, calculate the factory overhead for the year.

$14.76

Rogers company reported net income of $35,000 for the year. During the year, accounts receivable increased by $7,000, accounts payable decreased by $3,000 and depreciation expense of $8,000 was recorded. Net cash provided operating expenses for the year is

$33,000

Sanders Inc has applied $567,988 of overhead to jobs in the cost ledger. Actual overhead at the end of the year is $575,000. The adjustment for over or underapplied overhead is

$7,012 underapplied, increase cost of goods sold

Department E had 4,000 units in work in process that were 40% completed at the beginning of the period. During the period, 15,000 units were completed. At the end of the period, 3,000 unites were 75% completed. What was the number of equivalent units of production for conversion costs for the period?

15,650

If Kaden Company's fixed costs are $46,800, the unit selling price is $42, and the unit variable costs are $24. What is the break even sales (units)?

2,600

Based on the following data for the current year, what is the inventory turnover?**

2.7

Johnson's Plumbing's fixed costs are $700,000 and the unit contribution margin is $17. What amount of units must be sold in order to realize an operating income of $100,000?

47,059

Department M had 600 units 60% completed in process at the beginning of June, 6,000 units completed during June, and 700 units 30% completed at the end of June. Using the first in first out method of inventory costing, what was the number of equivalent units of production for conversion costs for the period?

5850

Motorcycles Manufactures Inc projected sales of 78,000 machines for the year. The estimated January 1 inventory is 6,500 units and the desired December 31 inventory is 6,000 units. What is the budgeted production (in units) for the year?

77,500

Which of the following would most likely use process costing?

A lawn fertilizer manufacturer

Which of the following is an example of a factory overhead cost?

Factory heating and lighting cost

Activity based costing is a method of accumulating and allocating costs by department

False

Direct labor cost is an example of period cost

False

For short run production planning, information in the absorption costing format is more useful to the management than the information in the variable costing format

False

Ford's Expedition vehicle is the most profitable model. Therefor, Ford does not need to promote the Expedition model anymore

False

Generally accepted accounting principles require companies to use only one factory overhead rate for production costing

False

If factory overhead applied exceeds the actual costs, overhead is said to be underapplied

False

If fixed costs are $650,000 and the unit contribution margin is $30, the sales necessary to earn an operating income of $30,000 are 14,000 units

False

If fixed costs are $850,000 and the unit contribution margin is $50, profit is zero when 15,000 units are sold

False

If the products of a manufacturing process are produced to customer specifications, a process cost system is more appropriate then a job order cost system

False

In a common sized income statement, each item is expressed as a percentage of net income.

False

In horizontal analysis, the current year is the base year.

False

Multiple production department factory overhead rates are less accurate than a plant wide factory overhead rate

False

On the variable costing income statement, deduction of the variable cost of goods sold from sales yields gross profit

False

Period costs include direct materials and direct labor.

False

The direct materials costs and direct labor costs incurred by a production department are referred to as conversion costs

False

The first budget to the prepared is usually the production budget

False

The ratio that indicates the percentage of each sales dollar available to cover the fixed costs and to provide operating income is termed the contribution margin ratio

False

Total fixed costs change as the level of activity changes

False

Variable costs are costs the vary on a per unit basis with changes in the activity level

False

When a plant wide factory overhead rate is used, the total overhead costs allocated to all products are the same

False

A company purchases equipment for $32,000 cash. This transaction should be shown on the statement of cash flows under

Investing activities

Materials purchased on account during the month totaled $190,000. Materials requisitioned and placed in production totaled $165,000. The journal entry to record the material purchase on account is

Materials 190,000 Accounts Payable 190,000

In calculating cash flows from operating activities using the indirect method, a gain on the**

added to net income

Which of the following should be shown on the statement of cash flows under the financing activities section?

The payment of cash to retire a long term note

A balance sheet shows cash, $75,000; marketable securities, $115,000; receivables, $150,000; and inventory, $222,500. Current liabilities are $225,000. The current ration is 2.5.

True

A law firm would use job order cost system to accumulate al of the costs associated with a particular client engagement, such as lawyer time, copying charges, filing fees, and overhead

True

A process cost accounting system provides product costs for each of the departments or process within the factory

True

A rental cost of $20,000 plus $0.70 per machine hour of use is an example of a mixed cost

True

ABC is used to allocate selling and administrative expenses to each product based on the products individual differences in consuming these activities

True

As product costs are incurred in the manufacturing process, they are accounted for as assists and reported on the balance sheet as inventory

True

Cash flows from financing activities, as part of the statement of cash flows, would include any payments.

True

Cost behavior refers to the manner in which cost changes as the related activity changes

True

Depreciation expense on factory equipment is part of factory overhead cost

True

Direct materials and direct labor are cost examples of variable costs of production

True

Factory overhead is an example of a product cost.

True

Factory overhead is applied to production using a predetermined overhead rate

True

If the activities causing overhead costs are different across different departments and products, use of plant wide factory overhead rate will cause distorted product costs

True

If the underapplied factory overhead amount is immaterial, it is transferred to cost of goods sold at the end of the fiscal year

True

In a process cost system, product costs are accumulated by processing department rather than by job

True

Industries that typically use process cost systems include chemicals, oil, metals, food, paper, and pharmaceuticals

True

Prime costs are the combination of direct materials and direct labor costs.

True

The budgeting process is used to effectively communicate planned expectations regarding profits and expenses to the entire organization

True

The document that serves as the basis for recording direct labor on a job cost sheet is a time ticket

True

The excess of current assets over current liabilities is referred to as working capital.

True

The master budget is an integrated set of budgets that tie together a company's operating, financing, and investing activities into an integrated plan for the coming year

True

The range of activity over which changes in cost are of interest to management is called the relevant range

True

The selection of the factory overhead allocation method is important because the method selected determines the accuracy of the product cost

True

The statement of cash flows shows the effects on cash of a company's operating, investing, and financing.

True

To arrive at cash flows from operations, it is necessary to convert the income statement from an accrual basis to cash basis of accounting.

True

Use of a plant wide factory overhead rate assumes that the activities causing overhead costs are the same across all departments and products

True

Variable costs as a percentage of sales are equal to 100% minus the contribution margin ratio

True

What term is commonly used to describe the concept whereby the cost of manufactured products is composed of direct materials cost, direct labor cost, and variable factory overhead cost

Variable costing

The journal entry to record the transfer of 1,600 units of part number 1177 with a value of $2.50 each, to work in process is

Work in Process 4,000 Materials 4,000

Which of the following would most likely use a job order costing system?

a swimming pool installer

What term is commonly used to decree the concept whereby the cost of manufactured products is composed of direct materials cost, direct labor cost, and all factory overhead cost?

absorption costing

Horizontal analysis of comparative financial statements includes

calculation of dollar amount changes and percentage changes from the previous

The contribution margin ratio is computed by

contribution margin divided by sales

Costs that can be influenced by management at a specific level are called

controllable costs

The entry to record the flow of direct labor costs into production in a job order cost accounting system is to

debit work in progress, credit wages payable

The two categories of cost comprising conversion costs are

direct labor and factory overhead

Under variable costing, which of the following costs would not be included in finished goods inventory?

fixed factory overhead costs

An acceleration in the collection of receivables will tend to cause the accounts receivable turnover to

increase

Which of the following is not a characteristic of a job order costing system?

it accumulates cost for each department within the factory

A widely used activity base for developing factory overhead rates in highly automated settings is

machine hours

The primary goal of managerial accounting is to provide information to

management

The document authorizing the issuance of materials from the storeroom is a

materials requisition

Costs that are incurred in generating revenues during the period, but not involved in the manufacturing process are referred to as

period costs

The cost system bets suited to industries that manufacture a large number of identical units of commodities on a continuous basis is

process

On the statement of cash flows, the cash flows from financing activities section would include

receipts from the issuance of capital stock.

The materials requisition is used to

release materials from the storeroom of the factory

Using multiple department factory overhead instead of a single plant wide factory overhead rate

results in more accurate product costs

Depreciation on factory equipment would be reported in the statement of cash flows prepared by the indirect method in

the cash flows from operating activities section.

Under absorption costing, which of the following costs would n to be included in finished goods inventory?

the salaries of salespeople

On a common sized balance sheet, 100% is

total assets

The fixed cost per unit varies with changes in the level of activity

true

The current ratio is

used to evaluate a company's liquidity and short term debt paying ability

Jase Manufacturing Co's static budget at 10,000 units of production include $40,000 for direct labor and $4,000 for electric power. Total fixed costs are $24,000. At 12,000 units of production, a flexible budget would show

variable costs of $52,800 and fixed costs of $24,000


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