cost exam 3 qs
Based upon the data derived from the regression analysis, 420 maintenance hours in a month would mean that Wilkens Co.'s maintenance costs (rounded to the nearest dollar) would be budgeted at A.$3,746 B.$3,600 C.$3,790 D.$3,780
A.$3,746
The budgeted dollar value of Wellfleet Company's purchases of component A19 for the fiscal year ending June 30, Year 2 is A.$538,080 B.$309,000 C.$540,600 D.$2,017,800
A.$538,080
A corporation's annual budget shows expected inventory purchases of $55,000,000 from its suppliers. Selected financial information from the corporation's pro forma beginning and ending balance sheets are as shown below. January 1 December 31 Inventory $6,000,000 $7,500,000 Accounts payable $4,000,000 $5,000,000 On the corporation's pro forma Statement of Cash Flows, the dollar amount that would be shown for "Cash payments to suppliers" is A.$54,000,000 B.$56,000,000 C.$55,500,000 D.$54,500,000
A.$54,000,000
Budgeted cash receipts from sales and collections on account for September are A.$684,500 B.$807,000 C.$635,000 D.$827,000
A.$684,500
Rokat Corporation is a manufacturer of tables sold to schools, restaurants, hotels, and other institutions. The table tops are manufactured by Rokat, but the table legs are purchased from an outside supplier. The Assembly Department takes a manufactured table top and attaches the four purchased table legs. It takes 20 minutes of labor to assemble a table. The company follows a policy of producing enough tables to ensure that 40% of next month's sales are in the finished goods inventory. Rokat also purchases sufficient direct materials inventory to ensure that direct materials inventory is 60% of the following month's scheduled production. The number of tables to be produced by Rokat during August is A.2,340 tables. B.1,400 tables. C.1,440 tables. D.1,900 tables.
A.2,340 tables.
Assume that Rokat Corporation will produce 1,800 units in the month of September. How many employees will be required for the Assembly Department? (Fractional employees are acceptable since employees can be hired on a part-time basis. Assume a 40-hour week and a 4-week month.) A.3.75 employees. B.600 employees. C.60 employees. D.15 employees.
A.3.75 employees.
Donehart Corporation produces agricultural vehicles. Most of the component parts for these vehicles are subcontracted to reliable vendors. The final assembly of all vehicles is accomplished at Donehart's plant. Donehart's Engineering Department has developed a new fuel injection system that can be produced in-house because of the availability of production capacity. The first production run of the new fuel injection system has already been completed in-house. This 80-unit production run took 60 direct labor hours per unit to produce based on the cumulative average labor hours per fuel injection unit. Donehart has experienced an 80% learning curve with similar products, and this experience indicates that learning tends to cease by the time 640 systems are produced. Donehart's direct labor cost (including employee benefits) is $18 per direct labor hour. Donehart's management must decide whether to continue producing the fuel injection system or to subcontract the work. Donehart's purchasing agent has received a proposal from Midland, Inc., a company specializing in fuel injection systems. From past contracts, Midland has proven to be efficient and reliable. The terms of Midland's proposal are outlined below.-Donehart must supply all materials required for the fuel injection system units.-The first 80 units produced by Midland will require direct labor input at the rate of 56 hours per unit. Current direct labor cost is $20 per hour.-The direct labor cost charged to Donehart will be the hourly rate in effect at the time the work is performed. Midland is currently negotiating its labor contract, which includes a 4% increase in direct labor cost and should be applicable when Donehart signs the contract.-A learning curve factor of 75% will be applied through the first 640 units produced, and all benefits derived from the learning factor will accrue to Donehart.-Donehart must pay the actual labor cost incurred plus a 5% margin. If Donehart manufactures the units in-house, what is the average labor hours per unit after manufacturing 640 units? A.30.72 B.23.63 C.23.04 D.60
A.30.72
Which one of the following best describes a reason why a company's budgeting should be based on the company's strategic plans? A.Identifies resources needed to reach strategic goals. B.Helps control costs so that products can be sold profitably. C.Establishes standards to measure employee performance. D.Identifies the external factors that have changed from the prior year and those that remain the same.
A.Identifies resources needed to reach strategic goals.
A company budgeted $148,000 sales on account for June, $120,000 for July, $211,000 for August, $198,000 for September, and $164,000 for October. Collection experience indicates that 60% of the budgeted sales will be collected the month after the sale, 36% will be collected the second month, and 4% will be uncollectible. Which month should have the largest amount of cash receipts from accounts receivable budgeted? A.October. B.September. C.August. D.November.
A.October.
In order to achieve its strategic goals, a company wants operating income to equal at least 10% of revenue. A portion of the company's pro forma income statement for the upcoming year is shown below. Cost of goods sold moves proportionately with revenue activity. Revenue $5,000,000 Cost of goods sold $3,000,000 Operating costs $1,700,000 Operating income $ 300,000 If the company wishes to reach this goal in the upcoming year, it should A.Sell the same number of units but decrease cost of goods sold by 10%. B.Reevaluate its financial standing the following year. C.Increase the marketing budget by $20,000, which would increase sales units by 10%. D.Reduce operating costs by 10%.
A.Sell the same number of units but decrease cost of goods sold by 10%
Which vendor should the controller recommend to management? A.Vendor S. B.Vendor Q. C.Vendor R. D.Vendor P.
A.Vendor S.
A master budget was prepared based on the following projections: Sales $2,400,000 Decrease in inventories 60,000 Decrease in accounts payable 100,000 Gross margin 40% Estimated cash disbursements for inventories are A.$920,000 B.$1,480,000 C.$1,400,000 D.$1,000,000
B.$1,480,000 Projected cost of sales is 60% of $2,400,000 of sales, or $1,440,000. Projected purchases is the $1,440,000 cost of sales less $60,000 projected decrease in inventory which is $1,380,000. Projected cash payments is the projected purchases of $1,380,000 plus the $100,000 projected decrease in accounts payable, which is $1,480,000.
The expected value of Gleason's operating profit directly traceable to the sale of frozen desserts is A.$150,250 B.$120,250 C.$198,250 D.Some amount other than those given.
B.$120,250
A company sells products exclusively on account and has experienced the following collection pattern: 60% in the month of sale, 25% in the month after sale, and 15% in the second month after sale. Uncollectible accounts are negligible. Customers who pay in the month of sale are given a 2% discount. If sales are $220,000 in January, $200,000 in February, $280,000 in March, and $260,000 in April, the accounts receivable balance on May 1 will be A.$143,920 B.$146,000 C.$107,120 D.$204,000
B.$146,000
Watson's revised pro forma cost of goods sold is closest to A.$17,760,000 B.$17,377,000 C.$16,942,000 D.$16,565,000
B.$17,377,000
A company's managers are attempting to value a piece of land they own. One potential occurrence is that the old road bordering the land gets paved. Another possibility is that the road does not get paved. A third outcome is that the road might be destroyed and completely replaced by a new road. Based on the following future states of nature, their probabilities, and subsequent values of the land, what is the expected value of the land? Future States of Nature (SN) Probability SN 1: Current road gets paved .5 SN 2: Road does not get paved .4 SN 3: Current road destroyed and replaced with new road .1 Estimates of land value under each possible future state of nature: Value if SN 1: $200,000 Value if SN 2: $100,000 Value if SN 3: $550,000 A.$225,000 B.$195,000 C.$283,333 D.$133,333
B.$195,000
The standard direct labor cost per unit of Product XK-46 is Answers A.$21.00 B.$26.25 C.$29.40 D.$36.75
B.$26.25
A company is creating its pro forma balance sheet for next year. The company anticipates that 50% of sales will be collected during the month of sale, 40% will be collected in the month following the sale, and 10% will be collected 2 months after the sale. If the company's budgeted sales for the months of October, November, and December of the upcoming year are $200,000, $350,000, and $450,000, respectively, the company's budgeted year-end accounts receivable balance is A.$285,000 B.$260,000 C.$385,000 D.$299,000
B.$260,000
The amount for cost of goods sold that will appear on Karmee Company's pro forma income statement for the month of February will be A.$195,000 B.$260,000 C.$272,000 D.$254,000
B.$260,000
During the past few years, a company has experienced the following average number of power outages: Number per Month Number of Months 0 3 1 2 2 4 3 3 12 Each power outage results in out-of-pocket costs of $800. For $1,000 per month, the company can lease a generator to provide power during outages. If the company leases a generator in the coming year, the estimated savings (or additional expense) for the year will be A.$(15,200) B.$3,200 C.$7,200 D.$(1,267)
B.$3,200 19*800-12,000
After completing production of the first propeller, the estimated cost for Proper Propeller to fill an order for seven additional propellers is Answers A.$98,000 B.$34,880 C.$92,000 D.$54,880
B.$34,880
Polk's budgeted cash collections during July are A.$417,675 B.$407,332 C.$422,338 D.$413,000
B.$407,332
Sales during the first 3 months of operations are as follows: Cash is collected from credit customers as follows: Within the first 10 days after the month of sale, at a 2% early pay discount: 60% In the month after sale, after the discount period: 30% In the second month after sale: 10% What will the cash receipts be for the month of March? A.$466,532 B.$449,480 C.$329,480 D.$484,000
B.$449,480
Karmee Company's total cash receipts for the month of April will be A.$504,000 B.$629,000 C.$707,400 D.$653,000
B.$629,000
A firm desires a finished goods ending inventory equal to 25% of the following month's budgeted sales. January sales are budgeted at 10,000 units and February at 12,000 units. Each unit requires 2 pounds of Material X, which costs $4 per pound. The company has a just-in-time system and materials are delivered daily just prior to use, so no raw materials inventories are maintained. Materials are paid for in the month following purchase. The January 1 finished goods inventory is 2,500 units. In February, what amount should the company expect to pay as a cash outflow for raw materials? A.$21,000 B.$84,000 C.$40,000 D.$42,000
B.$84,000
Aerosub, Inc., has developed a new product for spacecraft that includes the production of a complex part. The manufacture of this part requires a high degree of technical skill. Management believes there is a good opportunity for its technical force to learn and improve as they become accustomed to the production process. The production of the first unit requires 10,000 direct labor hours. Management projects an 80% learning curve and wants to produce a total of eight units. After completing the first unit, the estimated total direct labor hours Aerosub will require to produce the seven additional units will be A.70,000 hours. B.30,960 hours. C.40,960 hours. D.56,000 hours.
B.30,960 hours. 5120*8 = 40960 40960-10000 = 30960
At LCB, variable overhead is applied on the basis of $1.00 per direct labor dollar. Based on historical costs, LCB knows that the production of 40 engines will incur $100,000 of fixed overhead costs. The bid request is for an additional 40 units; all companies submitting bids are allowed to charge a maximum of 25% above full cost for each order. LCB's rate of learning on the 3-year engine contract is A.79.0% B.80.0% C.62.6% D.75.5%
B.80.0% 19,200/20 = 9,600 9,600/12,000 = .80
If Niro increases the price of its inkjet printers, total sales revenue would Answers A.Increase by $87,750. B.Decrease by $122,250. C.Increase by $272,250. D.Decrease by $212,250.
B.Decrease by $122,250.
If Moss Point had experienced a 70% learning curve, the bid for the 150 units would A.Be 10% lower than the total bid at an 80% learning curve. B.Include 6.40 direct labor hours per unit at $8.50 per hour. C.Show a 30% reduction in the total direct labor hours required with no learning curve. D.Include increased fixed overhead costs.
B.Include 6.40 direct labor hours per unit at $8.50 per hour.
The manager of the retailer's Marketing Department believes sales volume will increase by 10% if the advertising budget is increased by $5,000,000. Should the retailer approve the increased advertising request? Answers A.Yes, because operating income would increase by $400,000. B.No, because operating income would decrease by $275,000. C.No, because advertising is 10% of sales, so the maximum increase in sales would be $900,000. D.Yes, because the increase in sales is $4,000,000 greater than the increase in advertising costs.
B.No, because operating income would decrease by $275,000.
Which of the following statements is true? A.The expected value of making is $20,000. B.The expected value of buying is $70,000. C.Making the gears is the best choice. D.Buying the gears is the best choice.
B.The expected value of buying is $70,000.
Ignoring income taxes, the financing Tidwell will need in January to maintain the firm's minimum cash balance is A.$23,000 B.$8,000 C.$11,000 D.$10,600
C.$11,000
Jordan Auto's total budgeted direct labor dollars for February usage should be A.$174,250 B.$221,400 C.$164,000 D.$184,500
C.$164,000
A company budgeted sales on account of $120,000 for July, $211,000 for August, and $198,000 for September. Collection experience indicates that 60% of the budgeted sales will be collected the month after the sale, 36% will be collected the second month, and 4% will be uncollectible. The cash receipts from accounts receivable that should be budgeted for September would be A.$147,960 B.$194,760 C.$169,800 D.$197,880
C.$169,800
The average labor cost per unit for the first batch produced by a new process is $120. The cumulative average labor cost after the second batch is $72 per product. Using a batch size of 100 and assuming the learning curve continues, the total labor cost of four batches will be Answers A.$10,368 B.$2,592 C.$17,280 D.$4,320
C.$17,280
If an 80% learning curve is applicable, Moss Point's total cost on this order would be estimated at Answers A.$32,000 B.$38,000 C.$26,400 D.$41,800
C.$26,400
A beverage stand can sell either soft drinks or coffee on any given day. If the stand sells soft drinks and the weather is hot, it will make $2,500; if the weather is cold, the profit will be $1,000. If the stand sells coffee and the weather is hot, it will make $1,900; if the weather is cold, the profit will be $2,000. The probability of cold weather on a given day at this time is 60%. If the probability of hot weather, given a hot weather forecast, is 50%, how much would the vendor be willing to pay for the forecast? A.$600 B.$500 C.$300 D.$1,000
C.$300 If the weather is hot and coffee is served, the vendor earns $1,900. If the vendor knows the weather will be hot, (s)he would sell soft drinks and make $2,500, a $600 increase. Thus, the vendor should be willing to pay up to $600 for perfect information regarding hot weather. However, if the forecasts are only 50% accurate, the information is not perfect. Accordingly, the vendor should be willing to pay only $300 (the $600 potential increase in profits � 50%) for the sometimes accurate forecasts.
Donehart Corporation produces agricultural vehicles. Most of the component parts for these vehicles are subcontracted to reliable vendors. The final assembly of all vehicles is accomplished at Donehart's plant. Donehart's Engineering Department has developed a new fuel injection system that can be produced in-house because of the availability of production capacity. The first production run of the new fuel injection system has already been completed in-house. This 80-unit production run took 60 direct labor hours per unit to produce based on the cumulative average labor hours per fuel injection unit. Donehart has experienced an 80% learning curve with similar products, and this experience indicates that learning tends to cease by the time 640 systems are produced. Donehart's direct labor cost (including employee benefits) is $18 per direct labor hour. Donehart's management must decide whether to continue producing the fuel injection system or to subcontract the work. Donehart's purchasing agent has received a proposal from Midland, Inc., a company specializing in fuel injection systems. From past contracts, Midland has proven to be efficient and reliable. The terms of Midland's proposal are outlined below.-Donehart must supply all materials required for the fuel injection system units.-The first 80 units produced by Midland will require direct labor input at the rate of 56 hours per unit. Current direct labor cost is $20 per hour.-The direct labor cost charged to Donehart will be the hourly rate in effect at the time the work is performed. Midland is currently negotiating its labor contract, which includes a 4% increase in direct labor cost and should be applicable when Donehart signs the contract.-A learning curve factor of 75% will be applied through the first 640 units produced, and all benefits derived from the learning factor will accrue to Donehart.-Donehart must pay the actual labor cost incurred plus a 5% margin. If Donehart subcontracts the order to Midland, how much additional cost will Donehart incur after the first batch in order to obtain a total of 1,000 units? A.$302,400 B.$330,220.80 C.$426,535.20 D.$390,600
C.$426,535.20
A company expects the following results for Year 1. Sales $2,000,000 Cost of goods sold 1,200,000 Indirect costs 400,000 EBIT $ 400,000 The controller is preparing a forecast for Year 2 using the following assumptions. Unit sales growth: 5% per year Increase in unit selling price: 3% per year Increase in direct cost per unit: 2% per year Increase in indirect costs: 4% per year The forecast of earnings before interest and taxes for Year 2 using the above assumptions (rounded to the nearest thousand) would be A.$523,000 B.$460,000 C.$462,000 D.$423,000
C.$462,000
Applying a deterministic approach, Gleason's revenue from sales of frozen desserts would be A.Some amount other than those given. B.$216,000 C.$540,000 D.$550,000
C.$540,000 Under the deterministic approach we simply choose the possible outcome that has the highest probability. The volume of frozen dessert sales with the greatest probability of occurring is 300,000 units. Since the question asks for the revenue, we need to multiply 300 units by the sales price of $1.80. The resulting most probable revenue using the deterministic approach is $540,000.
At LCB, variable overhead is applied on the basis of $1.00 per direct labor dollar. Based on historical costs, LCB knows that the production of 40 engines will incur $100,000 of fixed overhead costs. The bid request is for an additional 40 units; all companies submitting bids are allowed to charge a maximum of 25% above full cost for each order. The maximum bid price that LCB, Inc., could submit to the Department of the Navy for the 40 units is A.$760,800 B.$708,640 C.$885,800 D.$608,640
C.$885,800 The company is permitted to bid 25% above full cost (including fixed overhead). Given a learning curve of 80% and a cumulative average unit labor cost for 40 units of $7,680 ($307,200 ÷ 40), the additional labor costs for the next 40 units can be determined. Cumulative average unit labor cost for 80 units is estimated to be $6,144 ($7,680 × 80%). Estimated total labor cost for 80 units is $491,520 (80 units × $6,144). Thus, the incremental labor cost of the last 40 units is expected to be $184,320 ($491,520 - $307,200). Variable overhead is $1?per direct labor dollar, or $184,320. Adding $240,000 for materials and $100,000 for fixed overhead results in a full cost of $708,640 ($184,320 DL + $184,320 VOH + $240,000 DM + $100,000 FOH). Consequently, the bid price should be $885,800 ($708,640 full cost × 125%).
Mountain Corporation manufactures cabinets but outsources the handles. Eight handles are needed for a cabinet, with assembly requiring 30 minutes of direct labor per unit. Ending finished goods inventory is planned to consist of 50% of projected unit sales for the next month, and ending handles inventory is planned to be 80% of the requirement for the next month's projected unit output of finished goods. The number of units that Mountain finished during December is A.4,200 B.5,000 C.5,100 D.3,000
C.5,100
Which one of the following four probability distributions provides the highest expected monetary value? A.Alternative #2. B.Alternative #3. C.Alternative #1. D.Alternative #4.
C.Alternative #1.
A company is the leading company in the premium bottled water industry. Its growth is mainly driven by the negative health publicity on carbonated soft drinks and other sweetened beverages. Extensive inventory and distribution infrastructure is needed to compete in this industry. Its main packaging materials can be sourced either locally or easily imported from overseas. With its 60% market share, the company is able to influence prices and competitive activity. The second biggest competitor holds 20% market share, while the remaining 20% is shared by many small companies. Supermarkets and other grocery retailers are the largest customer segment, accounting for approximately 45% of sales. The supermarkets and grocery retailers are driving volume growth and are undergoing consolidation into larger supermarket conglomerates. Using Porter's 5 Forces, which one of the following statements best reflects the industry environment? A.Low profitability but can increase due to increasing power of buyers. B.High profitability due to high power of buyers and sellers. C.High profitability but can decrease due to increasing power of buyers. D.Low profitability due to low threat of substitutes and new entrants.
C.High profitability but can decrease due to increasing power of buyers.
If Niro increases the price of its laser printers, total sales revenue would A.Increase by $499,500. B.Decrease by $409,500. C.Increase by $310,500. D.Increase by $297,000.
C.Increase by $310,500.
Sales for June are projected to be $255,000. Based on this information, the expected cash receipts for March would be A.$237,400 B.$230,000 C.$243,200 D.$242,000
D.$242,000
Budgeted cash collections during April would be A.$349,300 B.$353,000 C.$347,000 D.$343,300
D.$343,300
A corporation manufactures goods that are sold by independent sales agents who receive a 20% payment based on sales value. The corporation's pro forma income statement for the upcoming year is below. Sales $15,000,000 COGS (all variable) 6,000,000 Payment to sales agents 3,000,000 Other expenses (all fixed) 2,000,000 Operating income $ 4,000,000 After the budget was created, the corporation became aware that its primary competitors would each be raising their selling prices by 5%. If the corporation also increased its selling price by 5%, the company's revised operating income would be A.$4,200,000 B.$4,750,000 C.$4,300,000 D.$4,600,000
D.$4,600,000 Raising the selling prices by 5% would increase the corporation's revenue by $750,000 ($15,000,000 × 0.05). However, payments to sale agents increase by 5% as well, which results in an expense of $150,000 ($3,000,000 × 0.05). The net increase in operating income is therefore $600,000 ($750,000 - $150,000), which makes the revised operating income $4,600,000.
Donehart Corporation produces agricultural vehicles. Most of the component parts for these vehicles are subcontracted to reliable vendors. The final assembly of all vehicles is accomplished at Donehart's plant. Donehart's Engineering Department has developed a new fuel injection system that can be produced in-house because of the availability of production capacity. The first production run of the new fuel injection system has already been completed in-house. This 80-unit production run took 60 direct labor hours per unit to produce based on the cumulative average labor hours per fuel injection unit. Donehart has experienced an 80% learning curve with similar products, and this experience indicates that learning tends to cease by the time 640 systems are produced. Donehart's direct labor cost (including employee benefits) is $18 per direct labor hour. Donehart's management must decide whether to continue producing the fuel injection system or to subcontract the work. Donehart's purchasing agent has received a proposal from Midland, Inc., a company specializing in fuel injection systems. From past contracts, Midland has proven to be efficient and reliable. The terms of Midland's proposal are outlined below.-Donehart must supply all materials required for the fuel injection system units.-The first 80 units produced by Midland will require direct labor input at the rate of 56 hours per unit. Current direct labor cost is $20 per hour.-The direct labor cost charged to Donehart will be the hourly rate in effect at the time the work is performed. Midland is currently negotiating its labor contract, which includes a 4% increase in direct labor cost and should be applicable when Donehart signs the contract.-A learning curve factor of 75% will be applied through the first 640 units produced, and all benefits derived from the learning factor will accrue to Donehart.-Donehart must pay the actual labor cost incurred plus a 5% margin. If Donehart manufactures the units in-house, how much additional cost will the company incur after the first batch in order to produce a total of 1,000 units? A.$503,193.60 B.$559,104 C.$463,104 D.$416,793.60
D.$416,793.60
In its pro forma income statement for the year ended October 31, Year 2, estimated net income will be A.$220,000 B.$330,000 C.$328,688 D.$493,032
D.$493,032
The expected value of perfect information for this firm in this case is A.$8.60 B.$9.00 C.$8.40 D.$6.40
D.$6.40
An entity sells sweatshirts and is preparing for a World Cup Soccer match. The cost per sweatshirt varies with the quantity purchased as follows: Quantity Unit Cost 4,000 $14.00 5,000 13.50 6,000 13.00 7,000 12.50 The entity must purchase the sweatshirts one month before the game and has analyzed the market and estimated sales levels as follows: Unit sales Probability 4,000 15% 5,000 20% 6,000 35% 7,000 30% The estimated selling price is $25 for sales made before and during game day. Any sweatshirts remaining after game day can be sold at wholesale to a local discount store for $10. The expected profit if the entity purchased 6,000 shirts is A.$69,000 B.$66,000 C.$72,000 D.$64,500
D.$64,500
The variable costs represent sales commissions paid at the rate of 6.2% of sales. The step costs depend on the number of salespersons employed by the company. In August there were 17 persons on the sales force. However, two members have taken early retirement effective August 31. It is anticipated that these positions will remain vacant for several months. Total fixed costs are unchanged within a relevant range of 15,000 to 30,000 units per month. The company is planning a sales price cut of 10%, which it expects will increase sales volume to 24,000 units per month. If the company implements the sales price reduction, the total budgeted selling and administrative costs for the month of September would be A.$679,760 B.$714,960 C.$759,600 D.$652,760
D.$652,760 sales = 372000/6.2%=600000 Unit Price Sales 6000000/20000=300Cut sale price by 10% increase units by 2400024000270=6480,0006.2%=4017802 people early retirement 85000*(15/17)=75000401760+75000+176000=652760
If the January beginning cash balance is $30,000, and the entity is required to maintain a minimum cash balance of $10,000, how much short-term borrowing will be required at the end of February? Loans are repaid in the following month, even though that might require additional borrowing at the end of the month. A.$60,000 B.$75,000 C.$80,000 D.$70,000
D.$70,000
What is the forecasted cash inflow for the freight company for the month of May? A.$83,850 B.$78,750 C.$70,875 D.$79,375
D.$79,375
A firm carries a large number of different items in its inventory, giving the firm a competitive advantage in its industry. Below is part of the firm's budget for the first quarter of next year. Sales $855,000 Cost of goods sold 425,000 Rent and salary expenses 375,000 Historically, all of the sales are on account and are made evenly over the quarter. 5% of all sales are determined to be uncollectible and written off. The balance of the receivables is collected in 50 days. This sales and collection experience is expected to continue in the first quarter. The projected balance sheet for the first day of the quarter includes the following account balances. Cash $ 10,000 Accounts receivable (net) 450,000 Inventory 900,000 Accounts payable 800,000 How much cash can the firm anticipate collecting in the first quarter (based on a 360-day year)? A.$902,500 B.$901,250 C.$830,000 D.$811,000
D.$811,000
Esplanade's estimated total cash collections during October from accounts receivable are A.$21,400 B.$63,000 C.$86,700 D.$84,400
D.$84,400
How many equivalent units should the company plan to produce? Answers A.1,800 B.1,565 C.1,815 D.1,845
D.1,845
Company A's unit production budget for toy rabbits for January is A.45,000 units. B.16,500 units. C.14,500 units. D.54,000 units.
D.54,000 units.
A company has budgeted sales of 24,000 finished units for the forthcoming 6-month period. It takes 4 pounds of direct materials to make one finished unit. Given the following: Finished DM Units (pounds) Beginning inventory 14,000 44,000 Target ending inventory 12,000 48,000 How many pounds of direct materials should be budgeted for purchase during the 6-month period? A.48,000 B.96,000 C.88,000 D.92,000
D.92,000
If Niro increases the price of its ink cartridges, total sales revenue would A.Decrease by $181,500. B.Increase by $301,500. C.Increase by $241,500. D.Decrease by $136,500.
D.Decrease by $136,500.
A company operates several retail stores. To support the company's long-term goals, operating income should be at least 10% of sales. The company's abbreviated pro forma income statement for next year is shown below. Revenues $7,500,000 Cost of goods sold 3,750,000 Operating fixed costs 3,125,000 Operating income $ 625,000 The best action for the company to take in order to meet its income goal is to A.Require all managers to reduce their budgeted operating fixed costs by 3%. B.Wait until the end of next year's first quarter to re-evaluate its situation. C.Raise the selling price by 2%, which would reduce sales units by 2% but save $50,000 in operating costs. D.Increase the advertising budget by $25,000, which would increase sales units by 5%.
D.Increase the advertising budget by $25,000, which would increase sales units by 5%.
The use of the master budget throughout the year as a constant comparison with actual results signifies that the master budget is also a A.Flexible budget. B.Capital budget. C.Zero-base budget. D.Static budget.
D.Static budget.
A company is considering three alternative machines to produce a new product. The cost structures (unit variable costs plus avoidable fixed costs) for the three machines are shown as follows. The selling price is unaffected by the machine used. Single purpose machine $.60x + $20,000 Semiautomatic machine $.40x + $50,000 Automatic machine $.20x + $120,000 The demand for units of the new product is described by the following probability distribution. Demand Probability 200,000 0.4 300,000 0.3 400,000 0.2 500,000 0.1 Using the expected value criterion, A.The automatic machine has the lowest expected cost. B.The automatic machine should be used because of the high expected demand. C.The single purpose machine should be used because of the low expected demand. D.The semiautomatic machine should be used because it has the lowest expected cost.
D.The semiautomatic machine should be used because it has the lowest expected cost.