Managerial Accounting Test One

Beck Incorporation reported a net income of $450,000 for the year. It declared and paid dividends of $50,000 to its common stockholders. During the year, Beck had an average of 100,000 common shares outstanding. What was the company's earnings per share for the year?

$4.50 per share

Spartan Corporation estimates that it will incur $200,000 of total manufacturing overhead cost at an estimated activity level of 10,000 direct labor-hours. What is the amount of manufacturing overhead that would be applied to a job that required 200 direct labor-hours?

$4000

Average sale period

365 days / inventory turnover

Average Collection period

Computed as 365 days divided by the accounts receivable turnover ratio

Which of the following occurs when finished jobs are shipped to customers?

Debit to cost of goods sold

Dividend Payout Ratio

Dividends per share / earnings per share

Total Estimated Manufacturing Overhead

Fixed Overhead + Variable Overhead

Groos Margin Percentage

Gross margin / sales

Direct Materials cost

The cost of materials that are an integral part of the finished product.

Direct Labor Cost

The wages of factory workers who are directly involved in converting materials into a finished product.

A common-size income statement expresses each item as

a percentage of net sales

Which of the following occurs when a job has been completed and transferred to the finished goods warehouse?

credit to work in progress

Working capital

may provide some assurance that the company can pay its creditors in full and on time.

Net profit margin percentage

net income / sales

Current ratio

should be interpreted with care

Irawaddy Company, a retailer, had cost of goods sold of $182,500 last year. The beginning inventory balance was $35,000 and the ending inventory balance was $38,000. The company's average sale period was closest to:

73 days

Direct materials are issued into production for a specific job

Debit: Workin in progress Credit: Raw materials

Cyber Devices manufactures PCTV products that enable people to watch television content on their computers. It sells its product to retailers for $50. A tuner component that goes into each of these devices costs $5 to acquire. The total variable cost at an activity level of 1,000 units equals ________.

$5,000

When companies incur selling and administrative costs, those costs ________.

do not flow through the three inventory accounts

If 7,700 units are sold, the variable cost per unit sold is closest to:

Direct materials $ 6.60 Direct labor 3.50 Variable manufacturing overhead 1.50 Sales commissions 1.40 Variable administrative expense 0.40 Variable cost per unit sold $ 13.40

Dividend Yield ratio

Dividends per share / market price per share

Which of the following is true of the contribution approach

it separates costs into fixed and variable categories

times interest earned ratio

the most common measure of a companies ability to provide protection to its long-term creditors

Windham Corporation has current assets of $680,000 and current liabilities of $850,000. Windham Corporation's current ratio would be increased by:

the purchase of $380,000 inventory on account

In the cost formula (Y = a + bX) that is used to estimate the total manufacturing overhead cost for a given period, the letter "a" refers to the estimated ________.

total fixed manufacturing overhead cost

Actual overhead costs are not assigned to jobs in a job costing system.

true

Which of the following is not a reason why managers use financial statement analysis?

Estimates stock price apprecation

Debt-to-equity ratio

Indicates the relative proportions of debt and equity at one point in time on a companies balance sheet

Manufacturing overhead is applied to jobs using a predetermined overhead rate.

Debit: Working in progress Credit: Manufacturing Overhead

In absorption costing, non-manufacturing costs are assigned to units of product

true

The management of Blue Ocean Company estimates that 50,000 machine-hours will be required to support the production planned for the year. It also estimates $300,000 of total fixed manufacturing overhead cost for the coming year and $4 of variable manufacturing overhead cost per machine-hour. What is the predetermined overhead rate?

$10

In a small manufacturing facility, one welder is needed for every 200 hours of machine-hours or fewer in a month. The welder is paid a monthly salary of $2,500. If the total monthly requirement is 1,300 machine-hours, the total salaried employee expense is ________.

$17,500

Audio Corporation purchased $20,000 of DVDs during the current year. The company had DVD inventory of $15,000 at the beginning of the year. An end of the year audit revealed that the company had DVD inventory of $10,000. The amount that would be reported as cost of goods sold in the income statement for the current year is ________.

$20,000

Ronald Company reported a net income of $840,000. During the year, 250,000 shares of common stock were outstanding. Total liabilities and stockholders' equity amounted to $18,000,000 and total liabilities amounted to $8,000,000. What will be the book value per share?

$40

Harris Fabrics computes its plantwide predetermined overhead rate annually on the basis of direct labor-hours. At the beginning of the year, it estimated that 20,000 direct labor-hours would be required for the period's estimated level of production. The company also estimated $94,000 of fixed manufacturing overhead cost for the coming period and variable manufacturing overhead of $2.00 per direct labor-hour. Harris's actual manufacturing overhead cost for the year was $123,900 and its actual total direct labor was 21,000 hours.

$6.70

Mickley Company's plantwide predetermined overhead rate is $14.00 per direct labor-hour and its direct labor wage rate is $17.00 per hour. The following information pertains to Job A-500: Direct materials $231 Direct labor $153 1. What is the total manufacturing cost assigned to Job A-500? 2. If Job A-500 consists of 40 units, what is the unit product cost for this job?

1. $510 2. $12.75

Newhard Company assigns overhead cost to jobs on the basis of 110% of direct labor cost. The job cost sheet for Job 313 includes $18,990 in direct materials cost and $10,600 in direct labor cost. A total of 1,650 units were produced in Job 313. a. What is the total manufacturing cost assigned to Job 313? b. What is the unit product cost for Job 313?

1. 18990 + 10600 + (10600 x 1.1) = $41,250 2. 41250 / 1650 = 25

Luthan Company uses a plantwide predetermined overhead rate of $23.40 per direct labor-hour. This predetermined rate was based on a cost formula that estimated $257,400 of total manufacturing overhead cost for an estimated activity level of 11,000 direct labor-hours. The company incurred actual total manufacturing overhead cost of $249,000 and 10,800 total direct labor-hours during the period.

10,800 x $23.40 = $252.720

James Company reported a net income of $700,000 for the year. During the year, the company declared a dividend of $3.80 per share to the 50,000 common shares outstanding. The dividends were paid by the end of the year. What was the company's dividend payout ratio?

27%

Davidson Company has sales of $100,000, variable cost of goods sold of $40,000, variable selling expenses of $15,000, variable administrative expenses of $5,000, fixed selling expenses of $7,000, and fixed administrative expenses of $9,000. What is Davidson's contribution margin?

40,000

Dennis Company reported a net income of $550,000 for the year. During the year, the company had an average of 200,000 common shares outstanding. All the dividends declared were paid by the end of the year, including $3.60 per share on its common stock. At the end of the year, the company's common stock is selling at $62 per share. What was the company's dividend yield ratio?

5.8%

Administrative Cost

All executive, organizational, and clerical costs associated with the general management of an organization rather than with manufacturing or selling.

Quick Assets

Cash and other current assets that can be quickly converted to cash, such as marketable securities and receivables.

What is the balance of the Manufacturing Overhead account and is overhead underapplied or overapplied at the end of the year? Manufacturing overhead applied $150,000 Actual amount of manufacturing overhead costs 120,000

Credit of $30,000, overapplied.

Which of the following occurs when manufacturing overhead is applied to Work in Process?

Credit to Manufacturing Overhead

Which of the following best describes the journal entry to record the withdrawal of raw materials from the storeroom for use as direct and indirect materials in production?

Debit Work in Process, debit Manufacturing Overhead, and credit Raw Materials. Correct

Which of the following best describes the journal entry to record the use of direct and indirect labor in production?

Debit Work in Process, debit Manufacturing Overhead, and credit Salaries and Wages Payable. Correct

Lubricating oil, waste cotton, and solder are used in the factory (Indirect materials)

Debit: Manufacturing Overhead Credit: Salaries and wages payable

Salary of the production supervisor is payable

Debit: Manufacturing Overhead Credit: Salaries and Wages payable

The wages of direct laborers who worked on a particular job are payable

Debit: Work in Progress Credi: Salaries and wages payable

Which of the following is common to both prime cost and conversion cost?

Direct Labor

Adventure Holiday sells thousands of tour packages each month through its various branches. A branch manager's salary would be a(n) _________ of the branch.

Direct cost

Pre-detremined Overhead Rate

Estimated Maufacturing Overhead / Estimated Direct Labor Hrs.

Equity Multiplier

It indicates that a company is increasing its financial leverage

Earnings per share

Net Income / Average number of common shares outstanding

Which of the following is not a limitation of financial statement analysis

Providing trends of accounting information

If 6,000 units are produced, the total amount of manufacturing overhead cost is closest to:

Total variable manufacturing overhead cost ($1.65 per unit × 6,000 units) $ 9,900 Total fixed manufacturing overhead cost 13,000 Total manufacturing overhead cost (a)$ 22,900

Direct cost

a cost that can be easily and conveniently traced to a specified cost object

Manufacturing cost include all of the following categories except

administrative cost

The direct materials required to manufacture each unit of product are listed on a ________.

bills of materials

A normal cost system applies overhead to jobs ________.

by multiplying a predetermined overhead rate by the actual amount of the allocation base incurred by the job Correct

A ___________ is a cost that is incurred to support a number of cost objects but cannot be traced to them individually.

common cost

Acid-test ratio

computed by dividing quick assets by current liabilities

The traditional income statement uses which of the following cost categories?

cost of goods sold and selling and administrative expenses

Inventory Turnover

cost of goods sold/average inventory

period cost

costs that are taken directly to the income statement as expenses in the period in which they are incurred or accrued

indirect costs

costs that are the result of a firm's general operations and are not directly tied to any specific cost object

working capital

current assets - current liabilities

____________ is sometimes called "touch labor."

direct labor

Materials that become an integral part of the finished product and whose costs can be conveniently traced to the finished product are called ________.

direct materials

If a job is not completed at year end, then no manufacturing overhead cost would be applied to that job when a predetermined overhead rate is used.

false

If the activity level increases, then one would expect the variable cost per unit to increase as well.

false

Times Interest Earned

income before interest expense and taxes / interest expense

Adventure Holiday sells thousands of tour packages each month through its various branches. A branch manager's salary would be a(n) _________ of selling a tour package.

indirect cost

Manufacturing Overhead Cost

is all the cost associated with the operation of the manufactory facility other than direct material cost and direct labor cost. Ex- For ford's mustang, manufacturing overhead cost would include a portion of costs for the factory's security, telephone, electricity, insurance, and factory depreciation.

Items such as indirect materials, indirect labor, maintenance and repairs on production equipment, depreciation, and insurance on manufacturing facilities are included in ________.

manufacturing overhead cost

The ________ requires that the costs incurred to generate a particular revenue should be recognized as expenses in the same period that the revenue is recognized.

matching principle

Accounts Receivable Turnover ratio

measures how quickly credit sales are converted to cash

Operating Cycle

measures the elapsed time from when inventory is received from suppliers to when cash is received from customers

Companies can improve job cost accuracy by using _______

multiple predetermined overhead rates

return on equity

net income / average total stockholders equity

Property taxes associated with a company's administrative facility are considered ________.

non-manufacturing costs

A fixed cost is a cost which ________.

remains constant in total changes in the level of activity

If a firm increases its activity level,

some cost will change other cost will remain the same

Product cost

the amount paid to suppliers for products that are purchased

In the equation, Y = a + bX, X represents ________.

the level of activity

Book Value per share

total stockholders equity / number of common shares outstanding

Wages paid to production supervisors would be classified as manufacturing overhead.

true

Selling cost

all costs that are incurred to secure customer orders and get the finished product or service into the hands of the customer

Kirk Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on machine-hours. The company based its predetermined overhead rate for the current year on total fixed manufacturing overhead cost of $665,000, variable manufacturing overhead of $3.00 per machine-hour, and 70,000 machine-hours. Recently, Job K321 was completed with the following characteristics:

154.50 Product cost = Direct Materials + Direct Labor + vmoh + fmoh =( 630+2880+(90*3)+(665000/70000*90)) /30 = 154.50

Price-earnings ratio

Market price per share / earnings per share

return on total assets

net income / average total assets

How should the wages of a sheet metal worker in a fabrication plant be classified?

product cost