Accy 202
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
