ch 5,7,9,and 1
Trak Corporation incurred the following costs while manufacturing its bicycles. Bicycle components$100,000 Advertising expense$45,000 Depreciation on plant60,000 Property taxes on plant14,000 Property taxes on store7,500 Delivery expense21,000 Labor costs of assembly-line workers110,000 Sales commissions35,000 Factory supplies used13,000 Salaries paid to sales clerks50,000 (a)Identify each of the above costs as direct materials, direct labor, manufacturing overhead, or period costs.
Bicycle components:Direct Materials Depreciation on plant:Manufacturing Overhead Property taxes on store:Period Costs Labor costs of assembly-line workers:Direct Labor Factory supplies used:Manufacturing Overhead Advertising expense: Period Costs Property taxes on plants:Manufacturing Overhead Delivery expense:Period Costs Sales commissions: Period Costs Salaries paid to sales clerks: Period Costs
Canosta, Inc. determined that it must expand its capacity to accept a special order. Which situation is likely?
Both variable and fixed costs will be relevant.
How much is the monthly break-even level of sales in dollars for Vaughn?
Fixed Costs / Contribution Margin Ratio = Monthly break-even level of sales in dollars
What is the break-even point?
Fixed Costs / Unit CM = Break-even in units
In applying the high-low method, which months are relevant?
High: April (90,000 miles; Low: February (50,000 miles)
Which of the following statements is true about managerial accounting?
It provides more detailed information than financial accounting does.
The point in the production process when joint products are readily identifiable is the
split-off point.
If Oriole accepts the offer, by how much will net income increase (decrease)?
((Direct Materials + Direct Labor + Variable Overhead) - (Special order price x Units) = Net Income Increase)
ch 7 If the special order is accepted, what will be the effect on net income?
((Number of Scales x Purchase Price) - ((Variable costs per unit + Shipping costs per unit) x number of scales) = Net Income Increase)
What effect will acceptance of the offer have on net income?
((Offer units x Offer price) - (Offer units x Variable cost per unit) = Net Income Increase)
What decision should Marigold make?
((Unassembled Selling Price - Cost of the unassembled product) - (Assembled Selling Price - Cost of assembled product) = Sell before assembly)
How much is its margin of safety ratio?
(Actual Sales - Breakeven point Sales) / Actual Sales = Margin of Safety Ratio
How much is the margin of safety for the company for June?
(Break-even sales = Fixed Cost / Contribution Margin Ratio; Actual Sales - Break even Sales = Margin of Safety
If this product line is eliminated, 60% of the fixed expenses can be eliminated and the other 40% will be allocated to other product lines. If management decides to eliminate this product line, the company's net income will
(Contribution margin - Fixed expenses eliminated = Net Income decrease)
How much does Swifty's operating income increase for each $2600 increase in revenue per month?
(Contribution margin / selling price = Contribution margin ratio; Contribution margin ratio x increase in revenue = increase in operating income)
How many MP3 players must Bonita sell to earn net income of $180000?
(Fixed Costs + Net Income) / (Selling Price - Variable Costs) = Units to earn net income)
What are the required sales if Bramble desires net income of $500000?
(Fixed Costs + Net Income) / Contribution Margin Ratio = Required sales for desired net income
What sales are needed by Coronado to break even?
(Fixed Costs / Contribution Margin Ratio = Sales needed to break-even)
Using the high-low method, the estimated fixed cost element of power costs is
(High Activity: Total Cost - Low Activity: Total Cost) / (High Activity: Machine Hours - Low Activity: Machine Hours) = Variable cost per unit; High Activity: Total Cost - ((Variable Cost per unit) X High Activity: Machine Hours)) = Fixed Cost Element
Using the high-low method, determine an estimate of total maintenance cost for a month in which production is expected to be 35000 units.
(High: Machine Maintenance Costs - Low: Machine Maintenance Costs) / (High: Units Produced - Low: Units Produced) = Variable Cost per unit; High: Machine Maintenance Costs - ((Variable Cost per unit x High: Units Produced) = Total Fixed Cost; (Variable Cost per unit x units produced) + Total fixed costs = Total maintenance cost
If the high-low method is used, what is the monthly total cost equation?
(High: Total Cost - Low: Total Cost) / (High: Units Produced - Low: Units Produced) = Variable Cost per unit; Low: Total Cost - (Variable Cost per unit x Low: Units Produced) = Total Fixed Cost)
Which of the following amounts is a sunk cost?
(Old Machine: Price - Accumulated Depreciation)
The manufacturing overhead consists of $16640 of costs that will be eliminated if the components are no longer produced by Vaughn. From Vaughn's point of view, how much is the incremental cost or savings if the widgets are bought instead of made?
(Proposed purchase price - (Direct material + Direct Labor + Manufacturing cost that can be eliminated) = Incremental Cost)
The opportunity cost associated with this order is
(Regular sale units x (Sale price per unit - Variable costs per unit)) = Opportunity cost)
The additional profit that would result from processing rough lumber further is
(Rough lumber: (Sales Value after Further Processing - Additional Variable Costs) - Sales Value at Split-off = Additional profit)
A CVP income statement would report
(Sales - Total Variable Expenses = Contribution Margin)
How much is the contribution margin ratio?
(Sales - Variable Costs) / Sales = Contribution Margin
How much is the contribution margin ratio?
(Sell price - variable cost) / Sell price = Contribution margin ratio
What should Sheridan do?
(Sell price to process further - (Inventory on hand + Additional Cost) = Manufacture further and sell it)
What should Swifty do?
(Selling price if manufactured further - (Old inventory cost + Additional Cost) = Manufacture Further and Sell It )
What should be reported as variable expenses in the CVP income statement?
(Selling price per unit x units) - (Net Income + Fixed Costs) = Variable Expenses
. If the company has sufficient capacity to produce the additional units, acceptance of the special order would affect net income as follows:
(Special order price x Special order quantity) - (Special order quantity x unit variable cost) = Net Income Increase)
The total sales necessary to break even are
(Total Fixed Costs / Contribution Margin Ratio) = Total Sales necessary to break even
(a)Utilities for manufacturing equipment$116,000 (b)Raw materials (CPU, chips, etc.)$85,000 (c)Depreciation on manufacturing building$880,000 (d)Wages for production workers
(a) factory overhead (b)dm (c)factory overhead (d)dl
1.Salaries for assembly line inspectors 2.Insurance on factory machines 3.Property taxes on the factory building 4.Factory repairs 5.Upholstery used in manufacturing furniture 6.Wages paid to assembly line workers 7.Factory machinery depreciation 8.Glue, nails, paint, and other small parts used in production 9.Factory supervisors' salaries. 10.Wood used in manufacturing furniture.
1. Direct Labor or Manufacturing Overhead 2. Manufacturing Overhead 3. Manufacturing Overhead 4. Manufacturing Overhead 5.Direct Materials 6. Direct Labor 7.Manufacturing Overhead 8.Manufacturing Overhead 9.Manufacturing Overhead 10.Direct Materials
1.direct materials 2.direct labor 3. manufacturing overhead 4. manufacturing overhead
1. Frames and tires used in manufacturing bicycles. 2.Wages paid to production workers 3.Insurance on factory equipment and machinery. 4.Depreciation on factory equipment.
1. DM 2. DM 3.DL 4. MOH 5. MOH 6. DM 7. DM 8. MOH
1. windshield 2. engine 3. wages of assembly line worker 4. depreciation of factory machinery 5. factory machinery lubricants 6. tires 7. steering wheel 8. salary of painting supervisor
Financial Accounting 1. Primary users of reports 2. types of reports 3. frequency of reports 4. purpose of reports 5. content of reports 6. verification process Managerial Accounting 1. Primary users of reports 2. types of reports 3. frequency of reports 4. purpose of reports 5. content of reports 6. verification process
1.External Users 2.Financial Statements 3.Quarterly and Annually 4.General-Purpose 5.Generally Accepted Accounting Principles 6.Annual Audit by Certified Public Accountant 1.Internal Users 2.Internal Reports 23.As Frequently as Needed 4.Special-Purpose Information for Specific Decisions 5.Relevance to Decisions 6.No Independent Audits
Gala Company is a manufacturer of laptop computers. Various costs and expenses associated with its operations are as follows.The company intends to classify these costs and expenses into the following categories: (a) direct materials, (b) direct labor, (c) manufacturing overhead, and (d) period costs.For each item, indicate the cost category to which it belongs.
1.Property taxes on the factory building.Manufacturing Overhead 2.Production superintendents' salaries Manufacturing Overhead 3.Memory boards and chips used in assembling computers.Direct Materials 4.Depreciation on the factory equipment Manufacturing Overhead 5.Salaries for assembly-line quality control inspector Direct Labor or Manufacturing Overhead 6.Sales commissions paid to sell laptop computers.Period Costs 7.Electrical components used in assembling computers Direct Materials 8.Wages of workers assembling laptop computers Direct Labor 9.Soldering materials used on factory assembly lines Manufacturing Overhead 10.Salaries for the night security guards for the factory building Manufacturing Overhead
Knight Company reports the following costs and expenses in May. Factory utilities$16,900 Direct labor$69,300 Depreciation on factory equipment13,850 Sales salaries50,400 Depreciation on delivery trucks4,100 Property taxes on factory building3,400 Indirect factory labor51,800 Repairs to office equipment1,600 Indirect materials83,100 Factory repairs2,440 Direct materials used142,700 Advertising15,600 Factory manager's salary8,400 Office supplies used2,990 Determine the total amount of manufacturing overhead.
179,890 ($16,900 + $13,850 + $51,800 + $83,100 + $8,400 + $3,400 + $2,440 = $179,890) (Fact. util. + Depr. on fact. equip. + Ind. fact. labor + Ind. mat. + Fact. mgr's. sal. + Prop. tax. on fact. bldg.. + Fact. repairs = MOH)
Product Costs Period Costs Period Costs Period Costs Product Costs Product Costs
Manufacturing overhead Selling expenses. Administrative expenses. Advertising expenses. Direct labor Direct materials.
At what price were the updated versions sold?
Scrap Value + Net Income Increase + Additional Cost to be updated = Updated version Price
The number of units the company must sell to break even is
Total fixed costs / (unit sales price - unit variable cost) = Break-even in units
Which of the following does not express the break-even point?
Total fixed costs / unit contribution margin = Break Even point