Cost test 3

Harbor Corp currently leases a corporate suite in an office building for a cost of $280,000 a year. Only 80% of the corporate suite is currently being used. A start-up business has proposed a plan that would use the other 20% of the suite and increase the overall costs of maintaining the space by $20,000. If the incremental method were used, what amount of cost would be allocated to the start-up business? A) $20,000 B) $300,000 C) $60,000 D) $75,000 Answer: A

A) $20,000

The flexible budget contains ________. A) budgeted amounts for actual output B) budgeted amounts for planned output C) actual costs for actual output D) actual costs for planned output

A) budgeted amounts for actual output

Emrald Corp currently uses a manufacturing facility costing $500,000 per year; 90% of the facility's capacity is currently being used. A start-up business has proposed a plan that would utilize the other 10% of the facility and increase the overall costs of maintaining the space by 5%. If the incremental method were used, what amount of cost would be allocated to the start-up business? A) $40,000 B) $50,000 C) $46,000 D) $42,000

B) $50,000

Alfred, owner of Hi-Tech Fiberglass Fabricators, Inc., is interested in using the reciprocal allocation method. The following data from operations were collected for analysis: Budgeted manufacturing overhead costs: Plant Maintenance PM (Support Dept) $350,000 Data Processing DP (Support Dept) $ 75,000 Machining M (Operating Dept) $225,000 Capping C (Operating Dept) $125,000 Services furnished: By Plant Maintenance (budgeted labor-hours): to Data Processing 3,500 to Machining 5,000 to Capping 8,200 By Data Processing (budgeted computer time): to Plant Maintenance 600 to Machining 3,500 to Capping 600 Which of the following linear equations represents the complete reciprocated cost of the Data Processing Department? A) DP= $75,000 + (600/4,700) PM B) DP= $75,000 + (3,500/16,700) PM C) DP= $75,000 × (600/4,700) + $350,000 × (3,340/16,700) D) DP= $350,000 + (600/16,700) DP

B) DP= $75,000 + (3,500/16,700) PM

A favorable variance indicates that ________. A) budgeted costs are less than actual costs B) actual revenues exceed budgeted revenues C) actual operating income is less than the budgeted amount D) budgeted contribution margin is more than the actual amount

B) actual revenues exceed budgeted revenues

1) A master budget is ________. A) a budget which starts from a zero base B) developed for a period for a planned output C) developed at the end of a period D) a type of flexible budget

B) developed for a period for a planned output

A flexible budget ________. A) is another name for management by exception B) is developed at the end of the period C) is based on the budgeted level of output D) provides favorable operating results

B) is developed at the end of the period

Jean Peck's Furniture's manufactures tables for hospitality sector. It takes only bulk orders and each table is sold for $300 after negotiations. In the month of January, it manufactures 3,000 tables and sells 2,250 tables. Actual fixed costs are the same as the amount fixed costs budgeted for the month. The following information is provided for the month of January: Variable manufacturing costs $120 per unit Fixed manufacturing costs $90,000 per month Fixed Administrative expenses $25,000 per month At the end of the month Jean Peck's Furniture's has an ending inventory of finished goods of 750 units. The company also incurs a sales commission of $10 per unit. What is the cost of goods sold per unit when using absorption costing? A) $120 B) $128 C) $150 D) $158

C) $150

Harbor Corp currently leases a corporate suite in an office building for a cost of $280,000 a year. Only 80% of the corporate suite is currently being used. A start-up business has proposed a plan that would use the other 20% of the suite and increase the overall costs of maintaining the space by $20,000. If the stand-alone method were used, what amount of cost would be allocated to the start-up business? A) $70,000 B) $66,000 C) $60,000 D) $74,000

C) $60,000

6) In a flexible budget __________. A) variable costs are calculated proportionately for the budgeted level of sales B) fixed costs are calculated proportionately for the actual level of sales C) fixed costs are kept at the same level of static budget D) variable costs are kept at the same level of static budget

C) fixed costs are kept at the same level of static budget

An unfavorable variance indicates that ________. A) the actual costs are less than the budgeted costs B) the actual revenues exceed the budgeted revenues C) the actual units sold are less than the budgeted units D) the budgeted contribution margin is more than the actual amount

C) the actual units sold are less than the budgeted units

Emrald Corp currently uses a manufacturing facility costing $500,000 per year; 90% of the facility's capacity is currently being used. A start-up business has proposed a plan that would utilize the other 10% of the facility and increase the overall costs of maintaining the space by 5%. If the stand-alone method were used, what amount of cost would be allocated to the start-up business? A) $48,000 B) $50,000 C) $50,500 D) $52,500

D) $52,500