Quiz Questions 210 FINAL

Styles Corporation's earnings per share were $5.25 for the year ended December 31, 2021, and $4.00 for the year ended December 31, 2020. As of December 31, 2021 and 2020, Styles Corporation had 1,000,000 common shares issued and outstanding. Styles Corporation did not have any preferred stock issued and outstanding as of December 31, 2021 and 2020. As of December 31, 2021, Styles Corporation's total stockholders' equity was $10,000,000 and its total assets were $15,000,000. As of December 31, 2020, Styles total stockholder's equity was $9,000,000 and its total assets were $13,000,000. The market price per share of Styles Corporation common stock was $25 as of December 31, 2021. The book value per share of Styles Corporation's common stock as of December 31, 2021 is $ __________ and its price-earnings ratio per share as of December 31, 2021 is __________.

$10 and 4.76 times

Kirsten believes her company's overhead costs are driven (affected) by the number of direct labor hours because the production process is very labor intensive, and thus, she has concluded that overhead should be allocated to the products produced by her company based on direct labor hours. During the year ended December 31, 2021, the company produced 5,000 units of Product A requiring a total of 1,600 direct labor hours and 2,500 units of Product B requiring a total of 400 direct labor hours. What overhead allocation rate should be used if the company incurs overhead costs of $20,000 during the year ended December 31, 2021?

$10 per direct labor hour

Marsden Company has three departments occupying the following amount of floor space: Department 115,000 sq. ft. Department 210,000 sq. ft.Department 325,000 sq. ft. How much rent should be allocated to Department 3 if the total rent is equal to $200,000?

$100,000

Wu Company incurred $40,000 of fixed costs and $50,000 of variable cost when 4,000 units of product were made and sold.If the company's volume increases to 5,000 units, the company's total costs will be:

$102,500

During its first year of operations, Silverman Company paid $14,000 for direct materials and $19,000 for production workers' wages. Lease payments and utilities on the production facilities amounted to $17,000 while general, selling, and administrative expenses totaled $8,000. The company produced 5,000 units and sold 3,000 units at a price of $15.00 a unit.What is the amount of gross margin for the first year?

$15,000

Great Outdoors Company makes two types of camping tents. Making a standard camping tent requires 4 hours of direct labor while making a deluxe camping tent requires 10 hours of direct labor. During the year ended December 31, 2021, the company made 2,000 standard camping tents and 500 deluxe camping tents, and incurred manufacturing overhead costs of $52,000. The management of Great Outdoors has determined that manufacturing overhead should be allocated based on direct labor hours. Based on this information:

$16 of overhead cost should be allocated to each standard camping tent and $40 of overhead cost should be allocated to each deluxe tent.

During the year ended December 31, 2021, The Powter Company's manufacturing process used $500,000 of direct raw materials, $1,000,000 of direct labor, and $800,000 of manufacturing overhead. As of January 1, 2021, Powter had Work in Process Inventory of $100,000 and Finished Goods Inventory of $500,000. As of December 31, 2021, Powter had Work in Process Inventory of $200,000 and Finished Goods Inventory of $100,000. What was Powter's costs of good sold for the year ended December 31, 2021?

$2,600,000

The Coldplay Company began operations on January 1, 2021. During the year ended December 31, 2021, The Coldplay Company started and completed 100,000 units of its only product and sold 75,000 of those units. Each unit of product requires one direct labor hour. The management of Coldplay has determined that manufacturing overhead should be allocated to each unit of product based on direct labor hours. Coldplay incurred the following costs and expenses during the year ended December 31, 2021: raw materials purchased and used of $1,000,000; direct labor of $2,000,000; manufacturing overhead pool costs of $500,000; and selling, general and administrative expenses of $300,000. What was Coldplay's cost of goods sold for the year ended December 31, 2021; and what was Coldplay's finished goods inventory balance as of December 31, 2021?

$2,625,000; and $875,000

Jarvis Company produces a product that has a selling price of $20 and a variable cost of $15 per unit. The company's fixed costs are $50,000. What is the break-even point measured in sales dollars?

$200,000

Jessup Company expects to incur manufacturing overhead costs of $20,000 each month during the year ending December 31, 2022 and direct production costs (i.e. direct labor and direct materials) of $126 per unit. Total units produced for the year ending December 31, 2022 are estimated to be 10,000 units. If the company desires to price its product at cost plus 50%, the sales price per unit would be which of the following amounts?

$225

As of December 31, 2021, Isaac Company had a balance of $200,000 in its common stock account, additional paid-in capital of $100,000, retained earnings of $75,000, and $10,000 of treasury stock. Isaac Company's total amount of stockholders' equity as of December 31, 2021 is:

$365,000

Madison Co. paid dividends of $3,000; $6,000; and $10,000 during the years ended December 31, 2019, 2020 and 2021, respectively. The company had 500 shares of cumulative preferred stock outstanding with a par value of $100 and a 10% Preferred Dividend rate. The amount of dividends paid by Madison to its common stockholders during the year ended December 31, 2021 would be:

$4,000

The following information is provided for Southall Company Sales Revenue $ 125,000 Variable Manufacturing Costs 42,500 Fixed Manufacturing Costs 37,500Variable selling and administrative costs 15,000Fixed selling and administrative costs 12,500 What is this company's contribution margin stated in dollars and as a percentage?

$67,500; and 54%

During the year ended December 31, 2021, Bon Jovi Company incurred direct labor costs of $750,000 and manufacturing overhead costs of $500,000. As of January 1, 2021, Bon Jovi had the following inventory balances: raw materials of $200,000, work in process inventory of $150,000, and finished goods inventory of $0. As of December 31, 2021, Bon Jovi had the following inventory balances: raw materials of $300,000, work in process inventory of $150,000, and finished goods inventory of $0. During the year ended December 31, 2021, Bon Jovi purchased $1,000,000 of raw materials. For the year ended December 31, 2021, what was Bon Jovi's cost of direct raw materials used and total manufacturing costs?

$900,000; and $2,150,000

Financial statement analysis involves forms of comparison including: All of these answers are correct Comparing key items to industry (same line of business) averages Comparing key relationships within the same year Comparing changes in the same item over a number of periods

* All of these answers are correct

On January 2, 2020, the Hoover Corporation issued 25,000 shares of $10 par-value common stock for $24 per share. Which of the following statements is true?

* The Additional Paid-in Capital account will increase by $350,000. The Cash account will increase by $500,000. The Retained Earnings account will increase by $600,000. The Common Stock account will increase by $600,000.

Southeast Manufacturing Company has identified the following cost objects:Cost Object 1: The cost of operating the finishing department, which is part of the factory.Cost Object 2: The cost of a particular product made in the factory in JuneCost Object 3: The cost of operating the factoryWith respect to these cost objects, the cost of the salary of the supervisor of the finishing department is directly traceable to cost objects:

1 and 3

As of December 31, 2021, Starwood Corporation has total current assets of $200,000, total current liabilities of $150,000, and accounts receivable of $69,000. As of December 31, 2020, Starwood's accounts receivable balance was $65,000. During the year ended December 31, 2021, Starwood had net sales on account of $1,300,000. What was Starwood's average days to collect accounts receivable during the year ended December 31, 2021?

18.81 days

Mitchell Company is authorized to issue 50,000 shares of common stock. The company issued 27,000 shares of stock and later purchased 5,000 shares of treasury stock. The number of outstanding shares of common stock is:

22,000 shares

Financial data for The Adams Company is as follows: Year ended Year ended Year ended December 31, 2021 December 31, 2020 December 31, 2019 Net sales $50,000,000 $40,000,000 $30,000,000 Gross margin 25,000,000 24,000,000 19,500,000 The percentage change in net sales for The Adams Company from the year ended December 31, 2020 to the year ended December 31, 2021 was ________%; and the trend in gross margin percentages from 2019 to 2021 is favorable or unfavorable?

25% and unfavorable

The following income statement is provided for Vargas, Inc. What is this company's magnitude of operating leverage? Assume that net income is equal to operating income. https://umd.instructure.com/courses/1333610/files/68390031/preview

3.00 times

Adele Company has a magnitude of operating leverage of 3 times. If Adele's sales increase by 10%, its operating income will increase by ________%; and if Adele's sales decrease by 20%, its operating income will decrease by ______%.

30%; and 60%

During its first year of operations, Forrest Company paid $30,000 for direct materials and $50,000 in wages for production workers. Rent payments and utility costs for its manufacturing facilities, and depreciation on manufacturing equipment totaled $15,000. General, selling, and administrative expenses were $20,000. The average cost to produce one unit was $2.50. How many units were produced during the period?

38,000 units

The Weeknd Company has the following account balances as of: December 31, 2021 December 31, 2020 Total current assets $2,000,000 $2,500,000 Total assets $8,000,000 $7,000,000 Total current liabilities $1,500,000 $2,000,000 Total stockholders' equity $5,000,000 $4,000,000 The Weeknd Company had net income of $500,000 for the year ended December 31, 2021 and $300,000 for the year ended December 31, 2020. What was the Return on Assets for The Weeknd Company for the year ended December 31, 2021?

6.67%

Frazier Company sells women's ski jackets. Each jacket sells for $250 and total variable costs per jacket are $100. Frazier Company's fixed costs per unit are $10 at an annual sales level of 10,000 units. What is Frazier's contribution margin percentage and what will be the increase in Frazier's operating income if it increases it sales by $1,000,000?

60%; and $600,000

The debt to asset ratio of Apple, Inc. as of September 25, 2001 was 82%. All of the following statements are true, except: The higher a company's debt to asset ratio, the increased risk of the company not being able to pay its debt when debts are due for repayment Companies may use a higher debt to asset financing structure to maximize returns to stockholders The debt to assets ratio indicates the percentage of a company's assets financed by debt Correct! Apple uses less debt to finance its assets than other companies in the Dow Jones Industrial Average

Apple uses less debt to finance its assets than other companies in the Dow Jones Industrial Average

Qualitative considerations pertaining to a decision to eliminate a segment include all of the following, except: Cost of goods sold for the eliminated segment will be zero after elimination Sales of the company's remaining product lines may decrease because its continuing products were interdependent with the products sold in the eliminated segment Employees lives will be disrupted and employee morale may be affected in the company's continuing segments

Cost of goods sold for the eliminated segment will be zero after elimination

Which of the following items would be reported directly on the income statement as an operating expense (i.e. selling, general and administrative expense)?

Costs to deliver products to customers

If the company purchased a $60,000 piece of equipment by paying $30,000 cash and having the rest financed with a short-term note from the bank, then immediately after this transaction what is the expected impact on the current ratio?

Current assets decrease and current liabilities increase by the same amount therefore, the current ratio decreases.

Wu Company incurred $40,000 of fixed cost and $50,000 of variable cost when 4,000 units of product were made and sold.If the company's volume doubles, the total cost per unit will:

Decrease

Certified Management Accountants (CMAs) are unlike Certified Public Accountants (CPAs) in that CMAs do not need to concern themselves with ethical issues of competence, confidentiality, and integrity.

False

Double taxation is a significant disadvantage of the partnership form of business organization

False

If a company is considering outsourcing the production of its only product, the salary of the President of the company is a relevant cost to this outsourcing analysis.

False

The following information is for Gable, Inc. and Harlowe, Inc. for the recent year. Based on the above data, which company has a higher operating leverage? https://umd.instructure.com/courses/1333610/files/68390032/preview

Harlowe, Inc.

All of the following methods are used by Certified Management Accountants to manage inventory, maximize customer satisfaction, increase profitability, and increase competitiveness, except:

Inventory Break-Even Analysis

During the year ended December 31, 2021, Ann mistakenly included some of the company's selling, general and administrative expenses in product costs, which she then allocated to the ending inventory of finished goods as of December 31, 2021 and cost of goods sold for the year ended December 31, 2021. Which of the following indicates how this error affects the company's financial statements?

Inventory is overstated, cost of goods sold is overstated, and gross margin is understated

Which form of business organization is established as a separate legal entity from its owners?

None of these Sole Proprietorship *Corporation Partnership

Which of the following terms designates the maximum number of shares that a corporation may issue?

Outstanding shares *Authorized shares Treasury stock Issued shares

All of the following statements about relevant information with regard to special decisions by business management are true, except:

Relevant costs remain the same under all alternatives being considered.

Three companies have the following current ratios as of December 31, 2021: Swift Company .9 Sheeran Company 1.75 Adele Company 3.0 Which of these three companies appears to be managing its working capital most efficiently?

Sheeran Company

Three companies operate in the same line of business and have the following inventory turnover ratios: Springsteen Company 10.0 times Bon Jovi Company 15.0 times The Calling Company 20.5 times Based solely on this inventory turnover ratio, which of these three companies appears to be managing its inventory most efficiently?

The Calling Company

The Oasis Company sells sporting equipment in three departments: baseball, soccer and tennis. Oasis is considering eliminating its tennis segment. Oasis will base its decision on the financial results of the tennis segment for its most recent year end, which are: Sales $2,000,000 Cost of goods sold (750,000) Sales commissions (200,000) Contribution margin $1,050,000 Corporate office overhead allocation $1,200,000 Net income/(loss) ($150,000) Using the information above and relying on a quantitative analysis only,

The Tennis Segment should not be eliminated.

The Smith Company is considering outsourcing the production of its only product to The Fray Company. Which of the following qualitative or quantitative factors is least likely to be relevant to Smith's outsourcing decision?

The cost of manufacturing equipment purchased five years ago by Smith

elect the correct statement regarding fixed costs. The fixed cost per unit decreases when volume increases. The fixed cost per unit increases when volume increases. Fixed costs increase in total as volume increases The fixed cost per unit does not change when volume decreases.

The fixed cost per unit decreases when volume increases.

The Coldplay Company is evaluating an option to outsource production of its only product, while it will continue to perform all sales, marketing and administration duties in-house. Coldplay incurs direct materials, direct labor and variable overhead costs of $20 for each unit of product it manufactures. In addition, Coldplay incurs fixed manufacturing overhead costs annually of $1,000,000 and has annual production of 100,000 units. Coldplay has determined that it could avoid all fixed manufacturing costs if it outsources production. Based on a quantitative analysis only of this information, is the following statement true or false? Coldplay should make the decision to outsource production of its only product if a third-party supplier offers to manufacture and sell to Coldplay the product for less than $30 per unit.

True

An analysis procedure that uses percentages to compare each of the parts of an individual statement to a key dollar amount from the financial statements (typically net sales) is:

Vertical Analysis

Bon Jovi Construction Company has two divisions: Residential and Commercial. Bon Jovi incurs $50,000 of depreciation costs annually on a crane used only by its Commercial Division. This depreciation expense is ____________ cost for the Commercial Division and ___________ cost for a specific project within the Commercial Construction Division.

a direct cost; and an indirect cost

If a department store is considering eliminating its children's clothing line of products, the revenues generated from the sale of children's clothing:

are differential revenues which should be considered in the segment elimination analysis

Custom Quilters makes decorative comforters, quilted garments, and other products in a small sewing factory. In 2020, the company expects to make 2,000 comforters. With respect to the comforters, how would the cost of the fabric used to make the comforters be classified?

as a direct cost and a variable cost

A cost driver is an activity, product, or service to which an accountant wishes to trace costs.

false

Sunk costs are typically relevant to future business decisions.

false

All of the following may be a cost driver, except:

manufacturing overhead cost pool

The Common Stock account on the balance sheet is stated at the ________ of the common stock.

most recent issue price lower of cost or market current market value * par or stated value

At the time that Stellar Company issued a 2-for-1 stock split, the company had 1,000 shares of $5 par value common stock outstanding. Stockholders' equity also included $14,000 of additional paid in capital and $20,000 of retained earnings. Immediately after the stock split,

the balance in the common stock account would be $5,000

Pets 'n Pals operates a chain of ten pet stores and maintains a corporate office. Pet 'n Pals is attempting to determine the cost of operating a particular store in its chain identified as Store #4. Which of the following costs would be classified as an indirect cost of that particular store?

the salary of the President of Pet 'n Pals

All costs directly attributable to the operation of a segment will be avoided if the segment is eliminated.

true

Articles of incorporation, prepared by a business that wishes to incorporate, normally include the corporation's name and purpose, its location, and provisions for capital stock, including the types of stock to be authorized, the number of authorized shares, and the par value or stated value per share for each type of stock.

true

In allocating fixed manufacturing overhead costs to products, it is best to estimate both the total fixed manufacturing overhead cost pool and the total units expected to be produced for the upcoming year and calculate an overhead allocation rate per unit based on these annual amounts to smooth the impact of monthly fluctuations in production volumes.

true

Qualitative factors should always be considered in a segment elimination decision.

true

The definitions of fixed and variable costs are valid over the relevant range of activity.

true