Accounting 12 Final

The CM ratio of Baginski's Corp only product is 53%. The company's monthly fixed expense is $617,980 and the company's monthly target profit is $23,000. The dollar sales to attain that target profit is closest to:

$1,209,396

If operating income is $60,000, average operating assets are $240,000, and the minimum required rate of return is 20%, what is the residual income?

$12,000

Trumbull Corp budgeted sales on account of $120,000 for July, $211,000 for August, and $198,000 for September. Experience indicates that none of the sales on account will be collected in the month of the sale, 60% will be collected the month after the sale, 36% in the second month, and 4% will be uncollectible. The cash receipts from accounts receivable that should be budgeted for September will be:

$169,800

*Check Midterm 1 for data* Determine the total amount of supervisory wages and factory utilities costs that would NOT be assigned to products.

$22,130

Quinnett Corporation has two divisions: the Export Products Division and the Business Products Division. The Export Products Division's divisional segment margin is $34,300 and the Business Products Division's divisional segment margin is $86,700. The total amount of common fixed expenses not traceable to the individual divisions is $95,600. What is the company's net operating income?

$25,400

*Check Quiz 2 for data* JT's cost of goods sold is 60% of sales dollars. At the end of each month, JT wants a merchandise inventory balance equal to 20% of the following month's expected cost of goods sold. What dollar amount of merchandise inventory should JT plan to purchase in August?

$352,000

The budgeted cash disbursements for November are:

$405,000

*Check Quiz 2 for data* The budgeted cash receipts for November are:

$450,000

For July, White Corp has budgeted production of 6,000 units. Each unit requires 0.10 direct-labor hours at a cost of $8.50 per direct labor-hour. How much will White Corp budget for labor in July?

$5,100

Pen Corporation manufactures a single product. Last year, the company's variable costing net operating income was $55,700 and ending inventory increased by 800 units. Fixed manufacturing overhead cost per unit was $3 in both beginning and ending inventory. Determine the absorption costing net operating income for last year.

$58,100

The overhead for year was:

$590 overapplied

On February 1st, Manwill Corp. had $24,000 of raw materials on hand. During the month, the Corp purchased an additional $60,000 of raw materials. During Feb, $54,000 of raw materials were requisitioned from the storeroom for use in production. The debits entered in the Raw Materials account during the month of February total

$60,000 (don't include beginning inventory)

*Check Midterm 1 for data* Determine the total amount of supervisory wages and factory utilities costs that would be allocated to the Machining activity cost pool.

$94,670

The Covey Corp is preparing its Manufacturing Overhead Budget for the fourth quarter of the year. The budgeted variable manufacturing overhead rate is $4.00 per direct labor-hour; the budgeted fixed manufacturing overhead is $64,000 per month, of which is $18,000 is factory depreciation. If the budgeted direct labor time for October is 8,000 hours, then the total budgeted manufacturing overhead for October is:

$96,000

The management of Pacubas Corporation expects sales in July to be $121,000. The company's CM ratio is 64% and its fixed monthly expenses are $40,000. Estimate the company's net operating income for July, assuming that the fixed monthly expenses do not change.

(Find Profit) = $37,440

If the budgeted cash disbursements for manufacturing overhead for November are $90,000, then the budgeted direct labor-hours for November must be:

11,000 direct labor-hours

*Check Quiz 2 for the data* ROI would be:

12%

Clear Colors Corporation uses a predetermined overhead rate based on direct labor costs to apply manufacturing overhead to jobs. At the beginning of the year, the Corporation estimated its total manufacturing overhead cost at $350,000 and its direct labor costs at $200,000. The actual overhead cost incurred during the year was $362,00 and the actual direct labor costs incurred on jobs during the year was $208,000. The manufacturing overhead for the year would be:

2,000 overapplied

If the Tudor Retailing Company uses the high-low method of analysis, the total monthly fixed cost for Tudor Retailing Company would be estimated to be:

22000

*Check Quiz 2 for data* 2 pounds of material are required for each finished unit. The inventory of materials at the end of each month should equal 20% of the following month's production needs. Purchases of raw materials for May should be:

36,800 pounds

Nash Corp: Wait time = 10 days, Move time = 5 days, Process time = 15 days, Queue time = 15 days, Inspection time = 5 days. What is Nash's manufacturing cycle efficiency (MCE) for its snowmobiles?

37.5%

The applied manu ovh for the year was closest to:

59,590

Caber Corp. applies manu ovh on the basis of machine-hours. At the beginning of the most recent year, the company based its POHR on total estimated overhead of $60,600. Actual manu ovh for the year amounted to $59,000 and actual machine-hours were 5,900. The company's POHR for the year was $10.10 per machine-hour. The POHR was based on how many estimated machine-hours?

6000

Garde Crop: Wait time = 28.1, Process time = 0.5, Inspection time = 0.4, Move time = 2.4, Queue time = 4.8. The throughout time is:

8.1 hours

Abbott Company's manufacturing overhead is 20% of its total conversion costs. If direct labor is $38,000 and if direct materials are $23,000, the manufacturing overhead is:

9500

A sunk cost is:

A cost which cannot be avoided because it has already been incurred

For which situation(s) below would an organization be more likely to use a process costing system of rather than a job-order costing system?

A paper mill that processes wood pulp into large rolls of paper

Process costing would be used when:

A single product is homogeneously produced on a continuing basis

The cost of factory machinery purchased last year is:

A sunk cost

*Check Quiz 2 for data* Caprice Corp. is a wholesaler of industrial goods. a) Prepare a Schedule of Expected Cash Collections for November and December.

Ask Naomi for picture of hers

*Check Quiz 2 for data* Caprice Corp. is a wholesaler of industrial goods. b) Prepare a Merchandise Purchases Budget

Ask Naomi for picture of hers

A company that is seeking to increase ROI should attempt to decrease:

Average operating assets

The ___________________ is the amount remaining from sales revenue after all variable expenses have been deducted

Contribution margin

Property taxes on a manufacturing facility are classified as:

Conversion Cost, not a Period cost

Soledad Corporation had $36,000 of raw materials on hand on December 1. During the month, the Corporation purchased an additional $71,000 of raw materials. The journal entry to record the purchase of raw materials would include a:

Debit to Raw Materials of $71,000

During October, Dorini Corporation incurred $60,000 of direct labor costs and $5,000 of indirect labor cost. The journal entry to record the accrual of these wages would include a:

Debit to WIP to $60,000

Prime costs

Direct materials + direct labor

What is the variable costing unit product cost for the month?

Direct materials + direct labor + variable manu ovh

A direct cost is a cost that cannot be easily traced to the particular cost object under consideration

False

A disadvantage of using ROI to evaluate performance is that it encourages the manager to reduce the investment in operating assets as well as increase net operating income.

False

A fixed cost remains constant if expressed on a unit basis

False

Direct materials is considered to be a product cost under variable costing but not absorption costing

False

If POHR are based on budgeted activity and overhead includes significant fixed cots, then the unit product costs will be stable regardless of the budgeted level of activity for the period

False

Indirect materials are charged to specific jobs

False

One way to compute the total contribution margin is to deduct total fixed expenses from net operating income

False

Process Time is the only non-value-added component of Throughout Time.

False

Product-level activities relate to how many batches are run or units of product are made.

False

Property taxes and insurance premiums paid on a factory building are examples of period costs

False

The basic idea underlying responsibility accounting is that each manager should be held responsible for the overall profit of the company to ensure that all manager are acting together.

False

The cost per equivalent unit is the cost of the beginning WIP plus costs added to WIP divided by actual units of production

False

The sum of all amounts transferred from the WIP account to the Finished Goods account present COGS sold for the period

False

Total variable cost is expected to remain unchanged as activity changes within the relevant range

False

When the number of units in WIP and finished goods inventories decrease, absorption costing net operating income will typically be greater than variable costing net operating income

False

Managerial performance can be measured in many different ways including ROI and residual income. A good reason for using residual income instead of ROI is:

Managers are more likely to accept projects that are beneficial to the company

Which of the following classifications best describes the behavior of clerical expense?

Mixed

What is the amount of CM if sales volumes increases by 30%?

Multiply sales and variable expenses by 30% and subtract variable expenses from sales

Which of the following budgets are prepared before the production budget?

No = Direct Materials budget, Yes = Sales budget

The formula for computing the predetermined overhead rate is:

Predetermined overhead rate = Estimated total manufacturing overhead cost / Estimated total amount of the allocation base

Which of the following entries would record correctly the monthly salaries earned by the top management of a manufacturing company?

Salaries Expense Salaries and Wages Payable (debit expense)

When sales are constant, but the number of units produced fluctuates, net operating income determined by the absorption costing method will:

Tend to fluctuate in the same direction as fluctuations in the number of units produced

Departmental overhead rates are generally preferred to plant-wide overhead rates when:

The activities of the various departments in the plant are not homogenous

Overapplied manufacturing overhead means that:

The applied manufacturing overhead cost was greater than the actual manufacturing overhead cost

Which of the following would most likely be included as part of manufacturing overhead in the production of a wooden table?

The cost of glue used in the table

Which of the following is NOT a correct definition of the break-even point?

The point where total profit equals total fixed expenses

The direct labor budget is based on:

The required production for the period

Activity-based costing uses a number of activity cost pools, each of which may have a different allocation base.

True

All other things the same, in periods of increasing sales, net operating income will tend to increase more rapidly in a company with high fixed costs and low variable costs than in a company with high variable costs and low fixed costs:

True

Budgets are used to plan and control operations.

True

Commissions paid to salespersons are a variable selling expense

True

If the actual manufacturing overhead cost for a period exceeds the manufacturing overhead cost applied, then manufacturing overhead would be considered to be underapplied

True

In a job-order cost system, direct labor is assigned to a job using information from the employee time ticket:

True

In two companies making the same product and with the same total sales and total expenses, the CM ratio will be higher in the company with a higher proportion of fixed expenses in its cost structure

True

Margin equals net operating income divided by sales.

True

On a cash budget, the total amount of budgeted cash payments for manufacturing overhead should not include any amounts for depreciation on factory equipment.

True

Segment margin is a better measure of the long-run profitability of a segment than CM

True

Selling costs can be either direct or indirect costs

True

The sales budget is usually prepared before the production budget.

True

Thread that is used in the production of mattresses is an indirect material that is therefore classified as manufacturing overhead

True

When the POHR is based on the level of activity at capacity, underapplied manu ovh may be called the Cost of Unused Capacity and treated as a period expense

True

Assembling a product is an example of a:

Unit-level activity

Which of the following classifications best describes the behavior of shipping expense?

Variable

CM is the amount remaining after

Variable expenses have been deducted from sales revenue

Which of the following entries would correctly record the application of overhead cost?

WIP Manufacturing Overhead (debit expense)

Contribution margin means:

What remains from total sales after deducting all variable expenses

In a manufacturing company, direct labor costs combined with direct materials costs are known as:

prime costs