accounting 2 exam 2 practice ch17-21
If sales are $1,000,000, variable costs are $524,800, and income from operations is $125,200, what is the amount of fixed costs? a $ 475,200 b $ 825,200 c $ 600,400 d $ 350,000
1,000,000 sales -(524,800) var cost =475,200 cont margin -125,200 income from ops =(350,000) fixed costs
Ingram Co. manufactures office furniture. During the most productive month of the year, 4,000 desks were manufactured at a total cost of $100,000. In its slowest month, the company made 1,300 desks at a cost of $46,000. Using the high-low method of cost estimation, total fixed costs are:
100,000 - $46,000 = $54,000 4000 - 1300 = 2700 $54,000 / 2700 = $20 var cost per unit $100,000 = (4000X$20) + fixed costs $100,000 = $80,000 + $20,000 Total fixed costs are $20,000.
The cost system best suited to industries that manufacture a large number of identical units on a continuous basis is: a process b departmental c first-in, first-out d job order
a - process
Which of the following is NOT one of the main purposes of financial accounting? a to provide managers with useful information for decision making b to provide outside readers of financial statements information about the financial condition and activity of the company c to report on the financial condition and activity of the company in conformity with GAAP d to provide financial information to lenders, regulators, and investors
a - to provide managers with useful information for decision making (Financial accounting does provide information for management's decision-making, but it is NOT one of the main purposes.)
An analysis in which all the components of an income statement are expressed as a percentage of net sales is called a vertical analysis b horizontal analysis c liquidity analysis d common-size analysis
a - vertical analysis
If fixed costs increase, break-even in units will: a Increase b Decrease c Remain the same
a Increase
The dividend yield for Coca-Cola with a market price of $50 and a dividend payout of $5 per share is a $50 b 10% c 5% d 20%
b - $5 / $50 = 10%
Expenses NOT related to either the manufacture or selling a product are classified as: a Advertising expenses b Administrative expenses c Wages d Sales commissions
b - Administrative expenses
Which of the following would most likely be classified as a period cost? a Direct materials b Advertising c Direct labor d Indirect materials
b - Advertising
Which of the following is an example of direct labor cost for an airplane manufacturer? a Cost of oil lubricants for factory machinery b Cost of wages of assembly worker c Salary of plant supervisor d Cost of jet engines
b - Cost of wages of assembly worker
Which of the following is considered a part of factory overhead cost? a Sales commissions b Depreciation of factory buildings c Depreciation of office equipment d Direct materials used
b - Depreciation of factory buildings
Which of the following is an example of a cost that varies in total as the number of units produced changes? a Salary of a production supervisor b Direct materials cost c Property taxes on factory buildings d Straight-line depreciation on factory equipment
b - Direct materials cost ( A variable cost)
Which of the following is an example of a factory overhead cost? a Repair and maintenance cost on the administrative building b Factory heating and lighting cost c Insurance premiums on salespersons' automobiles d President's salary
b - Factory heating and lighting cost
There is no overlap between financial and managerial accounting. a TRUE b FALSE
b - False
In order to be useful to managers, management accounting reports should possess all of the following characteristics EXCEPT: a provide objective measures of past operations and subjective estimates about future decisions b be prepared in accordance with generally accepted accounting principles c be provided at any time management needs information d be prepared to report information for any unit of the business to support decision making
b - be prepared in accordance with generally accepted accounting principles
For purposes of cost behavior analysis, costs are divided into what classifications? a variable costs, product costs, and sunk costs b fixed costs, variable costs, and mixed costs c variable costs, period costs, and differential costs d variable costs, sunk costs, and opportunity costs
b - fixed costs, variable costs, and mixed costs
The previous question shows what kind of analysis? a vertical analysis b horizontal analysis c ratio analysis d common-size analysis
b - horizontal analysis
In what type of production line would workers be cross-trained to perform multiple functions and find more pride in the finished product? a work center flow system b lean production c traditional production line d first-in, first-out
b - lean production
A cost of production report does all of the following except: a summarizes the production activity of each department b summarizes production quality data c summarizes accumulated costs for each job d helps control costs by reporting on units entering production and costs incurred in each department
b - summarizes production quality data
Putnam Manufacturers Inc. has estimated total factory overhead costs of $168,000 and 12,000 direct labor hours for the current fiscal year. If job number 117 incurred 1,500 direct labor hours, the work in process account will be debited and factory overhead will be credited for: a $10,500 b $0; WIP is credited c $21,000 d $1,500
c - $21,000
Refer to your answer to the previous question. During April, a job was completed that used 250 machine hours. What is the amount of factory overhead applied to this job, based on the factory overhead rate calculated in the previous question. a $2,000 b $1,333 c $1,000 d $1,500
overhead applied = predetermined factory overhead rate X activity base for the job = $6 per machine hour X 250 hours = $1,500
Which of the following statements is true regarding fixed and variable costs? a Both costs are constant when considered on a per unit basis. b Both costs are constant when considered on a total basis. c Fixed costs are fixed in total, and variable costs are fixed per unit. d Variable costs are fixed in total, and fixed costs vary in total.
c - Fixed costs are fixed in total, and variable costs are fixed per unit.
Which of the following activity bases would be the most appropriate for food costs of a hospital? a Number of cooks scheduled to work b Number of x-rays taken c Number of patients who stay in the hospital d Number of scheduled surgeries
c - Number of patients who stay in the hospital
Which of the following costs is a mixed cost? a Salary of a maintenance supervisor b Electricity costs of $.12 per kilowatt-hour c Rental costs of $5,000 per month plus $.30 per machine hour of use d Straight-line depreciation on factory equipment e Monthly rental costs of $5,000
c - Rental costs of $5,000 per month plus $.30 per machine hour of use
Putnam Manufacturers Inc. has estimated total factory overhead costs of $84,000 and 12,000 direct labor hours for the current fiscal year. If job number 117 incurred 1,500 direct labor hours, the work in process account will be debited and factory overhead will be credited for: a $10,500 b $0; WIP is credited c $84,000 d $1,500
1. Find predetermined factory overhead rate. total estimated FOH / activity base $84,000 / 12,000 = $7 per direct labor hour 2. multiply overhead rate by number of DL hours: 1,500 X $7 = $10,500
If sales are $100,000, variable costs are $30,000 and income from operations is $20,000 what is the contribution ratio? a $50,000 b $70,000 c 50% d 70%
$100,000 - $30,000 = $70,000 / $100,000 = 70%
The Collins Company forecasts that total overhead for the current year will be $12,000 and that total machine hours will be 2,000 hours. Year to date, the actual overhead is $8,000 and the actual machine hours are 1,000 hours. If the Collins Company uses a predetermined overhead rate based on machine hours for applying overhead, what is that overhead rate? a $8 per machine hour b $12 per machine hour c $4 per machine hour d $6 per machine hour
$12,000 / 2,000 machine hours = predetermined factory overhead rate of $6 per machine hour
Assume the following sales data for a company: 2019 600,000 2018 750,000
$600,000 - $750,000 = -$150,000 -$150,000 / $750,000 = -.2 or 20% decrease
Department A had 4,000 units in work in process that were 75% completed as to labor and overhead at the beginning of the period, 30,000 units of direct materials were added during the period, 32,000 units were completed during the period, and 2,000 units were 40% completed as to labor and overhead at the end of the period. All materials are added at the beginning of the process. The first-in, first-out method is used to cost inventories. The number of equivalent units of production for conversion costs for the period was: a 31,800 b 29,800 c 33,800 d 32,000
4000 X .25 = 1000 eq units 2000 X .4 = 800 eq units 32,000 completed less 4,000 in beg. WIP = 28,000 eq units 28000 + 1000 + 800 = 29,800 eq units
In an oil refinery, 10,000 gallons of partially-refined crude oil entered the Distilling Department, and 9,575 gallons of gasoline were produced. What was the yield? a 95.75% b 25.00% c 95.00% d 4.25%
9,575 / 10,000 = .9575 or 95.75%
Based on the following data for the current year, Net sales on account during year $200,000 Cost of merchandise sold during year 300,000 Accounts receivable, beginning of year 45,000 Accounts receivable, end of year 35,000 Inventory, beginning of year 90,000 what is the accounts receivable turnover? a 5 b 10 c 20 d 40
A/R TURNOVER = NET SALES / AVG. A/R AVG. A/R = (BEG. A/R + END. A/R) / 2 ($45,000 + $35,000) / 2 = $40,000 NET SALES of $200,000 / $40,000 = 5
A company reports the following: Net Income $100,000 Preferred Dividends $25,000 Shares of Common Stock Outstanding 50,000 shrs Market Price $25 per share Calculate the company's Price-Earnings (PE) Ratio: a $1.50 b 16.7 c 0.6 d 0.06
EPS = $100,000 - $25,000 / 50,000 = $1.50 EPS PE Ratio = MKT Price/EPS $25 / $1.50 = 16.7
Which of the following is not included in the computation of the quick ratio? a inventory b marketable securities c accounts receivable d cash
a - inventory
What phase of management is considered to be intergral to all phases? a planning b directing c controlling d decision making
d - decision making
The Report on Internal Control over Financial Reporting is the responsibility of a the Independent Registered Public Accounting Firm b the company's internal auditor c the company's chief operating officer d the company's management
d - the company's management
What is the quick ratio? a 2.2 b 3.1 c 4.4 d 4.4
QUICK RATIO = QUICK ASSETS/ CURRENT LIABILITIES $82,000/ $37,000 = 2.2
Based on the following data, Accounts payable $30,000 Accounts receivable 12,000 Accrued liabilities 7,000 Cash 30,000 Intangible assets 40,000 Inventory 72,000 Long-term investments 100,000 Long-term liabilities 75,000 Marketable securities 40,000 Property, plant, and equipment 625,000 Prepaid expenses 2,000 8 What is the dollar amount of quick assets? a $163,000 b $114,000 c $82,000 d $116,000
The "quick assets" are CASH AND CASH EQUIVALENTS ACCOUNTS RECEIVABLE TEMPORARY INVESTMENTS (aka MARKETABLE SECURITIES) CASH $30,000 A/R $12,000 MKT SEC $40,000 $82,000
The Rolling Department of Alcoa Aluminum had 4,150 tons in beginning work in process inventory (40% complete). During April, 83,580 tons were completed. The ending work in process inventory was 6,770 tons (30% complete). What were the total equivalent units for conversion, assuming FIFO? a 90,350 units b 83,580 units c 81,920 units d 83,951 units
Total whole units Percent conversion completed in period Equivalent units for conversion 4,150 60% 2,490 79,430* 100% 79,430 83,580 — 81,920 6,770 30% 2,031 90,350 83,951 d
Nikki Company has fixed costs of $480,000. The unit selling price, variable cost per unit, and contribution margin per unit for the company's two products are provided below. Selling Variable Contribution Product Price Cost/Unit Margin/Unit Q $200 $100 $100 Z $100 $80 $20 The sales mix for products Q and Z is 75% and 25%, respectively. The break-even point in units is:
Unit selling of E (Enterprise) = ($200 X .75) + ($100 X .25) = $175 Unit variable cost of E (Enterprise) = ($100 X .75) + ($80 X .25) = $95 Enterprise unit selling price $175 minus: Enterprise unit variable cost ($95) equals: Enterprise unit contribution margin $80 Break-even in units = Fixed costs / unit contribution margin $480,000 / $80 = 6000 units
The costs of energy consumed in producing muffins in the Baking Department were $162,000 and $160,000, for June and July, respectively. The number of equivalent units produced in June and July was 450,000 pounds and 400,000 pounds, respectively. What was the cost per equivalent unit for each month? a June $2.78 and July $2.50 b June $.40 and July $.40 c June $3.60 and July $4.00 d June $.36 and July $.40
Cost / equivalent units = Cost per equivalent unit $162,000 / 450,000 pounds $0.36 $160,000 / 400,000 pounds $0.40
When the fixed costs are $40,000 and the unit contribution margin is $20, the break-even point is a 80,000 units b 4,000 units c 4,000 units d 2,000 units
FIXED COSTS / UNIT CONTRIBUTION MARGIN $40,000 / $20 = 2,000
The following information is available for Applegate Manufacturing Company for the month ending January 31, 2010: Cost of direct materials used in production $200,000 Direct labor $145,000 Work in process inventory, January 1 $70,000 Work in process inventory, January 31 $125,000 Total factory overhead $65,000 Determine Applegate's cost of goods manufactured for the month ended January 31, 2010. a $265,000 b $410,000 c $355,000 d $480,000
beginning WIP $70,000 plus: Cost of materials used in production $200,000 Direct labor $145,000 Total factory overhead $65,000 =Total manufacturing costs $480,000 Less ending WIP ($125,000) = Cost of goods manufactured $355,000
In addition to the Financial Statements and the accompanying Notes, the annual report of a publicly-traded company includes all of the following, except a Management Discussion and Analysis b Management's Report on Internal Control over Financial Reporting c Securities and Exchange Commission Statement on Internal Control d Report of Independent Registered Public Accounting Firm
c - Securities and Exchange Commission Statement on Internal Control
Which of the following conditions would cause the break-even point to decrease? a Total fixed costs increase b Unit selling price decreases c Unit variable cost decreases d Unit variable cost increases
c - Unit variable cost decreases
Statements in which all items are expressed only in relative terms (percentages of a common base) are: a horizontal statements b percentage statements c common-size statements d vertical statements
c - common-size statements
If the amount of factory overhead cost applied exceeds the amount incurred, the factory overhead account will have a: a debit balance and be underapplied b debit balance and be overabsorbed c credit balance and be overapplied d debit balance and be overapplied
c - credit balance and be overapplied
Another term for factory overhead is: a material inventory b work in process inventory c factory burden d administrative overhead
c - factory burden
For financial reporting purposes, costs that are identified with a product are called _________________. These would include direct materials, direct labor, and factory overhead. a period costs b miscellaneous costs c product costs d other manufacturing costs
c - product costs
Which of the following describes the relationship of unit sales price and break-even in units? a As unit sales price decreases, break-even in units decreases. b As unit sales price increases, break-even in units decreases. c As unit sales price decreases, break-even in units increases. d Both b and c are correct
d - Both b and c are correct.
The cost of materials that is an integral part of the manufactured product is: a direct labor cost b factory overhead cost c burden cost d direct materials cost
d - direct materials cost
A measure of the relationship between the volume of goods (or merchandise) sold and inventory may be stated as: a inventory turnover b accounts receivable turnover c number of days' sales in receivables d number of days' sales in inventory
d - inventory turnover
The High - Low method is used to a determine how high the costs go b determine how low the costs go c both a and b d separate mixed costs into fixed and variable
d - separate mixed costs into fixed and variable
As noted in the Report of Independent Registered Public Accounting Firm, the financial statements are the responsibility of: a the Independent Registered Public Accounting Firm b the company's internal auditor c the company's chief operating officer d the company's management
d - the company's management
The type of cost accounting system most appropriate for an industry that manufactures special-order goods or a variety of different products: a Managerial accounting b Income tax accounting c Process cost accounting d Job cost accounting
d- Job cost accounting