Accounting Exercise
Which words mean the same thing? Expenses and Expenditures Sales and Profit Correct! Revenue and Sales Revenue and Income
Revenue and Sales
During the control function, the measurements taken of the performance must be accurate enough to see ________. the primary focus only the negative results Correct! deviations and variances only positive results
deviations and variances
Management accountants help the management of an organization in their planning function through ________. analyzing profits evaluating costs Correct! strategic planning monitoring anti-theft system
strategic planning
Lidon Company is the exclusive distributor for an automotive product that sells for $37.00 per unit and has a CM ratio of 39%. The company's fixed expenses are $259,740 per year. The company plans to sell 19,000 units this year. Assume that by using a more efficient shipper, the company is able to reduce its variable expenses by $4.07 per unit. What is the company's new break-even point in unit sales and indollar sales?
14040 and 519480 Selling price = $37 per unit New Variable Expense = $22.57 - 4.07 = $18.50 or 50% New Contribution Margin = $18.50 or 50% BE Unit Sales: 259,740 / 18.50 = 14,040 units (rounded) BE Dollar Sales: 259,740 / .50 = $519,480
1 of 4 Lidon Company is the exclusive distributor for an automotive product that sells for $37.00 per unit and has a CM ratio of 39%. The company's fixed expenses are $259,740 per year. The company plans to sell 19,000 units this year. What are the variable expenses per unit? Correct!
22.57 Variable expenses: $37 × (100% - 39%) = $22.57 per unit
Lidon Company is the exclusive distributor for an automotive product that sells for $37.00 per unit and has a CM ratio of 39%. The company's fixed expenses are $259,740 per year. The company plans to sell 19,000 units this year. What amount of unit sales and dollar sales is required to earn an annual profit of $72,150?
23,000 units and 851000
Use the following information to compute the total manufacturing costs incurred during the period: Beginning raw materials = 5,500 Ending raw materials = 4,000 Direct labor = 12,250 Raw materials purchased =7,400 Depreciation on factory equipment = 6,500 Factory repairs and maintenance = 3,300 Beginning finished goods inventory = 10,200 Ending finished goods inventory = 8,900 Beginning goods in process inventory = 5,700 Ending goods in process inventory = 6,300 What is the total manufacturing Cost? [cost]
30950 RM = $5500 + 7400 = $12,900 - 4000 = $8900 MOH = $6500 + 3300 = $9800 Total Manuf. Cost = DM + DL + MOH = 8900 + 12,250 + 9800 = $30,950
Some accounts increase with a debit and some increase with a credit. What makes the "Accounts Payable" account go up? Correct! Credit Both make it go up Debit
Credit
Which of the following statements is incorrect? Management accounting focuses mainly on the internal user The information gathered from management accounting is not required by law Correct! Reports produced using management accounting must follow GAAP The practice of management accounting is fairly flexible
Reports produced using management accounting must follow GAAP
Use the following information to compute the NET Income for the period. Beginning raw materials = 5,500 Ending raw materials = 4,000 Direct labor = 12,250 Raw materials purchased =7,400 Depreciation on factory equipment = 6,500 Factory repairs and maintenance = 3,300 Beginning finished goods inventory = 10,200 Ending finished goods inventory = 8,900 Beginning goods in process inventory = 5,700 Ending goods in process inventory = 6,300 Sales revenue = $96,250 Selling expenses = 20,500 Advertising = $3,250 Administrative Expenses = $18,750 Correct!
income Statement = sales - COGS = gross margin - expenses = net income = 96,250 - 31,650 = 64,600 - 20,500 - 3,250 - 18,750 =$22,100 Net Income
The managers of an organization are responsible for performing several broad functions. They are ________. directing, controlling, and evaluating Correct! planning, controlling, and evaluating planning, evaluating, and manufacturing planning, controlling, and selling
planning, controlling, and evaluating
Lidon Company is the exclusive distributor for an automotive product that sells for $37.00 per unit and has a CM ratio of 39%. The company's fixed expenses are $259,740 per year. The company plans to sell 19,000 units this year. What is the break-even point in unit sales and in dollar sales? and
18000 and 666000 Variable expenses: $37 × (100% - 39%) = $22.57 per unit Unit Sales: = 259,740 / 14.43 = 18,000 units Dollar Sales: = 259,740 / 39% = $666,000
The basic accounting equation is: Assets = Liabilities + Equity. What account is considered a liability? Cash Inventory Correct! Accounts Payable Dividend
Accounts Payable
Some accounts increase with a debit and some increase with a credit. What makes the "Retained Earnings" account go up? Both make it go up Debit Correct! Credit
Credit
Internal users of accounting information would not include ________. Officers Correct! Creditors Managers Employees
Creditors
Some accounts increase with a debit and some increase with a credit. What makes the "Wage Expense" account go up? Both make it go up Credit Correct! Debit
Debit
GIRLS is an acronym for accounts that increase with a Credit. What accounts do each of the letters represent? Spell out the word in its entirety and watch your spelling! G I R L S
Gains Income Revenue Liabilities Stockholder's Equity
External users of accounting information would include ________. Supervisors Correct! Investors Employees Managers
Investors
Each account has a debit side and a credit side. Credit is on what side? Both sides Correct! Right Left
Right
Managerial accounting produces information: To meet the needs of external users That follows the rules of GAAP To meet the needs of investors Correct! That is often focused on the future
That is often focused on the future
Question: The Paper Corporation produces fine paper using three production departments Pulping Drying Finishing In the Pulping Department, raw materials such as wood fiber and rag cotton are mechanically and chemically treated to separate their fibers. The result is a thick slurry of fibers. In the Drying Department, the wet fibers transferred from the Pulping Department are laid down on porous webs, pressed to remove excess liquid, and dried in ovens. In the Finishing Department, the dried paper is coated, cut, and spooled onto reels. The company uses the weighted-average method in its process costing system. Data for March for the Drying Department follow: Percent Completed Units Pulping Conversion Work in process inventory, March 1 5,000 100 % 20 % Work in process inventory, March 31 8,000 100 % 25 % Pulping cost in WIP inventory, March 1 $ 4,800 Conversion cost in WIP inventory, March 1 $ 500 Units transferred to the next production department $ 157,000 Pulping cost added during March $ 102,450 Conversion cost added during March $ 31,300 No materials are added in the Drying Department. Pulping cost represents the costs of the wet fibers transferred in from the Pulping Department. Wet fiber is processed in the Drying Department in batches; each unit in the above table is a batch and one batch of wet fibers produces a set amount of dried paper that is passed on to the Finishing Department. Required: Determine the equivalent units for March for pulping and conversion Compute the costs per equivalent unit for March for pulping and conversion (round 2 decimals) Determine the total cost of ending WIP inventory and the total cost of units transferred to the Finishing Department in March Enter Your Answers Equivalent Units:Pulping Units? Conversion Units? Cost per Equivalent Unit:Pulping Cost? Conversion Cost? Total CostEnding WIP Dollar Amount? Cost of Units transferred to Finishing Department?
165000 159000 0.65 0.20 5600 133450 Q1 Equivalent Unit Formula = transferred to next department + ending WIP Pulping Equivalent Units: = transferred to next department + ending WIP = 157,000 - 8,000 (8000x100%) Equivalent Units =165,000 Conversion Equivalent Units: = transferred to next department + ending WIP = 157,000 - 2,000 (8000x25%) Equivalent Units =159,000 Equivalent Units = the number of units that would have been produced if the units were produced sequentially and in full. Q2 Cost of Equivalent Unit Formula = (cost of beginning WIP + cost added) / equivalent units Pulping Cost per Equivalent Unit: = (cost of beginning WIP + cost added) / equivalent units = ($4800 + $102,450) / 165,000 Pulping Cost per Equivalent Unit = $0.65 Conversion Cost per Equivalent Unit: = (cost of beginning WIP + cost added) / equivalent units = ($500 + $31,300) / 159,000 Conversion Cost per Equivalent Unit = $0.20 Q3 Total Cost of Ending WIP (Pulp + Conversion) Formula: (ending WIP x cost/unit) pulping + (ending WIP x cost/unit) conversion (ending WIP x cost/unit) pulping + (ending WIP x cost/unit) conversion = (8000 x 0.65) + (2000 + 0.20) = $5200 + 400 = $5,600 total cost of ending WIP Cost of Units Transferred Out (Pulp + Conversion) Formula: (transferred out x cost/unit) pulping +(transferred out x cost/unit) conversion = (157,000 x 0.65) + (157,000 x 0.20) = $102,050 + 31,400 = $133,450 total cost of units transferred out
Smith Company uses an ABC system. At the beginning of the year, the company made the following estimates of cost and activity for its five activity cost pools. Activity Cost Pool Activity Measure Expected OH Cost Expected Activity Labor-related Direct labor-hours$311,500 44,500 DLHs Purchase orders Number of orders$8,840 221 orders Parts management Number of part types$71,280 99 part types Board etching Number of boards$63,700 1,820 boards General factory Machine-hours$148,000 14,800 MHs The expected activity for the year was distributed among the company's four products as follows: Expected Activity Activity Cost PoolProduct AProduct BProduct CProduct D Labor-related (DLHs)6,800 27,300 4,600 5,800 Purchase orders (orders)51 29 49 92 Parts management (part types)34 17 33 15 Board etching (boards)500 770 550 0 General factory (MHs)2,100 6,300 2,400 4,000 Required: Compute the activity rate for each of the activity cost pools.Labor Related Purchase Orders Parts Management Board Etching General Factory Using the rates determine the total overhead cost assigned to each product.Product A Product B Product C Product D
7 40 720 35 10 112620 294450 101170 95080
DEAL is an acronym for accounts that increase with a Debit. What accounts do each of the letters represent? Spell out the word in its entirety and watch your spelling! D E A L
Dividends Expenses Assets Losses
Management accounting: Relates to the company as a whole Correct! Emphasizes special-purpose information Is limited to strictly cost figures Is controlled by GAAP
Emphasizes special-purpose information
Which of the following is false regarding strategic planning? It should include both short-term and long-term goals Strategic objectives will be diverse and vary from company to company Correct! It is the sole responsibility of supervisors It will span many years.
It is the sole responsibility of supervisors
Each account has a debit side and a credit side. Debit is on what side? Correct! Left Right Both sides
Left
Match the financial statement to the best definition: Correct!Income Statement Lists the revenue and expense accounts Correct!Balance Sheet Where you will find the basic accounting equation accounts listed Correct!Statement of Retained Earnings Provides detail about dividends paid to owners Correct!Statement of Cash Flows Tracks the movement of cash
Lists the revenue and expense accounts Where you will find the basic accounting equation accounts listed Provides detail about dividends paid to owners Tracks the movement of cash
Use the following information to compute the cost of goods sold for the period. Beginning raw materials = 5,500 Ending raw materials = 4,000 Direct labor = 12,250 Raw materials purchased =7,400 Depreciation on factory equipment = 6,500 Factory repairs and maintenance = 3,300 Beginning finished goods inventory = 10,200 Ending finished goods inventory = 8,900 Beginning goods in process inventory = 5,700 Ending goods in process inventory = 6,300 Total COGS? [cost] Hint: there is no adjustment made to the COGS
WIP = 5700 + 30,950 = 36,650 - 6300 = $30,350 COGM FG = 10,200 + 30,350 = 40,550 - 8900 = $31,650 COGS 31650
Question 12.5 / 10 pts Smith Co. provided the following account balances for the year ended December 31. Sales Revenue = $1,090,000 Purchase of raw materials = $265,000 Direct Labor = $60,000 Administrative expenses = $157,000 Selling expenses = $219,000 Manufacturing OH applied to WIP = $332,000 Total actual Manufacturing OH cost = $351,000 Inventory balances at the beginning and end of year were as follows: Raw MaterialsBeginning = $55,000Ending = $32,000 Work in ProcessBeginning = $45,000Ending = $33,000 Finished GoodsBeginning = $38,000Ending = $67,000 What is the total Direct Material Used, ? What is the total Cost of Goods Manufactured, ? What is the total Adjusted Cost of Goods Sold, ? What is the total Net Income, ?
What is the total Direct Material Used, ? 288000 What is the total Cost of Goods Manufactured,363000 What is the total Adjusted Cost of Goods Sold, 334000 What is the total Net Income 380000
Which of the following is a primary aspect of the evaluating function within an organization? Correct! comparing actual results against expected results for products, departments, divisions, or the company as a whole reviewing only the quantitative or financial results of the company setting goals putting controls in place for the upcoming year
comparing actual results against expected results for products, departments, divisions, or the company as a whole