Accounting final
If the total cost function is y = 6,500 + 9X, calculate the variable cost for 4,400 units.
JUST 9 x X VARIABLE COST ONLY
A budget serves as much as a control tool as a planning tool because ________.
it is a benchmark against which actual performance can be compared
Which of the following is a component of operating budgets?
production budget
A manufacturing plant produces two product lines: golf equipment and soccer equipment. An example of indirect cost for the soccer equipment line is the ________.
property taxes paid on the land and building (plant)
Advantage Inc. employs 29 professional cleaners. Budgeted costs total $1,955,000 of which $1,702,000 is direct costs. Budgeted indirect costs are $839,500 and actual indirect costs were $795,600. Budgeted professional labor-hours are1,150,000 and actual hours were 1,221,875. What is the budgeted direct cost-allocation rate?
$1.48 = budgeted direct costs / budgeted labor hours
Which of the following statements is true of activity−based costing?
Activity based costing is more suited to companies with high product diversity than companies with single product line.
Blistre Company operates on a contribution margin of 30% and currently has fixed costs of $550,000. Next year, sales are projected to be $3,100,000. An advertising campaign is being evaluated that costs an additional $120,000. How much would sales have to increase to justify the additional expenditure?
400,000= 120,000/.30 additional cost/cmu%
Puritan Apparels is a clothing retailer. Unit costs associated with one of its products, Product DCF 130, are as follows: Direct materials $120 Direct manufacturing labor 40 Variable manufacturing overhead 15 Fixed manufacturing overhead 33 Sales commissions (2% of sales) 5 Administrative salaries 24 Total $237 What are the indirect nonmanufacturing variable costs per unit associated with Product DCF130?
$5
Which of the following companies will use a process costing system?
an oil refining company
Crandle Corp. applies manufacturing overhead costs to products at a budgeted indirectcost rate of $60 per direct manufacturing labor-hour. A retail outlet has requested a bid on a special order of a necklace. Estimates for this order include: Direct materials of $40,000; 400 direct manufacturing labor-hours at $15 per hour; and a 50% markup rate on total manufacturing costs. Estimated total product costs for this special order equal ________.
$7,000: (40,000 + 400x15) x1.5
Which of the following is true of planning in decision making?
It helps an organization to select goals and strategies.
Which of the following is true of management accounting information?
It helps with the coordination of elements of the value chain.
Sky High sells helicopters. During the current year, 130 helicopters were sold resulting in $840,000 of sales revenue, $260,000 of variable costs, and $350,000 of fixed costs. The number of helicopters that must be sold to achieve $320,000 of operating income is ________.
151 - use master equation = x = FC+OI/ CMU
Dartmouth Corporation manufactures two models of office chairs, a standard and a deluxe model. The following activity and cost information has been compiled: Product Number of Setups Number of Components Number of Direct Labor Hours Standard 18 9 275 Deluxe 32 14 215 Overhead Costs $75,000 $87,400 Number of setups and number of components are identified as activity−cost drivers for overhead. Assuming an activity−based costing system is used, what is the total amount of overhead costs assigned to the standard model?
61,200, setups= 20,000/(22+28)=400 components=40,000/(8+12)=2000 (400 x 22)+(2000 x 8)= 24,800
Rally Synthesis Inc. manufactures and sells 100 bottles per day. Fixed costs are $22,000 and the variable costs for manufacturing 100 bottles are $30,000. Each bottle is sold for $1,200. How would the daily profit be affected if the daily volume of sales drop by 10%?
9,000 - make sure to find profit and factor in variable cost
Which of the following statements is true of direct costs?
A direct cost of one cost object can be an indirect cost of another cost object
Budgets incorporate managements goals and
Express management's operating and financial plan for a specified period - usually a fiscal year
Comfort Corporation manufactures two models of office chairs, a standard and a deluxe model. The following activity and cost information has been compiled: Product Number of Setups Number of Components Number of Direct Labor Hours Standard 18 6 265 Deluxe 29 12 200 Overhead Costs $61,100 $64,800 Assume a traditional costing system applies the overhead costs based on direct labor hours. What is the total amount of overhead costs assigned to the standard model? (Do not round interim calculations. Round the final answer to the nearest whole dollar.)
TRADITIONAL 71,749 [overhead cost/(direct labor hours standard+direct labor hours deluxe)] x direct labor hours standard
Sales Volume Variance
actual budget <-- master budget
Managers use management accounting information to ________.
communicate, develop, and implement strategies
________ is the process of assigning indirect costs to products.
cost allocation
W.T. Ginsburg Engine Company manufactures part ACT31107 used in several of its engine models. Monthly production costs for 1,000 units are as follows: Direct materials $42,000 Direct labor 10,500 Variable overhead costs 32,500 Fixed overhead costs 18,000 Total costs $103,000 It is estimated that 6% of the fixed overhead costs assigned to ACT31107 will no longer be incurred if the company purchases ACT31107 from the outside supplier. W.T. Ginsburg Engine Company has the option of purchasing the part from an outside supplier at $94.75 per unit. If W.T. Ginsburg Engine Company purchases 1,000 ACT31107 parts from the outside supplier per month, then its monthly operating income will ________. (Round any intermediary calculations and your final answer to the nearest cent.)
decrease 8,670
In a cost-benefit approach, managers should spend resources if the ________.
expected benefits to the company exceed the expected costs
Which of the following is true if the production volume decreases?
fixed cost per unit increases
Annette has been recently promoted to head of her department. She is responsible for activities that influence revenues and is responsible for controlling the expenses of her department. She is held responsible for maximizing the profits of the department and to ensure that the earnings are ploughed back into the business. Annette is most likely to head a (n) ________.
investment center
Which of the following departments is most likely to be a profit center?
the consulting department of a law firm
Product−cost cross−subsidization meansthat:
when a company undercosts one of its products, it will overcost at least one of its other products
Classifying a cost as either direct or indirect depends upon ________.
whether the cost can be traced to a particular cost object in an economically feasible way
A favorable efficiency variance for direct labor might indicate that ________.
work is scheduled efficiently
Extreme Manufacturing Company provides the following ABC costing information: Activities Total Costs Activity−cost drivers Account inquiry $320,000 16,000 hours Account billing $220,000 4,000,000 lines Account verification accounts $182,000 80,000 accounts Correspondence letters $25,000 4,000 letters Total costs $747,000 The above activities are used by Departments A and B as follows: Department A Department B Account inquiry hours 2,200 hours 3,700 hours Account billing lines 600,000 lines 450,000 lines Account verification accounts 5,000 accounts 3,000 accounts Correspondence letters 1,000 letters 1,400 letters How much of the account billing cost will be assigned to Department B?
$24,750 = total cost / cost driver x department amount