Accounting midterm #2 (ch. 6-8)

Film Studio, Incorporated has beginning retained earnings of $80,000 and expects to earn net income of $70,000 during the budget period. What would be the budgeted ending balance in retained earnings if the company declares and pays dividends of $50,000?

$100,000

Max, Incorporated, has two divisions, South Division and North Division. South Division's sales, contribution margin ratio, and traceable fixed expenses are $500,000, 60%, and $100,000, respectively. What is the segment margin for the South Division?

$200,000

Striker Company estimates its expected cash receipts for the period to be $80,000 and its expected cash disbursements to be $70,000. The beginning cash balance for the period was $5,000. The management wants to maintain a minimum cash balance of $40,000. How much cash will the company need to borrow?

$25,000

For the budget period ending December 31 of the current year, Aaron Corporation estimates its ending balances for cash as $4,000, accounts receivable as $16,000, finished goods inventory as $12,000, and raw materials inventory as $8,000. Invoices relating to raw materials in the amount of $14,000 are expected to be unpaid as of December 31. What is the amount of total current assets that will be reported on the budgeted balance sheet?

$40,000

Bovine Corporation has two divisions: televisions and mobile phones. The mobile phone division has a contribution margin of $600,000. The company's common fixed costs and total traceable fixed costs are $100,000 and $500,000 respectively. Assuming the traceable fixed costs of the television division are $300,000, what is the segment margin of the mobile phone division?

$400,000

Smarton Company is in the process of preparing its budgeted income statement. It has determined its estimated gross margin to be $90,000. The company also expects to incur selling and administrative expenses of $30,000 and interest expense of $12,000. What is Smarton's budgeted net income?

$48,000

Vineyard Corporation, a manufacturer of fine wines, began the year with 20,000 bottles in inventory. The company estimated the budgeted sales for the four quarters of the current year to be 200,000 bottles, 150,000 bottles, 250,000 bottles, and 400,000 bottles, respectively. The management feels that an ending inventory of 10% of the subsequent quarter's sales is appropriate. What are the production needs for the first quarter?

195,000 bottles

All of the following are differences between activity-based costing (ABC) and traditional absorption costing except ________. -ABC may assign nonmanufacturing costs to products -ABC allocates all manufacturing costs to products -ABC uses many cost pools -ABC may exclude some manufacturing costs, such as organization-sustaining costs

ABC allocates all manufacturing costs to products

Activity-based costing accumulates costs for each __________.

Activity

Activity-based costing estimates the costs of the resources consumed by _________.

Cost objects

Which of the following is a major factor that should be taken into consideration while planning the desired level of inventories? -Costs of carrying inventory -General administrative policy of the company -Selling price of the finished product -Statutory requirements

Costs of carrying inventory

Which of the following is not a management report that is normally prepared with ABC data? -Product profitability -Customer margins -Customer profitability

Customer margins

Which of the following is deducted from the total selling and administrative expense budget to determine the cash disbursements for selling and administrative expense budget?

Depreciation expense

Which of the following costs would not be allocated using ABC?

Direct labor

Which of the following is an allocation base commonly used under the traditional methods for allocation of overhead costs? -Number of batches -Direct labor-hours -Indirect materials -Number of customer orders

Direct labor-hours

Which of the following costs would not be allocated to products or customers?

Other

Fixed manufacturing overhead (Variable costing approach)

Period Cost

Fixed selling and administrative expenses (Variable costing approach)

Period cost

Variable selling and administrative expenses (Variable costing approach)

Period cost

Direct labor (Variable costing approach)

Product Cost

Variable manufacturing overhead (Variable costing approach)

Product Cost

Advertising is an example of a __________activity.

Product-level

Which of the following statements about the segment margin is not true? -In preparing a segmented income statement, the variable expenses are deducted from sales to yield the contribution margin for each segment. -The segment margin is obtained by deducting the common fixed costs that have been allocated to a segment from that segment's contribution margin. -The segment margin represents the margin available after a segment has covered all of its own costs. -The segment margin is the best gauge of the long-run profitability of a segment because it includes only those costs that are caused by the segment.

The segment margin is obtained by deducting the common fixed costs that have been allocated to a segment from that segment's contribution margin.

In the second-stage allocation of overhead costs, we use ________ to assign costs to cost objects.

activity rates

Shipping orders to a grocery store would be considered a(n) ________.

batch-level activity

For a production budget, the ______ is the beginning inventory for the year.

beginning inventory for the first quarter

In a budgeted income statement, _________ is subtracted from sales to arrive at gross margin.

cost of goods sold

Ordering materials, setting up machines, assembling products, and inspecting products are examples of ________.

cost pools

The difference between absorption costing net operating income and variable costing net operating income can be explained by the way these two methods account for ________.

fixed overhead costs

When the units produced are less than the units sold, the net operating income computed using the variable costing method is ______ the net operating income using the absorption costing method.

is greater than

When the units produced exceed the units sold, the net operating income computed using the variable costing method is ______ the net operating income using the absorption costing method.

is less than

The budgeting process begins with the preparation of the ______ budget.

sales

A company determines that the number of units sold is the cost driver for its variable selling and administrative expense budget. The product of its variable selling and administrative rate and budgeted unit sales will be ________.

total budgeted variable selling and administrative expenses

Absorption costing income statements ignore ________.

variable and fixed cost distinctions

Vineyard Corporation, a manufacturer of fine wines, began the year with 20,000 bottles in inventory. The company estimated the budgeted sales for the four quarters of the current year to be 200,000 bottles, 150,000 bottles, 250,000 bottles, and 400,000 bottles, respectively. The management feels that an ending inventory of 10% of the subsequent quarter's sales is appropriate. What is the desired ending inventory for the second quarter?

25,000 bottles

When the units produced are equal to the units sold, the net operating income computed using the variable costing method is ______ the net operating income using the absorption costing method.

is equal to

When the number of units produced is greater than the number of units sold, variable costing net operating income will be ________.

less than absorption costing net operating income