ACCT 212 Exam 2

Given the following costs and activities for Dance Company, use the high-low method to determine Dance's variable electrical costs per machine hour.

$0.60 Difference in Total Cost = Total Cost (Highest Level) - Total Cost (Lowest Level) = $13,200 - $11,400 = $1,800 Variable Cost per Machine Hour = Difference in Total Cost ÷ Difference in Machine Hours = $1,800 ÷ (17,500 - 14,500) = $0.60

If sales are $425,000, variable costs are 62% of sales, and income from operations is $50,000, what is the contribution margin ratio?

38% Contribution Margin = Sales - Variable Costs = $425,000 - ($425,000 × 62%) = $425,000 - $263,500 = $161,500 Contribution Margin Ratio = Contribution Margin ÷ Sales = $161,500 ÷ $425,000 = 38%

What term refers to the cost of changing direct materials into a finished manufactured product?

conversion cost

For April, sales revenue is $700,000, sales commissions are 5% of sales, the sales manager's salary is $98,000, advertising expenses are $90,000, shipping expenses total 2% of sales, and miscellaneous selling expenses are $2,100 plus ½ of 1% of sales. Total selling expenses for the month of April are

$242,600

Production and sales estimates for May for Cardinal Co. are as follows: Estimated inventory (units), May 119,500 Desired inventory (units), May 3119,300 Expected sales volume (units): Area W6,000 Area X7,000 Area Y8,000 Unit sales price$20 The number of units expected to be sold in May is

21,000

If fixed costs are $500,000, the unit selling price is $55, and the unit variable costs are $30, what is the break-even point in sales units if fixed costs are increased by $80,000?

23,200 units Break-Even Sales (units) = Fixed Costs ÷ Unit Contribution Margin = $500,000 + $80,000) ÷ ($55 - $30) = $580,000 ÷ $25 = 23,200 units

All of the following are examples of indirect labor except

machine operators

Carter Co. sells two products, arks and bins. Last year, Carter sold 14,000 units of arks and 56,000 units of bins. Related data are as follows: Assuming that last year's fixed costs totaled $960,000, what was Carter Co.'s break-even point in sales units?

40,000 units

Use this information about Bluebird Company to answer the question that follows. The following is the budgeted production and sales information for Bluebird Company for the month of December. The unit selling price for Product XXX is $5 and for Product ZZZ is $14. Budgeted production for Product ZZZ during the month is

457,000 units

Zeke Company sells 25,000 units at $21 per unit. Variable costs are $10 per unit, and fixed costs are $75,000. The contribution margin ratio (rounded to the nearest whole percent) and the unit contribution margin are

52% and $11 per unit, respectively Unit Contribution Margin = Sales Price per Unit - Variable Cost per Unit = $21 - $10 = $11 Contribution Margin Ratio = Unit Contribution Margin ÷ Sales Price per Unit = $11 ÷ $21 = 52%

Which of the following is true of preparing managerial accounting reports?

Managerial accounting reports may be prepared at fixed intervals or on an as-needed basis.

Materials must have which two qualities in order to be classified as direct materials?

They must be an integral part of the finished product and a significant portion of the total product cost.

The cost of wages paid to employees directly involved in the manufacturing process in converting materials into finished products is classified as a

direct labor cost

Which of the following is an example of a cost that varies in total as the number of units produced changes?

direct materials cost

A series of static budgets for different levels of activity is termed a(n)

flexible budget

Which of the following budgets allows for adjustments in activity levels?

flexible budget

The primary difference between a static budget and a flexible budget is that a static budget

is a plan for a single level of production, whereas a flexible budget can be converted to any level of production

Given the following cost data, what type of cost is shown? Total Cost Number of Units $20:1 40:2 60:3 80:4

variable cost

Jase Manufacturing Co.'s static budget for 10,000 units of production includes $40,000 for direct labor and $4,000 for variable electric power. Total fixed costs are $24,000. At 12,000 units of production, a flexible budget would show

variable costs of $52,800 and $24,000 of fixed costs

Use the information provided for Jensen Company to answer the question that follow. Direct materials used. $345,000 Direct labor incurred. 250,000 Factory overhead incurred. 400,000 Operating expenses. 175,000 Jensen Company's period costs are

$175,000

With the aid of spreadsheets, managers can vary assumptions regarding selling prices, costs, and volume and can immediately see the effects of each change on the break-even point and profit. This is called

"what if" or sensitivity analysis

Given the following cost and activity observations for Bounty Company's utilities, use the high-low method to determine Bounty's variable utilities cost per machine hour. Round to the nearest cent.

$0.11 Difference in Total Cost = Total Cost (Highest Level) - Total Cost (Lowest Level) = $3,600 - $2,700 = $900 Variable Cost per Machine Hour = Difference in Total Cost ÷ Difference in Machine Hours = $900 ÷ (18,000 - 10,000) = $0.11

The total direct materials purchases (assuming no beginning or ending inventory of material) of Material A and Material B required for August production is

$1,080,000 for A; $648,000 for B

Given the following cost and activity observations for Smithson Company's utilities, use the high-low method to determine Smithson's fixed costs per month. Do not round intermediate computations.

$1,533 Difference in Total Cost = Total Cost (Highest Level) - Total Cost (Lowest Level) = $75,000 - $52,200 = $22,800 Variable Cost per Machine Hour = Difference in Total Cost ÷ Difference in Machine Hours = $22,800 ÷ (29,000 - 20,000) = $2.53 Total Fixed Costs (Highest Level) = Total Costs - (Variable Cost per Machine Hour × Machine Hours) = $75,000 - ($2.53 × 29,000) = $1,533

At the beginning of the period, the Assembly Department budgeted direct labor of $110,000, direct materials of $170,000, and fixed factory overhead of $28,000 for 8,000 hours of production. The department actually completed 10,000 hours of production. What is the appropriate total budget for the department, assuming it uses flexible budgeting? Round hourly rates to two decimal places.

$378,000

Compute conversion costs given the following data: direct materials, $347,500; direct labor, $196,300; factory overhead, $187,900; and selling expenses, $45,290.

$384,200 Conversion Costs = Direct Labor Cost + Factory Overhead Cost = $196,300 + $187,900 = $384,200

Given the following data: Beginning raw materials inventory. $30,000 Materials purchased. 65,000 Ending raw materials inventory. 40,000 What is the amount of raw materials used?

$55,000 Amount of Raw Materials Used = Beginning Raw Materials Inventory + Materials Purchased - Ending Raw Materials Inventory = $30,000 + $65,000 - $40,000 = $55,000

Use this information about Flushing Company to answer the question that follows. The budgeted production and sales information for Flushing Company for the month of December is as follows: The unit selling price for Product XXX is $5 and for Product ZZZ is $15. Budgeted sales for the month are

$8,500,000

Production and sales estimates for June are as follows: Estimated inventory (units), June 120,000 Desired inventory (units), June 3019,000 Expected sales volume (units): Area X7,000 Area Y4,000 Area Z5,500 Unit sales price$20 Budgeted production for June is

15,500

Cardinal Company had a finished goods inventory of 55,000 units on January 1. Its projected sales for the next four months were: January, 200,000 units; February, 180,000 units; March, 210,000 units; and April, 230,000 units. Cardinal Company wishes to maintain a desired ending finished goods inventory of 20% of the following month's sales. Determine the budgeted units of production for February.

186,000

If fixed costs increased and variable costs per unit decreased, the break-even point

cannot be determined from the data provided

Which of the following are basic phases of the management process?

planning and controlling

Rent expense on a factory building would be treated as a

product cost

The operating budgets of a company include the

production budget

Which of the following describes the behavior of a variable cost per unit?

remains constant with changes in the activity level

Which of the following costs is an example of a cost that remains the same in total as the number of units produced changes?

salary of a factory supervisor

All of the following are product costs except

sales and administrative expenses

The production budgets are used to prepare which of the following budgets?

direct materials purchases, direct labor cost, and factory overhead cost

A product cost is

expensed in the period the product is sold

Which of the following is an example of a factory overhead cost?

factory heating and lighting cost