ACG2071 pt 2

Daget Corporation uses direct labor-hours in its predetermined overhead rate. At the beginning of the year, the total estimated manufacturing overhead was $364,260. At the end of the year, actual direct labor-hours for the year were 24,000 hours, manufacturing overhead for the year was overapplied by $8,180, and the actual manufacturing overhead was $359,500. The predetermined overhead rate for the year must have been closest to:

$15.32 per direct labor-hour

Jones Company uses a job-order costing system with a predetermined overhead rate of 120% of direct labor cost. The job cost sheet for Job #420 listed $4,000 in direct materials cost and $5,000 in direct labor cost to manufacture 7,500 units. The unit cost of Job #420 is ______.

$2.00

On January 1, James Company reported total current assets of $658,000 and total current liabilities of $365,000. During the year, James purchased $2,000 worth of equipment for cash, paid $560 towards salaries, and borrowed $80,000 from its bank to be repaid after 5 years. How much working capital does the company have as of December 31?

$370,440

Mark Company's balance sheet reported total assets of $754,000, which include: cash, $48,000; accounts receivable, $130,000; land, $200,000; inventory, $220,000; short-term notes receivable, $150,000; and prepaid expenses, $6,000. Total liabilities amounted to $408,000, which include: accounts payable, $230,000; short-term notes payable, $10,000; unearned revenue, $8,000; and long-term liabilities, $160,000. What was the company's acid-test ratio.

1.32

Given sales of $650,000, a gross margin of $320,000 and net income of $78,000, calculate the net profit margin.

12%

SPL Enterprises assigns overhead based on number of machine hours. For the upcoming year, they plan to use a total of 250,000 machine hours and 50,000 direct labor hours. Total overhead cost is expected to be $500,000. The predetermined overhead rate per machine hour is $_

2

Which of the following is correct? 1.A common-size income statement expresses each item as a percentage of net income. 2.A common-size income statement expresses each item as a percentage of net sales. Correct 3. A common-size income statement expresses each item as a percentage of total assets.

2. A common-size income statement expresses each item as a percentage of net sales. Correct

At the beginning of the year, Carson Company reported total current assets of $658,000 and total assets of $2,450,000. Carson reported sales of $6,000,000 for the year. At the end of the year, Carson reported total current assets of $790,000 and total assets of $2,800,000. What was the company's the total asset turnover?

2.29

Micro Manufacturing Company's sales revenue amounted to $1,880,000 during the year. Cost of goods sold as a percentage of sales was 30%. Beginning inventory balance was $125,000 and ending inventory balance was $165,000. What was the company's inventory turnover ratio for the year?

3.89

Given sales of $600, gross margin of $400, and cost of goods sold of $200, the gross margin percentage is ______

67%

Micro Manufacturing Company's sales revenue amounted to $4,400,000 during the year. Cost of goods sold as a percentage of sales was 35%. Beginning inventory balance was $360,000 and ending inventory balance was $345,000. The company's inventory turnover was 4.37 for the year. Assuming 365 days a year, what was the company's average sale period for the year?

83.52 days

Which of the following would not be a good allocation base for manufacturing overhead?

Accounting hours

Which ratio is used to measure how quickly credit sales are converted into cash?

Accounts receivable turnover

Which of the following measures excludes inventories and prepaid expenses from total current assets, leaving only the more liquid assets to be divided by current liabilities?

Acid-test (quick) ratio

What side of the Manufacturing overhead account is actual manufacturing overhead entered on?

Always the debit side

What is calculated when a company takes 365 days and divides it by the accounts receivable turnover?

Average collection period

A measure such as direct labor-hours or machine hours used to assign overhead costs to products and services is called a cost driver or a(n)

Blank 1: allocation or activity Blank 2: base or driver

The elapsed time from when inventory is received from suppliers until cash is collected from customers is the _________ _________

Blank 1: operating Blank 2: cycle

Profits relative to the book value of stockholder's equity is measured by _____ on ________

Blank 1: return Blank 2: equity

When all of a company's job cost sheets are viewed collectively, they form what is known as a(n)

Blank 1: subsidiary Blank 2: ledger

average collection period

Computed as 365 days divided by the accounts receivable turnover ratio.

Acid-test ratio

Computed by dividing quick assets by current liabilities.

Underapplied or overapplied manufacturing overhead can be disposed of by closing it to ______.

Cost of goods sold or allocating it to Work in process, Finished goods, and Cost of goods sold

Should be interpreted with care.Current ratio

Current ratio

Which of the following is not a reason why managers use financial statement analysis?

Estimates stock price appreciation.

Which ratio is found by dividing gross margin by sales?

Gross margin percentage

Working capital

May provide some assurance that the company can pay its creditors in full and on time.

Accounts receivable turnover ratio

Measures how quickly credit sales are converted into cash.

Operating cycle

Measures the elapsed time from when inventory is received from suppliers to when cash is received from customers.

Which of the following would be considered direct materials in a service firm that uses job-order costing?

Paperwork at a law firm

Which of the following is not a limitation of financial statement analysis?

Providing trends of accounting information

Which of the following is a measure of operating performance calculated as: {Net income + [Interest expense × (1 - Tax rate)]} ÷ Average total assets?

Return on total assets

Which of the following is not a manufacturing cost category?

Selling & administrative costs

Which of the following would not be considered a direct labor cost in a service firm that uses job-order costing?

The salary of the manager at a hair salon.

Which of the following would not be considered a job in a service firm that uses job-order costing?

The tax department in an accounting firm

Which of the following measures a company's ability to protect its long term creditors?

Times interest earned ratio

Which of the following measures how efficiently a company's assets are being used to generate sales?

Total asset turnover

Continual liquidity problems can lead to bankruptcy.

True

An allocation base should be:

a cost driver.

A cost driver is ______.

a factor that causes overhead costs to occur

Cost-plus pricing occurs when Blank______.

a markup percentage is added to the cost of a job

All manufacturing costs are assigned to units of product and all nonmanufacturing costs are treated as period cost under _______ costing

absorption

The ratio that excludes inventories and prepaid expenses from total current assets, leaving only the more liquid assets to be divided by current liabilities, is the quick or_________ - _______ ratio.

acid test

Overhead is overapplied if ______.

actual overhead is less than applied overhead

Overhead is underapplied if ______.

actual overhead is more than applied overhead

The more accurate method of closing out the balance in Manufacturing overhead is:

allocating it among Work in process, Finished goods, and Cost of goods sold.

The process used to assign overhead costs to products is called overhead ________

allocation,

Companies use a predetermined overhead rate rather than an actual overhead rate because ______.

an actual rate is not known until the end of the period

The return on total ______ is a measure of operating performance.

assets

Overhead application is the process of Blank______.

assigning manufacturing overhead cost to jobs

An essential quality of an overhead allocation base is that it must ______.

be common to all the company's products and services

The type and quantity of each type of direct material needed to complete a unit of product is listed on the Blank______.

bill of materials

Methods to dispose of underapplied or overapplied manufacturing overhead are ______.

close it to Cost of goods sold allocate it to Work in process, Finished goods, and Cost of goods sold

365 days can be divided by the accounts receivable turnover to determine the average number of days required to receive payment on an account, which is known as the average ______ period

collection

typical cost drivers include ______.

computer time machine-hours flight-hours

Manufacturing overhead costs Blank______.

consist of many different items are indirect costs

Job-order costing would most likely be used in a(n) Blank______.

construction company

A factor that causes overhead costs is called a Blank______.

cost driver

When overhead is underapplied, a _____ must be made to the Manufacturing overhead account to close it out.

credit

Dividing current assets by current liabilities calculates the _______ ratio.

current

Current assets divided by current liabilities is ______.

current ratio

During March, Pendergraph Corporation incurred $66,000 of actual Manufacturing Overhead costs. During the same period, the Manufacturing Overhead applied to Work in Process was $68,000. The journal entry to record the incurrence of the actual Manufacturing Overhead costs would include a:

debit to Manufacturing Overhead of $66,000

The adjustment for overapplied overhead Blank______ net income.

decreases cost of goods sold and increases

Labor costs that are easily traced to a job are called ______ labor costs.

direct

The total cost of a job includes:

direct labor cost. predetermined manufacturing overhead. direct materials cost.

Categories of manufacturing costs include ______.

direct materials manufacturing overhead direct labor

To calculate the unit product cost using the job cost sheet Blank______ by the number of units produced.

divide the total job cost

o calculate a predetermined overhead rate, divide estimated total manufacturing overhead by the Blank______.

estimated total allocation base

The formula for a predetermined overhead rate is Blank______.

estimated total manufacturing overhead cost ÷ estimated total allocation base

A predetermined overhead rate is calculated by dividing the ______ total manufacturing overhead by the ______ total allocation base.

estimated; estimated

The difference between the rate of return the company earns on investments on its own assets and the rate of return that the company must pay its creditors is ______.

financial leverage

Average manufacturing overhead cost per unit usually varies from one period to the next because Blank______.

fixed manufacturing overhead remains constant in total even when production changes

The adjustment for underapplied overhead Blank______ net income.

increases cost of goods sold and decreases

Labor charges that cannot be easily traced to a job are considered Blank______.

indirect labor manufacturing overhead

How many times a company's inventory has been sold and replaced during the year is measured by the _______ ______ ratio

inventory turnover

Which of the following measures how many times a company's inventory has been sold and replaced during the year?

inventory turnover

Manufacturing overhead:

is an indirect cost. consists of many different types of costs. contains fixed costs.

The document that records the materials, labor, and manufacturing overhead costs charged to a job is the Blank______.

job cost sheet

Companies that make many different products each period use _______-______ costing.

job order

An increase in the debt-to-equity ratio indicates that a company is increasing its financial

leverage

Borrowing money to acquire assets in an effort to increase sales and profits is financial

leverage

A job cost sheet contains ______ the job.

manufacturing overhead charged to labor costs charged to materials costs charged to

Direct materials costs are recorded on the job cost sheet when the ______.

materials are issued to the job

An allocation base is a(n) Blank______. Multiple choice question.

measure of activity used to assign overhead costs to products and services

Another type of leverage ratio that indicates the portion of a company's assets that are funded by equity is the equity

multiplier

Net income divided by sales is ______.

net profit margin percentage

Average sale period + Average collection period = the

operating cycle

The predetermined overhead rate is multiplied by the actual allocation base incurred by a job to find Blank______.

overhead applied to the job

The total cost of a job is calculated by adding the total of direct labor cost, direct materials cost, and:

predetermined manufacturing overhead cost.

The total cost of a job is calculated by adding the total of direct labor cost, direct materials cost, and: Multiple choice question.

predetermined manufacturing overhead cost.

The formula for applying overhead to a specific job is: ______ amount of allocation base incurred by job.

predetermined overhead rate ×

A bill of materials contains the ______.

quantity of each direct material needed to complete a unit of product type of each direct material needed to complete a unit of product

Analytical techniques that are widely used when comparing financial statements are ______.

ratios dollar and percentage changes on statements common-size statements

Vertical analysis focuses on ______.

relations among financial statement items at a given point in time

When companies have large amounts of fixed manufacturing overhead, total manufacturing overhead costs tend to ______.

remain fairly constant from one period to the next

Net income divided by average stockholders' equity is ______.

return on equity

When all of a company's job cost sheets are viewed collectively, they form what is known as a(n) Blank______.

subsidiary ledger

An hour-by-hour summary of an employee's activities throughout the day is found on the

time ticket

the document used to record the hours workers spend on each job and task is called a Blank______.

time ticket

The most common measure of a company's ability to protect its long term creditors is the ______.

times interest earned ratio

The ratio that measures how efficiently company assets are being used to generate sales is the _________ ________ turnover ratio

total asset

One reason to use a predetermined overhead rate is to eliminate the effect of seasonal factors.

true

Bayest Manufacturing Corporation uses a predetermined overhead rate based on direct labor-hours to apply manufacturing overhead to jobs. Last year, the Corporation worked 58,250 actual direct labor-hours and incurred $442,000 of actual manufacturing overhead cost. The Corporation had estimated that it would work 60,900 direct labor-hours during the year and incur $389,760 of manufacturing overhead cost. The Corporation's manufacturing overhead cost for the year was:

underapplied by $69,200

Widely used allocation bases in manufacturing include ______.

units of product machine hours direct labor hours direct labor cost

An increasing equity multiplier means a company is ______.

using more debt than equity to fund its assets

Costs assigned to units of product under absorption costing include:

variable manufacturing. fixed manufacturing.

The average manufacturing overhead cost per unit tends to Blank______.

vary from one period to the next

A common-size financial statement is a ______ analysis.

vertical

Allocation bases that do not drive overhead costs Blank______.

will not accurately measure the cost of overhead used

Current assets minus current liabilities is ______.

working capital

Current assets minus current liabilities is known as

working capital

Murphy Manufacturing estimated total manufacturing overhead for the year to be $100,000 and that 5,000 direct-labor hours would be used. Actual overhead was $120,000 and actual direct labor-hours were 7,500. The overhead applied to a job completed during the year that used 200 direct labor-hours was Blank______.

$4,000

Modern Textiles Company sold $2,500,000 worth of goods during the year, out of which $550,000 were cash sales. Accounts receivable at the beginning of the year amounted to $225,000 and $265,000 at the end of the year. The company's accounts receivable turnover was 7.96. Assuming 365 days a year, what was the company's average collection period for the year?

46 days

Coastal Company's balance sheet reported total assets of $473,000, which include: cash, $35,000; accounts receivable, $150,000; land, $100,000; inventory, $180,000; and prepaid expenses, $8,000. Total liabilities amounted to $244,000, which include: accounts payable, $130,000; short-term notes payable, $8,000; unearned revenue, $6,000; and long-term liabilities, $100,000. What was the company's the current ratio?

2.59

The balance between liabilities and stockholders' equity is measured by the_________ -to- ______ ratio.

debt equity

Kelly Incorporated sold $930,000 worth of goods during the year, out of which $820,000 was on credit. Accounts receivable at the beginning of the year amounted to $95,000 and $115,000 at the end of the year. What was the company's accounts receivable turnover for the year?

7.81