Managerial Accounting 2521 FINAL EXAM

Direct labor is also called _______ labor.

touch

The costs of all work not yet completed is in

work in progress

To make one unit of Product No. 145, it takes $30 of direct material, $40 of direct labor, and $10 of manufacturing overhead. Each unit sells for $120. If 10 units are produced in 20XX and 8 units are sold in that year (and there was no beginning inventory), how much expense is recognized in 20XX for the manufacture of the units?

$80 x 8 = $640 Product costs expensed when goods sold Product costs = DM 30 + DL 40 + FOH 10 = 80

Cost objects include:

-customers -anything for which cost data is desired -organizational subunits

If a busniess had a margin of safety ratio of 20%m variable costs of 75% of sales, fixed costs of $240,000, a break-even point of $960,000, and net income of $60,000 for the current year, what are the current year's sales?

25%X = 300,000 X = 300,000/.25 X = 1,200,000

If a business had actual sales of $6,000,000 break-even sales of $4,500,000, fixed costs of $1,800,000, and variable costs of 60% of sales, what is the margin of safety expressed as a percentage of sales?

6,000,000 - 4,500,000 = 1,500,000/6,000,000 MOS%= 25%

Hyde's Headphones sells deluxe headphones for $75 each. Unit variable expense total $45. The breakeven sales in units is 2,400 and the budgeted sales in units is 4,200. WHat is the margin of safety in dollars?

75 - 45 = 30 MOS (units) = 4,200 - 2,400 = 1,800 1,800 x 75 = $135,000

The manufacturing operations of Barton, Inc. had the following inventory balances for the month of March 20XX: Beginning Ending Raw Materials $10,000 $12,000 Work in process $6,000 $7,000 Finished Goods $30,000 $22,000 If Barton transferred $38,000 of completed goods from work in process to finished goods during march, what was the amount of the cost of goods sold?

BI(fg) 30,000 +CGM 38,000 GAS 68,000 - EI(fg) 22,000 CGS 46,000 (CGM are completed items transferred from WIP)

The beginning balance of Finished Goods is $50,000, the ending balance in Finished Goods is$100,000, and Cost of Goods Manufactured is $200,000. What is Cost of Goods Sold?

BI(fg) 50,000 +CGM 200,000 GAS 250,000 - EI(fg) 100,000 CGS 150,000---- cost of goods sold

Cost of Goods Sold is $200,000, the beginning balance of Finished Goods is $50,000, the ending balance in Finished Goods is $100,000, and the ending balance in Work in Process is $10,000. What is the Cost of Goods Manufactured?

BI(fg) 50,000 +CGM 250,000 ---- cost of goods manufactured GAS 300,000 - EI(fg) 100,000 CGS 200,000

The manufacturing operations of Barton, Inc. had the following inventory balances for the month of March 20XX: Beginning Ending Raw Materials $10,000 $12,000 Work in process $6,000 $7,000 Finished Goods $30,000 $22,000 If Barton purchased $18,000 of raw materials during March, the cost of raw materials used in production would be:

BI(rm) 10,000 +Purch. 18,000 GA(rm) 28,000 - EI(rm) 12,000 DM used 16,000

If fixed costs are $250,000, the unit selling price is $105, and the unit variable costs are $65, what is the break-even sales (units)?

Break even (units)= Fixed costs/Contribution margin Selling price $105- Variable costs $65= Contribution margin 40 250,000/40= 6,250 break even sales (units)

Tom's Taxidermy has a monthly target operating income of $25,000. Variable expenses are 75% of sales and monthly fixed expenses are $15,000. What is the monthly margin of safety in dollars if the business achieves its operating income goal?

Break-even cost = 15,000/.25 = 60,000 Target sales cost = 25,000 + 15,000 / .25 = 160,000 160,000 - 60,000 = 100,000 MOS $

If fixed costs are $750,000 and variable costs are 70% of sales, what is the break-even point?

Break-even cost = Fixed costs/Contribution Margin Ratio % 750,000/.30= 2,500,000

A company makes a single product that it sells for $16 per unit. Fixed costs are $76,000 per month and the product has a contribution margin ratio of 40$. If the company's actual sales are $224,000, its margin of safety is:

Break-even dollars = 76,800/40% = 192,000 Sales 224,000 Break-even -192,000 MOS 32,000

The "Dog Hut" hot dog stand expects the following operating results for next year: Sales $280,000 Net operating income 21,000 Contribution margin ratio 70%

Break-even dollars = Fixed cost/contribution margin % 280,000 - 196,000 - 175,000 21,000 280,000 x .70 = 196,000 175,000/.70 = 250,000 break even $

The cost of electricity for running production equipment is classified as

Conversation cost: yes Period cost: no

Which of the following costs is classified as both a prime cost and conversation cost?

Direct labor

s a firm begins to operate outside the relevant range, the accuracy of cost estimates for fixed and variable costs:

Fixed: decreases Variable: decreases

If fixed costs are $500,000 the UGM is $3 and the contribution ratio is 30%, what must sales be in order to realize a net income of $100,000?

Total sales (cost) = Target price + Fixed costs/ Contribution margin % 100,000 + 500,000 / .30 = 2,000,000

If fixed costs are $1,400,000 the unit selling price is $220, and the unit variable costs are $120, how many units must be sold to realize a net income of $200,000?

Total sales (units) = Target price + Fixed cost / Unit contribution margin $220-$120= 100 unit contribution margin 200,000 + 1,400,000/100 = 16,000 units

Which costs will change with a decrease in activity within the relevant range?

Unit fixed costs and total variable costs

The cost of lubricants used to grease a machine used in the production process of a manufacturing company is an example of a

an indirect cost

Period costs

are expensed in the period incurred include all costs that are not product costs

How individual costs react to changes in activity level is referred to as cost

behavior

Cost behavior

categorizes costs as fixed, mixed and variable refers to how a cost will change as activity level changes

Fixed costs that cannot easily be changed and often lock a company into a multi-year decision are called _______ fixed costs

committed

The costs associated with a company's basic facilities, equipment, and organization are known as:

committed fixed costs

Nonmanufacturing costs include

company presidents salary sales commissions

Which of the following is not an example of a committed fixed cost?

contributions to charitable organization

In an automobile manufacturing plant, the assembly-line workers are classified as ________ _________ costs.

direct labor

Manufacturing costs include ______.

direct labor direct materials manufacturing overhead

Administrative costs include Blank______.

executive compensation and public relations costs

Indirect labor costs include ______.

factory security guard wages assembly-line supervisor salary

All of a company's depreciation, property taxes, and insurance premiums are considered manufacturing overhead.

false

Labor costs that can be specifically traced to a product are indirect labor costs.

false

The costs of all work completed but not yet sold is in

finished goods

Within the relevant range of activity, Blank______ costs remain constant in total.

fixed

Variable costs vary ______ within the relevant range of activity.

in total

Product costs flow through the inventory accounts until the goods are sold, at which time they are matched against sales on the Blank______.

income statement

Manufacturing overhead costs include ______

indirect materials, factory supervisors' salaries, and factory depreciation

An example of a discretionary fixed cost is:

management training.

Factory costs such as cleaning supplies, taxes, insurance, and janitor wages are classified as Blank______.

manufacturing overhead

A dress manufacturer would consider the cost of relatively inexpensive items like thread to be part of ______.

manufacturing overhead indirect materials

Discretionary fixed costs

may be reduced for short periods of time with minimal damage to the long- rungoals of the organization.

A cost that contains both variable and fixed cost elements is a(n) Blank______ cost.

mixed

The depreciation on equipment in a manufacturer's headquarters can be classified as a(n)

non-manufacturing cost

Product costs appear on the balance sheet

only if goods are partially completed, are unsold at the end of a period, or both.

Which of the following would not typically be classified as a discretionary fixed cost?

property taxes

The inventory accounts of a manufacturing firm include:

raw materials, finished goods, and work in progress

The assumption that cost behavior is strictly linear is reasonably valid within the _______ ______ of range

relevant range

An example of a discretionary fixed cost would be:

research and development

Which of the following is a period cost:

salary for the vice president of finance

Contribution margin is

sales revenue minus variable costs

Period costs are always expensed on the income statement in the period in which Blank______.

they are incurred

Committed fixed costs include

top management salaries real estate taxes

The finished product of one company can become raw materials for another company.

true

Within the relevant range, a cost that changes in direct proportion to changes in the activity level is a Blank______ cost.

variable

Variable costs are costs that:

vary in total directly and proportionately with changes in the activity level.remain the same per unit at every activity level