Master
A corporation sold 19,000 shares of its $10 par value common stock at a cash price of $13 per share. The entry to record this transaction would include:
A credit to Common Stock for $190,000.
An important tool used in process costing that refers to the number of units that could have been started and completed given the costs incurred during the period is known as:
Equivalent units of production.
Which is associated with process cost accounting but is not normally associated with job cost accounting?
Equivalent units of production.
Which of the following characteristics applies to process costing but not to job order cost accounting?
Equivalent units of production.
The building blocks of financial statement analysis do not include:
External analyst services.
Investment center managers are usually evaluated using performance measures
that combine income and assets.
Amazon's balance sheet at year end shows the following. Amazon's debt-to-equity ratio equals: Cash$60,000 Current liabilities$95,000 Accounts receivable 75,000 Long-term liabilities 20,000 Inventory 80,000 Common stock 120,000 Equipment 165,000 Retained earnings 145,000 Total assets$380,000 Total liabilities and equity$380,000
0.43 Debt-to-equity ratio equals total debt divided by total equity.($95,000 + $20,000) / ($120,000 + $145,000) = 0.43
A retail store has three departments, S, T, and U, and does general advertising that benefits all departments. Advertising expense totaled $42,000 for the year, and departmental sales were as follows. Allocate advertising expense to Department T based on departmental sales. (Do not round your intermediate calculations.) Department S$130,000 Department T 215,350 Department U 150,250 Total$495,600
$18,250. ($215,350/$495,600) × $42,000 = $18,250
A company reported that its bonds with a par value of $50,000 and a carrying value of $63,500 are retired for $67,800 cash, resulting in a loss of $4,300. The amount to be reported under cash flows from financing activities is:
$(67,800).
A company reported that its bonds are retired for $68,400 cash. The bonds have a par value of $50,000 and a carrying value of $64,000 . Thus there is a loss of $4,400. How much will be shown as a cash flow in the financing activities section of the Statement of Cash Flows?
$(68,400).
A company uses a process costing system. Its Assembly Department's beginning inventory consisted of 51,200 units, 75% complete with respect to direct labor and overhead. The direct labor beginning inventory costs were $9,200. The department completed and transferred out 124,500 units this period. The ending inventory consists of 41,200 units that are 25% complete with respect to direct labor and overhead. All direct materials are added at the beginning of the process. The department incurred direct labor costs of $27,000 and overhead costs of $35,000 for the period. Assuming the weighted average method, the direct labor cost per equivalent unit (rounded to the nearest cent) is:
$0.27.
General Electric uses a process costing system. Its Fabricating Department's beginning inventory consisted of 55,200 units, 75% complete with respect to direct labor and overhead. The direct labor beginning inventory costs were $10,200. The department completed and transferred out 114,500 units this period. The ending inventory consists of 45,200 units that are 25% complete with respect to direct labor and overhead. All direct materials are added at the beginning of the process. The department incurred direct labor costs of $37,000 and overhead costs of $45,000 for the period. Assuming the weighted average method, the direct labor cost per equivalent unit (rounded to the nearest cent) is:
$0.38. Completed and transferred out114,500 EWIP (45,200 * 25%)11,300 Total EUP125,800 Cost ÷ EUP ($10,200 + $37,000)/125,800 = $0.38/EUP
A department store has budgeted sales of 13,500 men's suits in September. Management wants to have 7,500 suits in inventory at the end of the month to prepare for the winter season. Beginning inventory for September is expected to be 5,500 suits. What is the dollar amount of the purchase of suits if each suit has a cost of $70.
$1,085,000.
Target has budgeted sales of 12,800 snow pants in November. Target's chief of logistics desires 6,800 snow pants in inventory at the end of the month in anticipation of holiday sales. Beginning inventory for November is predicted to be 4,800 snow pants. How much should Target anticipate spending on snow pants purchases if each pair has a cost of $83?
$1,228,400. Budgeted purchases = Budgeted sales units + ending inventory - beginning inventoryBudgeted purchases = 12,800 + 6,800 - 4,800 = 14,800 suits14,800 suits x $83/suit = $1,228,400
Comet Company accumulated the following account information for the year: Beginning raw materials inventory$6,400 Indirect materials cost 2,400 Indirect labor cost 5,400 Maintenance of factory equipment 3,200 Direct labor cost 7,400 Using the above information, total factory overhead costs would be:
$11,000.
A company has two departments, Y and Z that incur wage expenses. An analysis of the total wage expense of $43,000 indicates that Dept. Y had a direct wage expense of $6,800 and Dept. Z had a direct wage expense of $10,700. The remaining expenses are indirect and analysis indicates they should be allocated evenly between the two departments. Departmental wage expenses for Dept. Y and Dept. Z, respectively, are:
$19,550; $23,450. Indirect expenses = $43,000 - $6,800 - $10,700 = $25,500 Y Z Direct$6,800 $10,700 Indirect to Y ($25,500 × 50%) 12,750 0 Indirect to Z ($25,500 × 50%) 0 12,750 Total$19,550 $23,450
Mustang Corporation has accumulated the following accounting data for the month of April: Finished goods inventory, April 1$31,700 Finished goods inventory, April 30 25,900 Total cost of goods manufactured 120,600 The cost of goods sold for the year is: Multiple Choice
$126,400.
Sony budgets to sell 25,500 radios for $11.50 per radio and for each radio to have a variable cost of $6.50. Sony has total fixed costs of $75,000. Sony's expected total contribution margin is:
$127,500. Contribution margin = Sales - Variable costs(25,500 * $11.50) - (25,500 * $6.50) = $127,500
A company's income statement showed the following: net income, $133,000; depreciation expense, $39,500; and gain on sale of plant assets, $13,500. An examination of the company's current assets and current liabilities showed the following changes as a result of operating activities: accounts receivable decreased $11,300; merchandise inventory increased $27,500; prepaid expenses increased $8,100; accounts payable increased $5,300. Calculate the net cash provided or used by operating activities.
$140,000.
Junior Snacks reports the following information from its sales budget: Expected Sales:October$146,000 November 154,000 December 190,000 All sales are on credit and are expected to be collected 40% in the month of sale and 60% in the month following sale. The total amount of cash expected to be received from customers in November is:
$149,200.
Junior Snacks reports the following information from its sales budget: Expected Sales:October$153,000 November 161,000 December 197,000 All sales are on credit and are expected to be collected 45% in the month of sale and 55% in the month following sale. The total amount of cash expected to be received from customers in November is:
$156,600. October credit sales collected (55% * $153,000)$84,150 November credit sales collected (45% * $161,000) 72,450 Cash collected in November$156,600
Stirrat LLC is preparing a cash budget for June. The company has $30,500 cash at the beginning of June and anticipates $100,000 in cash receipts and $125,040 in cash disbursements during June. The company has no loans outstanding on June 1. Compute the amount the company must borrow, if any, to maintain a $22,000 cash balance.
$16,540. $30,500 + $100,000 - $125,040 = $5,460; $22,000 - $5,460 = $16,540
Georgia, Inc. has collected the following data on one of its products. The actual cost of the direct materials used is: Direct materials standard (2 lbs @ $3/lb)$6per finished unitTotal direct materials cost variance—unfavorable$20,750 Actual direct materials used72,000lbs.Actual finished units produced24,000units
$164,750. Budgeted direct materials (24,000 units × $6 each)$144,000 Unfavorable direct materials variance 20,750 Actual cost of direct materials used$164,750
Acme's production managers provide the following information. What was Acme's actual cost of the direct materials used? Direct materials standard (3 lbs @ $2/lb)$6per finished unitTotal direct materials cost variance—unfavorable$21,250 Actual direct materials used100,000lbs.Actual finished units produced25,000units
$171,250. Budgeted direct materials (25,000 units × $6 each)$150,000 Unfavorable direct materials variance 21,250 Actual cost of direct materials used$171,250
Royal Corp. produces drum kits. It takes 4 hours of direct labor to produce a single drum kit. General's standard labor cost is $12 per hour. During July, Royal produced 18,000 drum kits and used 72,130 hours of direct labor at a total cost of $863,560. What is Royal's labor rate variance for August?
$2,000 favorable. AH * ARGiven$863,560 AH * SR72,130 * $12 865,560 Direct labor rate variance$2,000 F
Hassock Corp. produces woven wall hangings. It takes 2 hours of direct labor to produce a single wall hanging. Hassock's standard labor cost is $17 per hour. During August, Hassock produced 14,000 units and used 28,160 hours of direct labor at a total cost of $476,020. What is Hassock's labor rate variance for August?
$2,700 favorable. AH * ARGiven$476,020 AH * SR28,160 * $17 478,720 Direct labor rate variance$2,700 F
A retail store has three departments, S, T, and U, and does general advertising that benefits all departments. Advertising expense totaled $48,000 for the year, and departmental sales can be found below. Allocate advertising expense to Department T based on departmental sales. (Do not round your intermediate calculations.) Department S$111,000 Department T 213,150 Department U 146,250 Total$470,400
$21,750. ($213,150/$470,400) × $48,000 = $21,750
Milltown Company specializes in selling used cars. During the month, the dealership sold 22 cars at an average price of $15,000 each. The budget for the month was to sell 20 cars at an average price of $16,000. Compute the dealership's sales price variance for the month.
$22,000 unfavorable. Actual = 22 * $15,000 = $330,000; Flexible = 22 * $16,000 = $352,000Sales price variance = $22,000 unfavorable
General Electric has 2,300 defective units of product that have already cost $14.30 each to produce. A salvage company will purchase the defective units as they are for $5.30 each. General Electric's production manager reports that the defects can be corrected for $5.70 per unit, enabling them to be sold at their regular market price of $21.60. The incremental income or loss on reworking the units is:
$24,380 income. If the units are reworked: Incremental revenue from reworking ($21.60 - $5.30)$16.30 Incremental cost to rework (5.70) Net benefit per unit to rework$10.60 Incremental income from reworking ($10.60 * 2,300 units)$24,380
The Gardner Company expects sales for October of $245,000. Experience suggests that 45% of sales are for cash and 55% are on credit. The company collects 50% of its credit sales in the month of sale and 50% in the month following sale. Budgeted Accounts Receivable on September 30 is $66,500. What is the amount of cash expected to be collected in October?
$244,125. September Accounts Receivable$66,500 October cash sales (45% * 245,000) 110,250 October credit sales collected (55% * 245,000 * 50%) 67,375 Total cash receipts$244,125
General Electric is considering the purchase of a machine costing $51,000 with a 5-year useful life and no salvage value. General Electric uses straight-line depreciation and assumes that the annual cash inflow from the machine will be received uniformly throughout each year. In calculating the accounting rate of return, what is General Electric's average investment?
$25,500. ($51,000 + $0) / 2 = $25,500
A company manufactures and sells a product for $140 per unit. The company's fixed costs are $150,000, and its variable costs are $56 per unit. The company's break-even point in dollars is: (Round your intermediate calculations to two decimal places.)
$250,000.
Morris Company applies overhead based on direct labor costs. For the current year, Morris Company estimated total overhead costs to be $424,000, and direct labor costs to be $2,120,000. Actual overhead costs for the year totaled $398,000, and actual direct labor costs totaled $1,860,000. At year-end, the balance in the Factory Overhead account is a:
$26,000 Debit balance.
A company manufactures and sells a product for $120 per unit. The company's fixed costs are $68,760, and its variable costs are $90 per unit. The company's break-even point in dollars is:
$275,040. Contribution margin ratio = ($120 - $90)/$120 = 25%Break-even point in sales dollars = $68,760/0.25 = $275,040
Pacific Company wishes to earn $71,500 of income before taxes. Pacific has a contribution margin ratio is 40%. How many dollars worth of product must Pacific sell to achieve its income target when fixed costs are $39,000?
$276,250. Dollar sales at target income = ($39,000 + $71,500)/0.40 = $276,250
General Electric's flexible budget for 22,000 units of production showed sales, $105,600; variable costs, $33,000; and fixed costs, $28,000. What fixed costs will General Electric expect if they produce and sell 28,000 units?
$28,000. Fixed costs remain constant at all levels within the relevant range.
A company has an overhead application rate of 128% of direct labor costs. How much overhead would be allocated to a job if it required total labor costing $23,000?
$29,440.
Morgan Company issues 8%, 20-year bonds with a par value of $740,000 that pay interest semiannually. The current market rate is 7%. The amount paid to the bondholders for each semiannual interest payment is:
$29,600.
Acme budgeted 4,900 pounds of material costing $6.00 per pound to produce 2,500 units. Acme actually used 5,400 pounds that cost $6.10 per pound to produce 2,500 units. What is the direct materials quantity variance?
$3,000 unfavorable. AQ × SP5,400 pounds × $6.00 / pound$32,400 SQ × SP4,900 pounds × $6.00 / pound 29,400 Direct materials quantity variance$3,000 U
Summerlin Company budgeted 5,000 pounds of material costing $7.00 per pound to produce 2,500 units. The company actually used 5,500 pounds that cost $7.10 per pound to produce 2,500 units. What is the direct materials quantity variance?
$3,500 unfavorable. AQ × SP5,500 pounds × $7.00 / pound$38,500 SQ × SP5,000 pounds × $7.00 / pound 35,000 Direct materials quantity variance$3,500 U
Sony's flexible budget for 19,000 units of production showed sales, $87,400; variable costs, $43,700; and fixed costs, $24,000. The operating income expected by Sony when they produce and sell 24,000 units is:
$31,200. Selling price per unit = $87,400 / 19,000 units = $4.60 per unitVariable costs per unit = $43,700 / 19,000 = $2.30 per unitContribution margin per unit = $4.60 - $2.30 = $2.30 per unitExpected operating income for 24,000 units: Contribution margin (24,000 * $2.30)$55,200 Fixed costs (24,000)Operating income$31,200
Washington Company sells recreational vehicles. During the month, the dealership sold 22 RV's at an average price of $15,000 each. The budget for the month was to sell 20 RV's at an average price of $16,000. Compute the company's sales volume variance for the month.
$32,000 favorable. Flexible = 22 * $16,000 = $352,000; Fixed = 20 * 16,000 = $320,000Sales volume variance = $32,000 favorable
A manufacturing company has a beginning finished goods inventory of $16,300, raw material purchases of $19,700, cost of goods manufactured of $35,900, and an ending finished goods inventory of $19,500. The cost of goods sold for this company is:
$32,700.
Sony reports the following from a recent production run. What is the direct materials quantity variance? Direct materials standard (3 lbs @ $1/lb)$3per finished unitTotal direct materials cost variance—unfavorable$19,250 Actual direct materials used140,000lbs.Actual finished units produced35,000units
$35,000 unfavorable. AQ * SP140,000 lb. × $1/lb. =$140,000 SQ * SP35,000 units × 3 lb. × $1/lb. = 105,000 Direct materials quantity variance$35,000 U
A company paid $35,800 plus a broker's fee of $475 to acquire 9% bonds with a $38,000 maturity value. The company intends to hold the bonds to maturity. The cash proceeds the company will receive when the bonds mature equal:
$38,000.
A company's flexible budget for 9,000 units of production showed sales, $44,100; variable costs, $14,400; and fixed costs, $17,000. The operating income expected if the company produces and sells 17,000 units is:
$39,100. Selling price per unit = $44,100 / 9,000 units = $4.90 per unitVariable costs per unit = $14,400 / 9,000 = $1.60 per unitContribution margin per unit = $4.90 - $1.60 = $3.30 per unitExpected operating income for 17,000 units: Contribution margin (17,000 * $3.30)$56,100 Fixed costs (17,000)Operating income$39,100
Southern Pacific is preparing a cash budget for February. The company has $17,400 cash at the beginning of February and expects to receive $121,600 in cash. Southern Pacific also budgets for $134,900 in cash disbursements during the month. Southern Pacific wants to maintain a minimum cash balance of $10,000. What ist he preliminary cash balance at the end of February before any borrowing or investing takes place?: Multiple Choice
$4,100. Beginning cash balance$17,400 Add cash receipts 121,600 Less cash disbursements (134,900) Cash balance before financing$4,100
Analysis reveals that a company had a net increase in cash of $20,880 for the current year. Net cash provided by operating activities was $18,800; net cash used in investing activities was $10,400 and net cash provided by financing activities was $12,480. If the year-end cash balance is $25,200, the beginning cash balance was:
$4,320.
The following information is available for the year ended December 31: Beginning raw materials inventory$3,700 Raw materials purchases 5,200 Ending raw materials inventory 4,200 Office supplies expense 2,200 The amount of raw materials used in production for the year is: Multiple Choice
$4,700.
Morris Company applies overhead based on direct labor costs. For the current year, Morris Company estimated total overhead costs to be $480,000, and direct labor costs to be $2,400,000. Actual overhead costs for the year totaled $440,000, and actual direct labor costs totaled $2,000,000. At year-end, the balance in the Factory Overhead account is a:
$40,000 Debit balance. Predetermined overhead rate = $480,000 estimated overhead cost / $2,400,000 estimated direct labor cost = 20% Overhead incurred, $440,000 - Overhead applied, $400,000 Factory Overhead440,000400,00040,000
Maroon Company's contribution margin ratio is 35%. Total fixed costs are $141,750. What is Maroon's break-even point in sales dollars?
$405,000.
Data pertaining to a company's joint production for the current period follows: L M Quantities produced 300 lbs. 150 lbs. Market value at split-off point$8.00 /lb.$16.00 /lb. Compute the cost to be allocated to Product L for this period's $828 of joint costs if the value basis is used. (Do not round intermediate calculations.)
$414.00. Product Lb. Per lb. Total % $828 allocated L 300 $8/lb. $2,400 50%* $414 M 150 $16/lb. 2,400 50%* 414 Total $4,800 $828 *Product L: $2,400/$4,800 = 0.50; Product M: $2,400/$4,800 = 0.50Product L allocation = 0.50 × $828 = $414; Product M allocation = 0.50 × $828 = $414
A company had a beginning balance in retained earnings of $43,300. It had net income of $6,300 and paid out cash dividends of $5,700 in the current period. The ending balance in retained earnings equals:
$43,900.
General Electric's total fixed costs are $178,350. GE's contribution margin ratio is 41%. How many dollars worth of product must General Electric sell to break even?
$435,000. Break-even point in dollars = $178,350/0.41 = $435,000
Using the information below for Singing Dolls, Inc., determine the total manufacturing costs incurred during the year: Work in Process, January 1$53,000 Work in Process, December 31 38,500 Direct materials used 14,000 Total Factory overhead 7,000 Direct labor used 28,000
$49,000.
A company has two departments, Y and Z that incur delivery expenses. An analysis of the total delivery expense of $9,000 indicates that Dept. Y had a direct expense of $1,000 for deliveries and Dept. Z had no direct expense. The indirect expenses are $8,000. The analysis also indicates that 50% of regular delivery requests originate in Dept. Y and 50% originate in Dept. Z. Departmental delivery expenses for Dept. Y and Dept. Z, respectively, are:
$5,000; $4,000. Direct$1,000 $0 Indirect to Y ($8,000 × 50%) 4,000 0 Indirect to Z ($8,000 × 50%) 0 4,000 Total$5,000 $4,000
General Corp. produces tires. It takes 3 hours of direct labor to produce a single tire. General's standard labor cost is $13 per hour. During August, General produced 15,900 tires and used 48,120 hours of direct labor at a total cost of $623,160. What is General's labor efficiency variance for August?
$5,460 unfavorable. AH * SR48,120 * $13$625,560 SH * SR(3 × 15,900) * $13 620,100 Direct labor efficiency variance$ 5,460 U
During July, the production department of a process operations system completed and transferred to finished goods 10,000 units that were in process at the beginning of July and 76,000 that were started and completed in July. July's beginning inventory units were 100% complete with respect to materials and 30% complete with respect to labor. At the end of July, 15,000 additional units were in process in the production department and were 100% complete with respect to materials and 25% complete with respect to labor. The beginning inventory included labor cost of $52,100 and the production department incurred direct labor cost of $450,750 during July. Compute the direct labor cost per equivalent unit for the department using the weighted-average method.
$5.60. Completed and transferred 86,000 * 100% 86,000 Ending Work in Process Direct labor 15,000 * 25% 3,750 Equivalent units 89,750 Costs of beginning inventory $52,100 Costs incurred this period 450,750 Total costs $502,850 Cost per equivalent unit$502,850/89,750 $5.60
Amazon has collected the information below on one of its products. During the period the company produced 25,000 units. The direct materials quantity variance is: Direct materials standard (7 kg. @ $1.50/kg)$10.50per finished unitActual cost of materials purchased$231,600 Actual direct materials purchased and used140,000kg
$52,500 favorable. AQ × SP = 140,000 * $1.50$210,000 SQ × SP = (7 kg * 25,000) * $1.50 262,500 Direct materials quantity variance$52,500 F
Royal planned to use 5,000 pounds of material costing $6.00 per pound to produce 2,400 units. Royal actually used 5,500 pounds that cost $6.10 per pound to produce 2,400 units. What was Royal's direct materials price variance?
$550 unfavorable. AQ × AP5,500 pounds × $6.10 / pound$33,550 AQ × SP5,500 pounds × $6.00 / pound 33,000 Direct materials price variance$550 U
Amazon forecasts the following for May: total sales: $152,000 total variable costs: $94,200 total fixed costs: $24,200 What is the expected total contribution margin for May?
$57,800. Contribution margin = Sales - Variable costs$152,000 - $94,200 = $57,800
A machine with a cost of $149,000 and accumulated depreciation of $104,000 is sold for $59,500 cash. The amount that should be reported as a source of cash under cash flows from investing activities is:
$59,500.
Southland Company is preparing a cash budget for August. The company has $16,300 cash at the beginning of August and anticipates $124,200 in cash receipts and $133,800 in cash disbursements during August. Southland Company wants to maintain a minimum cash balance of $10,000. The preliminary cash balance at the end of August before any loan activity is:
$6,700.
A company's product sells at $12.40 per unit and has a $5.60 per unit variable cost. The company's total fixed costs are $96,000.The contribution margin per unit is:
$6.80.
General Electric has total fixed costs of $97,200. GE sells hair dryers at $12.16 per dryer and has a $5.24 per dryer variable cost. .What is the contribution margin per unit?
$6.92. Selling price per unit$12.16 Variable cost per unit 5.24 Contribution margin per unit$6.92
Data pertaining to a company's joint production for the current period follows: L M Quantities produced 232lbs. 174lbs.Market value at split-off point$10/lb.$20/lb. Compute the cost to be allocated to Product M for this period's $1,020 of joint costs if the value basis is used.
$612. Product Lb. Per lb. Total % $1,020 allocatedL 232 $10/lb. $2,320 40%* $408 M 174 $20/lb. 3,480 60%* 612 Total $5,800 $1,020 *Product L: $2,320/$5,800 = 40%; Product M: $3,480/$5,800 = 60%Product L allocation = 40% × $1,020 = $408; Product M allocation = 60% × $1,020 = $612
Using the information below for Singing Dolls, Inc., determine cost of goods manufactured for the year: Work in Process, January 1$53,000 Work in Process, December 31 38,500 Total Factory overhead 7,000 Direct materials used 14,000 Direct labor used 28,000
$63,500.
If a firm's forecasted sales are $258,000 and its break-even sales are $194,000, the margin of safety in dollars is:
$64,000.
General Electric has forecasted sales of $262,000 and its break-even sales are $196,000, the margin of safety in dollars is:
$66,000. $262,000 - $196,000 = $66,000
General Electric has two operating (production) departments: Assembly and Painting. Assembly has 180 employees and occupies 58,800 square feet; Painting has 120 employees and occupies 39,200 square feet. Indirect factory expenses for the current period are as follows: Administration$89,000 Maintenance$114,000 Administration is allocated based on workers in each department; maintenance is allocated based on square footage. The amount of maintenance expenses that should be allocated to the Assembly Department for the current period is:
$68,400. Maintenance $114,000 × [58,800/(58,800 + 39,200)]= $68,400
The Exxon board of directors vote to declare a cash dividend of $.75 per share of common stock. Exxon has 15,000 shares authorized, 10,000 issued, and 9,500 shares outstanding. The cash dividend declared is:
$7,125.
Ready Company has two operating (production) departments: Assembly and Painting. Assembly has 360 employees and occupies 72,000 square feet; Painting has 90 employees and occupies 48,000 square feet. Indirect factory expenses for the current period are as follows: Administration$100,000 Maintenance$126,000 Administration is allocated based on workers in each department; maintenance is allocated based on square footage. The amount of administration expenses that should be allocated to the Assembly Department for the current period is:
$80,000. Administration $100,000 × 360/(360 + 90) = $80,000
Chang Industries has 1,100 defective units of product that have already cost $13.10 each to produce. A salvage company will purchase the defective units as they are for $4.10 each. Chang's production manager reports that the defects can be corrected for $6.90 per unit, enabling them to be sold at their regular market price of $19.20. The incremental income or loss on reworking the units is:
$9,020 income. Incremental revenue from reworking ($19.20 - $4.10)$15.10 Incremental cost to rework (6.90) Net benefit per unit to rework$8.20 Incremental income from reworking ($8.20 * 1,100 units)$9,020
Hassock Corp. produces woven wall hangings. It takes 4 hours of direct labor to produce a single wall hanging. Hassock's standard labor cost is $16 per hour. During August, Hassock produced 17,900 units and used 72,190 hours of direct labor at a total cost of $1,152,040. What is Hassock's labor efficiency variance for August?
$9,440 unfavorable. AH * SR72,190 * $16$1,155,040 SH * SR(4 × 17,900) * $16 1,145,600 Direct labor efficiency variance$ 9,440 U
The B&T Company's production costs for May are: direct labor, $22,000; indirect labor, $7,400; direct materials, $15,900; property taxes on production facility, $890; factory heat, lights and power, $1,090; and insurance on plant and equipment, $290. B&T Company's factory overhead incurred for May is:
$9,670.
Use the following information and the indirect method to calculate the net cash provided or used by operating activities: Net income$86,800Depreciation expense 13,500Gain on sale of land 6,800Increase in merchandise inventory 3,550Increase in accounts payable 7,650
$97,600.
Charger Company's most recent balance sheet reports total assets of $27,000,000, total liabilities of $15,000,000 and total equity of $12,000,000. The debt to equity ratio for the period is (rounded to two decimals):
1.25
A company is planning to purchase a machine that will cost $32,400, have a six-year life, and be depreciated over a six-year period with no salvage value. The company expects to sell the machine's output of 3,000 units evenly throughout each year. A projected income statement for each year of the asset's life appears below. What is the payback period for this machine? Sales $132,000 Costs: Manufacturing$53,400 Depreciation on machine 5,400 Selling and administrative expenses 44,000 (102,800) Income before taxes $29,200 Income tax (30%) (8,760) Net income $20,440
1.25 years. Depreciation on machine = $32,400/6 = $5,400Annual cash flows = $20,440 + $5,400 = $25,840Payback period = $32,400 / $25,840 = 1.25 years
General Electric uses the weighted average approach for inventory costing. GE had beginning Work in Process inventory with 20,000 units. These 20,000 units were 80% finished as far as direct labor required. A total of 90,000 units were completed during the period. Pacific had 25,000 units listed as end of period Work in Process. These incomplete units were 40% finished as far as direct labor required. What was GE's equivalent units of production in terms of direct labor?
100,000. EUP completed & transferred out90,000 EUP in End WIP (25,000 * 40%)10,000 EUP100,000
Ash Company reported sales of $510,000 for Year 1, $560,000 for Year 2, and $610,000 for Year 3. Using Year 1 as the base year, what is the revenue trend percent for Years 2 and 3?
109.8% for Year 2 and 119.6% for Year 3.
A company has earnings per share of $9.80. Its dividend per share is $.60, its market price per share is $124.46, and its book value per share is $100. Its price-earnings ratio equals:
12.70.
Use the following selected information from Wheeler, LLC to determine the 2017 and 2016 trend percentages for net sales using 2016 as the base. 2017 2016 Net sales$283,700 $232,900 Cost of goods sold 150,400 131,090 Operating expenses 53,740 51,740 Net earnings 29,520 21,320
121.8% for 2017 and 100.0% for 2016.
Two investment centers at Marshman Corporation have the following current-year income and asset data: Investment Center A Investment Center B Investment center income$475,000 $585,000 Investment center average invested assets$3,600,000 $2,550,000 The return on investment (ROI) for Investment Center A is: Multiple Choice
13.19% ROI = $475,000/$3,600,000 = 13.19%
A company's product sells at $12.08 per unit and has a $5.12 per unit variable cost. The company's total fixed costs are $97,600. The break-even point in units is:
14,023.
The Menswear Department of Major's Department Store had sales of $189,000, cost of goods sold of $133,000, indirect expenses of $13,350, and direct expenses of $27,600 for the current period. The Menswear Department's contribution to overhead as a percent of sales is:
15.03%. $189,000 - 133,000 - 27,600 = $28,400; $28,400/$189,000 = 15.03%
A company is planning to purchase a machine that will cost $31,800, have a six-year life, and be depreciated over a six-year period with no salvage value. The company expects to sell the machine's output of 3,000 units evenly throughout each year. A projected income statement for each year of the asset's life appears below. What is the accounting rate of return for this machine? Sales $100,000 Costs: Manufacturing$50,700 Depreciation on machine 5,300 Selling and administrative expenses 40,000 (96,000) Income before taxes $4,000 Income tax (35%) (1,400) Net income $2,600
16.35%. Accounting rate of return = $2,600 / [($31,800 + $0)/2] = 16.35%
The Swimwear Department of King's Department Store had sales of $200,000, cost of goods sold of $138,500, indirect expenses of $14,450, and direct expenses of $28,700 for the current period. The Swimwear Department's contribution to overhead as a percent of sales is:
16.40%. $200,000 - 138,500 - 28,700 = $32,800; $32,800/$200,000 = 16.40%
General Electrics's production for the most recent year resulted in 12,500 units completed and moved to finished goods inventory. There were 12,500 units in ending Work in Process inventory. The units in ending Work in Process inventory are reported as 65% complete with respect to all manufacturing costs. There were 1,500 units in beginning Work in Process inventory. This output was 85% complete in regards to all manufacturing costs. What was equivalent units of production for the year? General Electric uses the weighted average method.
20,625 units. Units completed and transferred to next stage12,500units Units in ending Work in Process inventory (12,500 * 65% complete)8,125units 20,625units
A company is planning to purchase a machine that will cost $24,600, have a six-year life, and be depreciated over a six-year period with no salvage value. The company expects to sell the machine's output of 3,000 units evenly throughout each year. A projected income statement for each year of the asset's life appears below. What is the accounting rate of return for this machine? Sales $91,000 Costs: Manufacturing$52,100 Depreciation on machine 4,100 Selling and administrative expenses 31,000 (87,200) Income before taxes $3,800 Income tax (35%) (1,330) Net income $2,470
20.08%. Accounting rate of return = $2,470 / [($24,600 + $0)/2] = 20.08%
Kayak Company uses a job order costing system and allocates its overhead on the basis of direct labor costs. Kayak Company's production costs for the year were: direct labor, $24,000; direct materials, $44,000; and factory overhead applied $5,400. The overhead application rate was:
22.50%.
A company has fixed costs of $320,000 and a contribution margin per unit of $15. If the firm wants to earn a target $40,000 pretax income, how many units must be sold (rounded to the nearest whole unit)?
24,000.
Amazon is evaluating two invesment centers. These investment centers report the following current-year information: Investment Center A Investment Center B Investment center income$480,000 $606,100 Investment center average invested assets$2,540,000 $2,090,000 The return on investment (ROI) for Investment Center B is:
29.0% ROI = $606,100/$2,090,000 = 29.0%
Cray manufactures supercomputers and provides the following annual data. How many supercomputers were transferred to finished goods during the year? Cray uses the weighted average method for process costing calculations. Beginning Work in Process (50% complete, $1,200)210units Ending inventory of Work in Process (90% complete)410units Total units started during the year3,300units
3,100 units. Beginning WIP210 Started3,300 Ending WIP(410)Transferred3,100
Porter Co. is analyzing two projects for the future. Assume that only one project can be selected. Project X Project Y Cost of machine$58,500 $67,600 Net cash flow: Year 1 20,700 4,700 Year 2 20,700 30,800 Year 3 20,700 30,800 Year 4 0 23,500 The payback period in years for Project Y is: Multiple Choice
3.06. Project Y payback period: Period Expected netcash flow Cumulative netcash flow 0 $(67,600) $(67,600) 1 4,700 (62,900) 2 30,800 (32,100) 3 30,800 (1,300) 4 23,500 22,200 Payback period = 3 years + (1.3/23.5) = 3.06 years
Porter Co. is analyzing two projects for the future. Assume that only one project can be selected. Project X Project Y Cost of machine$50,300 $67,500 Net cash flow: Year 1 17,700 4,500 Year 2 17,700 29,300 Year 3 17,700 29,300 Year 4 0 22,500 The payback period in years for Project Y is:
3.20. Project Y payback period: Period Expected netcash flow Cumulative netcash flow 0 $(67,500) $(67,500) 1 4,500 (63,000) 2 29,300 (33,700) 3 29,300 (4,400) 4 22,500 18,100 Payback period = 3 years + (4.4/22.5) = 3.20 years
A production department's output for the most recent month consisted of 18,000 units completed and transferred to the next stage of production and 18,000 units in ending Work in Process inventory. The units in ending Work in Process inventory were 80% complete with respect to both direct materials and conversion costs. There were 2,600 units in beginning Work in Process inventory, and they were 80% complete with respect to both direct materials and conversion costs. Calculate the equivalent units of production for the month, assuming the company uses the weighted average method.
32,400 units.
Schrank Company is trying to decide how many units of merchandise to order each month. The company's policy is to have 15% of the next month's sales in inventory at the end of each month. Projected sales for August, September, and October are 46,000 units, 36,000 units, and 56,000 units, respectively. How many units must be purchased in September?
39,000. Purchases = (15% * 56,000) + 36,000 - (15% * 36,000) = 39,000
Metaline Corp. uses the weighted average method for inventory costs and had the following information available for the year. The number of units transferred to finished goods during the year is: Beginning Work in Process (50% complete, $3,000)390units Ending inventory of Work in Process (90% complete)590units Total units started during the year5,100units
4,900 units.
Use the following selected information from Wheeler, LLC to determine the 2017 and 2016 common size percentages for cost of goods sold using Net sales as the base. 2017 2016 Net sales$555,000 $449,000 Cost of goods sold 228,400 136,220 Operating expenses 83,290 80,270 Net earnings 42,100 29,850
41.1% for 2017 and 30.3% for 2016.
ex3 Yankee Company produces and sells LED televisions with a sale price of $420 for each TV; variable costs are $231. Annual fixed costs are $909,000. Current sales volume is $4,220,000. What is the contribution margin ratio?
45.0%. Contribution margin ratio = $420 - $231 = $189/$420 = 45.0%
General Electric provides the following financial information. Determine the 2017 and 2016 common size percentages for cost of goods sold using Net sales as the base. 2017 2016 Net sales$374,600 $308,200 Cost of goods sold 178,900 131,930 Operating expenses 65,140 62,780 Net earnings 32,860 23,360
47.8% for 2017 and 42.8% for 2016. 2017: $178,900/$374,600 × 100 = 47.8%2016: $131,930/$308,200 × 100 = 42.8%
A company is considering purchasing a machine for $22,700. The machine will generate an after-tax net income of $2,500 per year. Annual depreciation expense would be $2,000. What is the payback period for the new machine?
5 years. Payback period = $22,700 / ($2,500 + $2,000) per year = 5 years
Honduras Corporation is a merchandiser of bicycles and offers the following data for its February budget:The January 31 inventory was 1,680 bikes.Budgeted sales for February are 4,200 bikes.Desired February 28 inventory is 2,940 bikes.Budgeted February purchases are:
5,460 units. Budgeted sales units + desired ending inventory - beginning inventory = purchases4,200 units + 2,940 units − 1,680 units = 5,460 units
Cloverton Corporation had net income of $35,910, net sales of $850,000, and average total assets of $630,000. Its return on total assets is:
5.7%
Flack Corporation, a merchandiser, provides the following information for its December budgeting process:The November 30 inventory was 1,980 units.Budgeted sales for December are 4,950 units.Desired December 31 inventory is 3,465 units.Budgeted purchases are:
6,435 units
General Electric provides this financial information for the current year: Net income$17,253 Net sales 725,855 Total liabilities, beginning-year 96,932 Total liabilities, end-of-year 116,201 Total stockholders' equity, beginning-year 211,935 Total stockholders' equity, end-of-year 141,351 The return on total assets is (Do not round intermediate calculations.):
6.09%. BeginningEnding Total liabilities$96,932 $116,201 Total equity 211,935 141,351 Total assets$308,867 $257,552 $17,253 / [($308,867 + $257,552) / 2] = 6.09%
ex1 Coomer Co. had net sales of $1,300,000,net income of $36,960, and average total assets of $560,000 . What is the return on total assets:
6.6% $36,960/$560,000 = 6.6%
A company uses the weighted average method for inventory costing. During a period, Department B finished and transferred 54,000 units to Department C. Also in Department B during the period, 12,000 units were started but brought only to a stage of being 60% completed. The number of equivalent units produced by Department B during the period was:
61,200 units
ex4 The management of Union Pacific expect the following sales in third quarter: JulyAugustSeptemberSales units 7,000 7,700 6,550 The logistics officer of Union Pacific wants to end each month with ending finished goods inventory equal to 30% of the next month's sales. Finished goods inventory on June 30 is 2,100 units. The budgeted production units for August are:
7,355 units. August units + 30% of September units - July ending inventory = August production7,700 units + (6,550 units * 0.30) - (7,700 * 0.30) = 7,355 units7,700 + 1,965 - 2,310 = 7,355 units
CWN Company uses a job order costing system and last period incurred $82,000 of actual overhead and $100,000 of direct labor. CWN estimates that its overhead next period will be $73,000. It also expects to incur $100,000 of direct labor. If CWN bases applied overhead on direct labor cost, its predetermined overhead rate for the next period should be:
73%.
A corporation reported cash of $14,600 and total assets of $178,900 on its balance sheet. Its common-size percent for cash equals:
8.16%.
A company's sales in Year 1 were $440,000 and in Year 2 were $477,500. Using Year 1 as the base year, the percent change for Year 2 compared to the base year is:
9%.
A company buys a machine for $70,000 that has an expected life of 6 years and no salvage value. The company anticipates a yearly net income of $3,300 after taxes of 30%, with the cash flows to be received evenly throughout each year. What is the accounting rate of return?
9.43%. Accounting rate of return = $3,300 / [($70,000 + $0) /2] = 9.43%
A company buys a machine for $68,000 that has an expected life of 8 years and no salvage value. The company anticipates a yearly net income of $3,250 after taxes of 36%, with the cash flows to be received evenly throughout each year. What is the accounting rate of return?
9.56%. Accounting rate of return = $3,250 / [($68,000 + $0) /2] = 9.56%
After-tax net income divided by the average amount invested in a project, is the:
Accounting rate of return.
Which of the following products is least likely to be produced in a process operations system?
Airplanes
The usual budget period for most companies is:
An annual period separated into quarterly and monthly budgets.
The difference between a profit center and an investment center is
An investment center is responsible for investments made in operating assets.
A corporation's board of directors:
Are responsible for and have final authority for managing corporate activities.
Which of the following is not a result of following a well-designed budgeting process?
Assurance of future profits
Which of the following is not a result of following a well-designed budgeting process?
Assurance of future profits.
An advantage of bonds is:
Bonds do not affect owner control.
Western Company is preparing a cash budget for June. The company has $10,900 cash at the beginning of June and anticipates $31,100 in cash receipts and $36,700 in cash disbursements during June. Western Company has an agreement with its bank to maintain a minimum cash balance of $10,000. As of May 31, the company owes $15,000 to the bank. To maintain the $10,000 required balance, during June the company must:
Borrow $4,700. Beginning cash balance$10,900 Add cash receipts 31,100 Less cash disbursements (36,700) Cash balance before financing$5,300 Desired cash balance 10,000 Amount to borrow$4,700
A formal statement of future plans, usually expressed in monetary terms, is a:
Budget.
General Electric can produce a unit of product for the following costs: Direct material$7.60 Direct labor 23.60 Overhead 38.00 Total costs per unit$69.20 An outside supplier offers to provide General Electric with all the units it needs at $42.50 per unit. If General Electric buys from the supplier, the company will still incur 65% of its overhead. General Electric should choose to:
Buy since the relevant cost to make it is $44.50.
The statement of cash flows reports:
Cash inflows and cash outflows for an accounting period.
Which of the following characteristics does not usually apply to process operations systems?
Each unit of product is separately identifiable
At the current year-end, Simply Company found that its overhead was underapplied by $2,500, and this amount was not considered material. Based on this information, Simply should:
Close the $2,500 to Cost of Goods Sold.
Costs that the manager has the power to determine or at least significantly affect are called:
Controllable costs.
The difference between actual overhead costs incurred and the budgeted overhead costs based on a flexible budget is the:
Controllable variance
The difference between actual overhead costs incurred and the budgeted overhead costs based on a flexible budget is the:
Controllable variance.
A department that incurs costs without directly generating revenues is a:
Cost center.
An important tool in predicting the volume of activity, the costs to be incurred, the sales to be made, and the profit to be earned is:
Cost-volume-profit analysis.
Which of the following products is least likely to be produced in a process operations system?
Custom cabinets
What is NOT typically true of a process cost accounting system?
Each unit of product is separately identifiable.
A company issued 9%, 15-year bonds with a par value of $620,000 that pay interest semiannually. The market rate on the date of issuance was 9%. The journal entry to record each semiannual interest payment is:
Debit Bond Interest Expense $27,900; credit Cash $27,900.
Landmark Corp. buys $390,000 of Schroeter Company's 6%, 5-year bonds payable at par value on September 1. Interest payments are made semiannually. Landmark plans to hold the bonds for the 5-year life. When the bonds mature, the journal entry to record the proceeds will be:
Debit Cash $390,000; credit Long-Term Investments-HTM $390,000.
On January 1, Parson Freight Company issues 7.0%, 10-year bonds with a par value of $4,500,000. The bonds pay interest semiannually. The market rate of interest is 8.0% and the bond selling price was $4,194,222. The bond issuance should be recorded as:
Debit Cash $4,194,222; debit Discount on Bonds Payable $305,778; credit Bonds Payable $4,500,000.
Minstrel Manufacturing uses a job order costing system. During one month, Minstrel purchased $198,000 of raw materials on credit; issued materials to production of $195,000 of which $30,000 were indirect. Minstrel incurred a factory payroll of $150,000, of which $40,000 was indirect labor. Minstrel uses a predetermined overhead rate of 150% of direct labor cost. The journal entry to record the issuance of materials to production is:
Debit Work in Process Inventory $165,000; debit Factory Overhead $30,000; credit Raw Materials Inventory $195,000.
The amount by which a department's sales exceed its direct expenses is:
Departmental contribution to overhead.
Which of the following is not one of the four steps in accounting for production activity and assigning costs during a period under a process cost system?
Determine over or underapplied overhead.
ch 24 An expense that is readily traced to a department because it is incurred for that department's sole benefit is a(n): Multiple Choice
Direct expense.
Expenses that are easily traced and assigned to a specific department because they are incurred for the sole benefit of that department are called:
Direct expenses.
What is subtracted from Departmental Sales in order to determine Departmental contribution to overhead?
Direct expenses.
Using conversion cost per equivalent unit is appropriate for many businesses that use process costing because:
Direct labor and factory overhead enter the production process at the same rate.
Labor costs that are clearly associated with specific units of product because the labor is used to convert raw materials into finished products are called:
Direct labor.
Labor costs in production can be:
Direct or indirect.
The appropriate section in the statement of cash flows for reporting the issuance of common stock for cash is:
Financing activities.
A cost that remains unchanged in total despite variations in volume of activity within a relevant range is a:
Fixed cost.
A budget based on several different levels of activity, often including both a best-case and worst-case scenario, is called a:
Flexible budget.
The most useful budget figures are developed:
From the "bottom-up" following a participatory process.
Classifying costs by behavior with changes in volume of activity involves:
Identifying fixed cost and variable cost.
An additional cost incurred, only if a company pursues a particular course of action, is a(n):
Incremental cost.
Expenses that are not easily associated with a specific department, and which are incurred for the joint benefit of more than one department, are:
Indirect expenses.
The appropriate section in the statement of cash flows for reporting the purchase of equipment for cash is:
Investing activities.
Which section in the statement of cash flows would a company report the purchase of a building for cash?
Investing activities.
Long-term investments include:
Investments in bonds and stocks that are not readily convertible to cash or not intended to be converted to cash in the short term.
Which of the follow best describes items that could be considered long-term investments?
Investments in bonds and stocks that are not readily convertible to cash or not intended to be converted to cash in the short term.
Managerial accounting information: Multiple Choice
Involves gathering information about costs for planning and control decisions.
The debt-to-equity ratio:
Is a means of assessing the risk of a company's financing structure.
An opportunity cost:
Is the potential benefit lost by choosing a specific alternative course of action among two or more.
A cost incurred to produce or purchase two or more products at the same time is a(n):
Joint cost.
The ability to meet short-term obligations and to efficiently generate revenues is called:
Liquidity and efficiency.
Capital budgeting is the process of analyzing:
Long-term investments.
The anticipated costs incurred under normal conditions to produce a specific product or to perform a specific service are:
Standard costs.
General Electric can produce a unit of product for the following costs: Direct material$7.10 Direct labor 23.10 Overhead 35.50 Total costs per unit$65.70 An outside supplier offers to provide General Electric with all the units it needs at $59.05 per unit. If General Electric buys from the supplier, the company will still incur 30% of its overhead. General Electric should choose to:
Make since the relevant cost to make it is $55.05. Relevant cost to make one unit: Direct material$7.10 Direct labor 23.10 Overhead saved (70% * $35.50) 24.85 Total relevant cost to make$55.05
ch 25 Epsilon currently pays $78 per unit to buy a part for a product it sells. Epsilon has excess capacity, and estimates that making the part would incur variable costs of $8 for direct materials and $42 for direct labor. Epsilon's normal predetermined overhead rate is 150% of direct labor cost, but management computes an incremental overhead rate of $16.80 per unit to make this part. Epsilon should choose to:
Make since the relevant cost to make it is $66.80 per unit. Relevant cost to make: Direct material$8.00 Direct labor 42.00 Incremental Overhead 16.80 Total relevant cost to make$66.80
A cost that includes both fixed and variable cost components is called a:
Mixed cost.
The appropriate section in the statement of cash flows for reporting the cash payment of wages is:
Operating activities.
The potential benefits lost by taking a specific action when two or more alternative choices are available is known as a(n):
Opportunity cost.
A company would be most likely to use a Process cost accounting system for:
Paint
Which of the following items is reported on the statement of cash flows under financing activities?
Payment of a cash dividend.
Which of the following best describes standard costs?
Preset costs for delivering a product or service under normal conditions.
The difference between actual price per unit of input and the standard price per unit of input results in a:
Price variance.
A classification of costs that determines whether a cost is expensed to the income statement or capitalized to inventory is:
Product versus period.
A unit of a business that generates revenues and incurs costs is called a:
Profit center.
At acquisition, debt securities are:
Recorded at cost.
Net income divided by average total assets is:
Return on total assets.
Budgets that are periodically revised and have new periods added to replace those that have lapsed are called:
Rolling budgets
What are budgets that are regularly updated have new time periods added to replace time period that have passed called?
Rolling budgets.
A cost that cannot be avoided or changed because it arises from a past decision, and is irrelevant to future decisions, is called a(n):
Sunk cost.
ex4 end A company paid $200,000 ten years ago for a specialized machine that has no salvage value and is being depreciated at the rate of $10,000 per year. The company is considering using the machine in a new project that will have incremental revenues of $28,000 per year and annual cash expenses of $20,000. In analyzing the new project, the $200,000 original cost of the machine is an example of a(n):
Sunk cost.
Equivalent units of production are equal to:
The number of units that could have been started and completed given the costs incurred during the period.
Which statement best describes Equivalent units of production?
The number of units that could have been started and completed given the costs incurred during the period.
A direct materials price variance is often the responsibility of the:
The purchasing department.
Which department is often responsible for the direct materials price variance?
The purchasing department.
Capital budgeting decisions are risky because all of the following are true except:
They rarely produce net cash flows.
A direct cost is a cost that is:
Traceable to a single cost object.
Stock that was reacquired and is still held by the issuing corporation is called:
Treasury stock.
A stock's par value is referencing the:
Value assigned per share by the corporate charter.
A cost that changes in proportion to changes in volume of activity is a(n):
Variable cost.
A cost that changes in proportion to changes in volume of activity is a(n):
ch 21 Variable cost.
Western Company is preparing a cash budget for June. The company has $10,100 cash at the beginning of June and anticipates $31,900 in cash receipts and $38,300 in cash disbursements during June. Western Company has an agreement with its bank to maintain a minimum cash balance of $10,000. As of May 31, the company owes $15,000 to the bank. To maintain the $10,000 required balance, during June the company must:
ch 22 Borrow $6,300.
The Fabricating Department started the current month with a beginning Work in Process inventory of $10,500. During the month, it was assigned the following costs: direct materials, $76,500; direct labor, $24,500; and factory overhead, 60% of direct labor cost. Also, inventory with a cost of $111,500 was transferred out of the department to the next phase in the process. The ending balance of the Work in Process Inventory account for the Fabricating Department is:
ch20 $14,700.
Barnes Company purchased $84,000 of 12.0% bonds at par. The bonds mature in six years and are a held-to-maturity security. Which of the following is the correct journal entry to record the receipt of the semiannual interest payment?
debit Cash, $5,040; credit Interest Revenue, $5,040.
Net income divided by net sales is the:
Profit margin.
The Finishing Department began the month with a beginning Work in Process inventory with a cost of $11,900. During the month, it was responsible for the following costs: direct materials, $77,900 direct labor, $25,900 factory overhead: applied using a predetermined overhead rate of 60% of direct labor cost. The Finishing department additionally reports inventory with a cost of $118,500 was moved out of the department to the next step in the process. Determine the balance at the end of the month of the Work in Process Inventory account for the Finishing Department:
$12,740. $11,900 + $77,900 + $25,900 + $15,540 − $118,500 = $12,740 Work in Process InventoryBeginning WIP11,900 Direct Materials77,900 Direct Labor25,900 Applied Overhead15,540 To Finished Goods 118,500Ending WIP12,740
Andrew Industries purchased $165,000 of raw materials on account during the month of March. The beginning Raw Materials Inventory balance was $22,000, and the materials used to complete jobs during the month were $141,000 of direct materials and $13,000 of indirect materials. What amount will Andrew debit to Work in Process Inventory for the month of March?
$141,000 Only direct materials used of $141,000 should be transferred to Work in Process Inventory for March.
Smith Corporation declared and issued a 10% stock dividend on July 15. The following information was available immediately prior to the dividend: Retained earnings$830,000Shares issued and outstanding 68,000Market value per share$23Par value per share$5 The amount that contributed capital will increase (decrease) as a result of recording this stock dividend is:
$156,400. 68,000 shares × 0.10 = 6,800 shares × $23 = $156,400
Tupelo Corporation has 3,000 shares of $10 par value, 7.5% cumulative and nonparticipating preferred stock and 30,000 shares of $10 par value common stock outstanding. The company paid total cash dividends of $2,000 in its first year of operation. The cash dividend that must be paid to preferred stockholders in the second year before any dividend is paid to common stockholders is:
$2,500. Preferred stock dividend: 3,000 shares × $10/share × 7.5% = $2,250Prior year: Dividend paid = $2,000; $250 in arrearsCurrent year: $250 in arrears + $2,250 current dividend = $2,500
Which one of the following is representative of typical cash flows from operating activities?
Receipts of cash sales.
Sony has $650,000 of common stock outstanding. Sony also has $250,000 of 8% noncumulative, nonparticipating, preferred stock outstanding. In the company's first year of operation, no dividends were paid. During the second year, the company paid cash dividends of $45,000. This dividend should be distributed as follows:
$20,000 preferred; $25,000 common. Preferred stock dividend: $250,000 × 8% = $20,000Common stock dividend: $45,000 - $20,000 = $25,000
ex2 Acme Industries provides the following cost information for the year: Direct materials$15,300 Indirect materials 3,300 Indirect labor 7,800 Factory depreciation 12,100 Direct labor 36,300 Using the above information, total factory overhead costs would be:
$23,200. Factory Overhead = Indirect Materials + Indirect Labor + Factory DepreciationFactory Overhead = $3,300 + $7,800 + $12,100 = $23,200.
A company has an overhead application rate of 124% of direct labor costs. How much overhead would be allocated to a job if it required total labor costing $23,000?
$28,520. $23,000 * 1.24 = $28,520
You receive the following yearly report: Beginning raw materials inventory$2,800 Raw materials purchases 4,300 Ending raw materials inventory 3,300 Office supplies expense 1,300 The amount of raw materials used in production for the year is:
$3,800. Beginning Raw Materials + Purchases - Ending Raw Materials = Raw Materials Used$2,800 + $4,300 − $3,300 = $3,800 Raw Materials InventoryBeginning RM2,800 Purchases4,300 Used 3,800Ending RM3,300
Andrew Industries purchased $165,000 of raw materials on account during the month of March. The beginning Raw Materials Inventory balance was $22,000, and the materials used to complete jobs during the month were $141,000 of direct materials and $13,000 of indirect materials. What is the ending Raw Materials Inventory balance for March?
$33,000 Beginning RM $22,000 + RM Purchased $165,000 - Direct RM used $141,000 - Indirect RM used $13,000 = $33,000 Ending RM Balance Raw Materials InventoryBeginning RM22,000 Purchases165,000 Direct Materials Used 141,000Indirect Materials Used 13,000Ending RM33,000
Koche Company purchases 9% bonds with a $33,000 maturity value. Koche spent $30,800 plus a transaction fee of $350 to obtain the bonds. The cash proceeds the company will receive when the bonds mature equal:
$33,000.
McCall Corp issues 9%, 20-year bonds with a par value of $780,000 that pay interest semiannually. The current market rate is 8%. The amount paid to the bondholders for each semiannual interest payment is:
$35,100. $780,000 × 0.09 × 1/2 year = $35,100
Summerteeth had a net increase in cash of $22,640 for the current year. Net cash provided by operating activities was $20,400; net cash used in investing activities was $11,200 and net cash provided by financing activities was $13,440. If the year-end cash balance is $27,600, the beginning cash balance was:
$4,960. Cash = $27,600 ending balance - $22,640 increase in cash = $4,960 beginning balance
The beginning balance for General Electric in retained earnings was $44,400. General Electric reported a net income of $7,400 and cash dividends of $5,975 were paid out in the current period. What was the ending balance in retained earnings?
$45,825. Beginning balance$44,400 Plus net income 7,400 Less dividends (5,975)Ending balance$45,825
Using the information below for Sony, determine the total manufacturing costs incurred during the year: Work in Process, January 1$51,200 Work in Process, December 31 37,600 Direct materials used 13,100 Total Factory overhead 6,100 Direct labor used 27,100
$46,300. Costs Added = Direct Materials Used + Direct Labor + Factory OverheadCosts Added = $13,100 + $27,100 + 6,100 = $46,300
General Electric reported current assets of $183,000 and current liabilities of $132,000 on its most recent balance sheet. The working capital is:
$51,000. $183,000 - $132,000 = $51,000.
A truck that was originally purchased for $143,000 and has accumulated depreciation of $98,000 is sold for $56,500 cash. How much will be shown as a source of cash in the investing activities section of the statement of cash flows?
$56,500.
Sony has a beginning finished goods inventory of $28,600, cost of goods manufactured of $58,800, and an ending finished goods inventory of $27,900. What is Sony's cost of goods sold?
$59,500. Beginning Finished Goods + Cost of Goods Manufactured - Ending Finished Goods = Cost of Goods Sold; $28,600 + $58,800 - $27,900 = $59,500.
Using the information below for Sony, determine cost of goods manufactured for the year: Work in Process, January 1$52,400 Work in Process, December 31 38,200 Total Factory overhead 6,700 Direct materials used 13,700 Direct labor used 27,700
$62,300. Cost of Goods Manufactured = Costs Added + Beginning Work in Process - Ending Goods in ProcessCost of Goods Manufactured = ($13,700 + $27,700 + $6,700) + $52,400− $38,200 = $62,300 Work in Process InventoryBeginning WIP52,400 Direct materials13,700 Direct labor27,700 Factory Overhead6,700 Total Manufacturing Costs100,500 Cost of Goods Mfg'd. 62,300Ending WIP38,200
General Electric issued 7%, 15-year bonds with a par value of $630,000 that pay interest semiannually. The market rate on the date of issuance was 7%. The journal entry to record each semiannual interest payment is:
$630,000 × 0.07 × 1/2 year = $22,050 Debit Bond Interest Expense $22,050; credit Cash $22,050.
Your production manager reports the following: Finished goods inventory, January 1$3,000Finished goods inventory, December 31 3,800Total cost of goods sold 6,600 The cost of goods manufactured for the year is:
$7,400. Beginning Finished Goods + Cost of Goods Manufactured - Ending Finished Goods = Cost of Goods Sold; $6,600 − $3,000 + $3,800 = $7,400.
The B&T Company's production costs for May are: direct labor, $14,000; indirect labor, $6,600; direct materials, $15,100; property taxes on production facility, $810; factory heat, lights and power, $1,010; and insurance on plant and equipment, $210. B&T Company's factory overhead incurred for May is:
$8,630. Indirect labor$6,600 Property Taxes 810 Heat, light and power 1,010 Insurance 210 Total OH$8,630
The production department reports the following for 2019: Beginning raw materials inventory$5,800 Indirect materials cost 1,800 Indirect labor cost 4,800 Maintenance of factory equipment 2,600 Direct labor cost 6,800 Using the above information, total factory overhead costs would be:
$9,200. Factory Overhead = Indirect materials + Indirect labor + MaintenanceFactory Overhead = $1,800 + $4,800 + $2,600 = $9,200
Foxtrot Corp. uses the indirect method and has provided you with the following information. Determine the net cash provided or used by operating activities: Net income$86,900Depreciation expense 13,600Gain on sale of land 6,700Increase in merchandise inventory 3,650Increase in accounts payable 7,750
$97,900. Net income$86,900 Depreciation expense 13,600 Gain on sale of land (6,700)Increase in merchandise inventory (3,650)Increase in accounts payable 7,750 Net cash used by operations$97,900
YankeeCo's most recent balance sheet shows total equity of $12,000,000, total assets of $27,000,000, and total liabilities of $15,000,000. What is the debt to equity ratio for the period (rounded to two decimals)?
1.25
General Electric reported sales of $450,000 for Year 1, $500,000 for Year 2, and $550,000 for Year 3. Using Year 1 as the base year, what is the revenue trend percent for Years 2 and 3?
111.1% for Year 2 and 122.2% for Year 3. Year 2: $500,000 / $450,000 × 100 = 111.1%Year 3: $550,000 / $450,000 × 100 = 122.2%
Smith Inc. is a corporation founded in 1965. Smith Inc. stock has a par value of $1 per share and earnings per share of $10.00. Its dividend per share is $.70, its market price per share is $129.00, and its book value per share is $105. Its price-earnings ratio equals:
12.90. Price-Earnings Ratio = Market Price per Share/Earnings per SharePrice-Earnings Ratio = $129.00 / $10.00 = 12.90
General Electric supplies the following accounting data. Determine the 2017 and 2016 trend percentages for net sales using 2016 as the base. 2017 2016 Net sales$278,200 $231,800 Cost of goods sold 151,500 129,990 Operating expenses 54,840 52,840 Net earnings 28,420 20,220
120.0% for 2017 and 100.0% for 2016. 2017: $278,200 / $231,800 × 100 = 120.0%2016: $231,800 / $231,800 × 100 = 100.0%
General Electric's total fixed costs are $96,600. GE sells hair dryers for $12.28 per dryer and has a $5.42 per dryer variable cost. The break-even point in number of dryers is:
14,082. $96,600/($12.28 - $5.42) = 14,082 units
A Chief Financial Officer provides this information about a corporation: Authorized shares 28,000 Issued shares 23,000 Treasury shares 7,500 The number of outstanding shares is:
15,500. Issued - TS
General Electric's income statement shows Net sales of $766,000 and Net income of $141,000. The Profit margin is:
18.41%. $141,000/$766,000 = 18.41%.
Sony uses a job order costing system and allocates its overhead on the basis of direct labor costs. Sony's production costs for the year were: direct labor, $26,000; direct materials, $46,000; and factory overhead applied $5,600. What was the overhead application rate?
21.54%. OH rate = OH applied/Direct Labor Costs = $5,600/$26,000 = 21.54%
Sony targets $40,000 income before taxes. Sony has fixed costs of $320,000 and Sony expects each unit will have a contribution margin of $15. How many units must Sony sell to achieve the income target (round to the nearest unit)?
24,000. Units required to earn target pre-tax income of $40,000 = ($320,000 + $40,000)/$15 = 24,000 units
Acme Company uses a job order costing system and last period incurred $87,000 of actual overhead and $100,000 of direct labor. Acme estimates that its overhead next period will be $68,000. It also expects to incur $100,000 of direct labor. If Acme bases applied overhead on direct labor cost, its predetermined overhead rate for the next period should be:
68%. OH rate = $68,000/$100,000 = 68%
General Electric reported total liabilities of $143,151, cash of $14,100 and total assets of $178,400 on its balance sheet. Its common-size percent for cash equals:
7.90%. ($14,100 / $178,400) × 100 = 7.90%
Over the course of a quarter, ALCOA completed and transferred 63,000 units to Finished Goods Inventory. ALCOA also was able to start 16,500 units. However these units were only 60% completed at the end of the quarter. ALCOA uses the weighted average method for inventory costing. How many equivalent units were produced by ALCOA during the week?
72,900 units. Completed and transferred63,000 EWIP (16,500 * 60%)9,900 Total72,900
General Electric's sales in 2000 were $410,000 and in 2001 were $447,500. Using 2000 as the base year, the percent change for 2001 compared to the base year is:
9%. ($447,500 − $410,000)/ $410,000 × 100 = 9%
Reports net income and then adjusts it for items necessary to determine net cash provided or used by operating activities.
A credit to Common Stock for $130,000.
The statement of cash flows is:
A financial statement that reports the cash inflows and cash outflows for an accounting period, and that classifies those cash flows as operating activities, investing activities, or financing activities.
Financial statement analysis involves all of the following except:
Assuring that the company will be more profitable in the future.
A disadvantage of bond financing is:
Bonds pay periodic interest and the repayment of par value at maturity.
Which best describes the information found in the statement of cash flows:
Cash inflows and cash outflows for an accounting period.
Amazon issues 8.5%, 20-year bonds with a par value of $2,800,000. Interest is semiannual. The market rate of interest is 9.5% and the bond selling price was $2,609,737. What is the entry to record the bond issuance?
Debit Cash $2,609,737; debit Discount on Bonds Payable $190,263; credit Bonds Payable $2,800,000.
AM Corp. purchases $530,000 of Anodyne Company's 6%, 10 year bonds payable at par. Interest is paid every six months. AM plans to hold the bonds to maturity. At the maturity date, what is the journal entry will be made by AM?
Debit Cash $530,000; credit Long-Term Investments-HTM $530,000.
Amazon has 480,000 shares authorized, 456,000 shares issued, and 19,200 shares in treasury stock. Amazon declared a $0.55 per share cash dividend. The journal entry to record the payment of the dividend is:
Debit Common Dividends Payable $240,240; credit Cash $240,240. $0.55 × (456,000 shares - 19,200 shares) = $240,240
Juarez Builders incurred $285,000 of labor costs for construction jobs completed during the month of August, of which $212,000 was direct and $73,000 was indirect supervisory costs. The correct journal entry to record the $73,000 indirect labor for the month is:
Debit Factory Overhead; credit Factory Wages Payable.
General Electric had 55,000 shares of $20 par value common stock outstanding on July 1. That day a 10% stock dividend was declared when the market value of each share was $25. What is the entry to record the dividend declaration?
Debit Retained Earnings $137,500; credit Common Stock Dividend Distributable $110,000; credit Paid-In Capital in Excess of Par Value, Common Stock $27,500. Retained earnings: 55,000 shares × 10% × $25 = $137,500Common Stock Dividend Distributable: 55,000 shares × 10% × $20 = $110,000Paid-in Capital in Excess of Par Value, Common Stock: 55,000 shares × 10% × $5 = $27,500
Wilco Corporation had 10,500 shares of $5 par value common stock outstanding when a stock dividend of 3,255 shares was declared. At the time of the stock dividend, the market value per share was $13. The entry to record this dividend is:
Debit Retained Earnings $16,275; credit Common Stock Dividend Distributable $16,275. 3,255/10,500 shares = large stock dividend of 31%.Large stock dividends are recorded at par value (3,255 shares × $5)
Amazon has 30,000 shares authorized, 15,000 shares issued, and 12,000 shares of common stock outstanding. The company declared a $0.50 per share cash dividend on its common shares. What is the journal entry to record the dividend declaration?
Debit Retained Earnings $6,000; credit Common Dividends Payable $6,000. $0.50 * 12,000 shares = $6,000
Juarez Builders incurred $285,000 of labor costs for construction jobs completed during the month of August, of which $212,000 was direct and $73,000 was indirect supervisory costs. The correct journal entry to record the direct labor for the month is:
Debit Work in Process Inventory $212,000; credit Factory Wages Payable $212,000.
ex2 Labor costs that are clearly associated with specific units of product because the labor is used to convert raw materials into finished products are called:
Direct labor.
Which of the following is most likely to be considered a variable cost?
Direct materials
The three major cost components of manufacturing a product are:
Direct materials, direct labor, and factory overhead.
A fixed cost:
Does not change with changes in the volume of activity within the relevant range.
Standards for comparisons in financial statement analysis do not include:
Management standards
ex3 Managerial accounting is different from financial accounting in that:
Managerial accounting includes many projections and estimates whereas financial accounting has a minimum of predictions.
A company's income statement showed the following: net income, $118,000; depreciation expense, $32,000; and gain on sale of plant assets, $6,000. An examination of the company's current assets and current liabilities showed the following changes as a result of operating activities: accounts receivable decreased $9,800; merchandise inventory increased $20,000; prepaid expenses increased $6,600; accounts payable increased $3,800. Calculate the net cash provided or used by operating activities.
Net income$118,000 Depreciation expense 32,000 Gain on sale of plant assets (6,000)Decrease in accounts receivable 9,800 Increase in merchandise inventory (20,000)Increase in prepaid expenses (6,600)Increase in accounts payable 3,800 Net cash provided by operating activities$131,000
Where would you look on a firm's balance sheet to find a firm's Long-term investments?
Non-current section of the balance sheet called long-term investments.
A liability for dividends exists:
On the date of declaration.
Wages paid in cash are shown in which section of the statement of cash flows?
Operating activities.
If a company borrows money from a bank, the interest paid on this loan should be reported on the statement of cash flows as a(n):
Operating activity.
Stockholders' equity consists of which of the following?
Paid-in capital and retained earnings.
Which would be a financing activity in the statement of cash flows?
Payment of a cash dividend.
The rate established prior to the beginning of a period that uses estimated overhead and an allocation factor such as estimated direct labor, and that is used to assign overhead cost to jobs, is the:
Predetermined overhead rate.
An example of direct labor cost is:
Product assembler wages
The indirect method for the preparation of the operating activities section of the statement of cash flows:
Reports net income and then adjusts it for items necessary to determine net cash provided or used by operating activities.
When preparing a master budget, which of the following is typically estimated first?
Sales.
Sansone Company obtains land by issuing a note payable for the full purchase price to the seller. Where would this transaction be found in the statement of cash flows?
Schedule of noncash investing or financing activity.
The ability to generate future revenues and meet long-term obligations is referred to as:
Solvency.
A corporation's distribution of additional shares of its own stock to its stockholders without the receipt of any payment in return is called a:
Stock dividend.
For product costs associated with a particular product to be reported on the income statement:
The product must be sold
The overhead cost applied to a job during a period is recorded with a credit to Factory Overhead and a debit to:
Work in Process Inventory.
Products that are in the process of being manufactured but are not yet complete are called:
Work in process inventory.
Boeing Company purchased bonds at par that mature in eight years as a held to maturity security. The bonds are $62,000 of 11.0% bonds. What is the journal entry to record the receipt of interest that is paid semi-annually?
debit Cash, $3,410; credit Interest Revenue, $3,410. ($62,000 * 11.0% = $6,820) * 1/2 = $3,410
A company that uses a job order costing system would make the following entry to record the flow of direct materials into production:
debit Work in Process Inventory, credit Raw Materials Inventory.
At maturity, the carrying value of bonds is always equal to:
the par value of the bond.