mgmt exam 2
Dukelow Corporation has two divisions: the Governmental Products Division and the Export Products Division. The Governmental Products Division's divisional segment margin is $255,000 and the Export Products Division's divisional segment margin is $59,800. The total amount of common fixed expenses not traceable to the individual divisions is $163,700. What is the company's net operating income?
$255,000 + $59,800 = $314,800 - 163,700 = $151,100
Plummer Corporation has provided the following data for its two most recent years of operation: The net operating income (loss) under absorption costing in Year 2 is closest to: question 10
$352,000 - $220,000= $132,000 - $106,000= $26,000 $220,000= 2,000 x $26 + 6,000 x $28 $106,000= 8,000 x $5 + $66,000
Last year, Kirsten Corporation's variable costing net operating income was $63,400. Fixed manufacturing overhead costs released from inventory under absorption costing amounted to $10,700. What was the absorption costing net operating income last year?
$52,700
Sipho Corporation manufactures a single product. Last year, the company's variable costing net operating income was $90,900. Fixed manufacturing overhead costs released from inventory under absorption costing amounted to $21,900. What was the absorption costing net operating income last year?
$69,000
Petrini Corporation makes one product and it provided the following information to help prepare the master budget for the next four months of operations: The estimated selling and administrative expense for February is closest to: question 30
10,600 x 1.70 + 70,000= 88,020
Croft Corporation produces a single product. Last year, the company had a net operating income of $160,000 using absorption costing and $149,000 using variable costing. The fixed manufacturing overhead cost was $10 per unit. There were no beginning inventories. If 43,000 units were produced last year, then sales last year were:
160,000-149,000= 11,000 / 10 = 1,100, 43,000-1,100= 41,900
Abel Corporation uses activity-based costing. The company makes two products: Product A and Product B. The annual production and sales of Product A is 200 units and of Product B is 400 units. There are three activity cost pools, with total cost and activity as follows: The activity rate for Activity 2 is closest to: question 19
18,450 / 1800 = $10.25
Delauder Enterprises makes a variety of products that it sells to other businesses. The company's activity-based costing system has four activity cost pools for assigning costs to products and customers. Details concerning that activity-based costing system are listed below: According to the activity-based costing system, the total cost of the activity "Processing batches" for this customer this past year was closest to: question 17
193.30 x 5 = $966.50
All of Gaylord Corporation's sales are on account. Thirty-five percent of the sales on account are collected in the month of sale, 45% in the month following sale, and the remainder are collected in the second month following sale. The following are budgeted sales data for the company: What is the amount of cash that should be collected in March? question 24
40,000 x 35% = 14,000 60,000 x 45% = 27,000 50,000 x 20% = 10,000 Answer= $51,000
The manufacturing overhead budget at Foshay Corporation is based on budgeted direct labor-hours. The direct labor budget indicates that 5,800 direct labor-hours will be required in May. The variable overhead rate is $9.10 per direct labor-hour. The company's budgeted fixed manufacturing overhead is $104,400 per month, which includes depreciation of $8,120. All other fixed manufacturing overhead costs represent current cash flows. The company recomputes its predetermined overhead rate every month. The predetermined overhead rate for May should be:
5,800 x 9.10 + 104,400= 157, 180 157,180 / 5,800 = $27.10
the occupany expenses in the flexible budget for September would be closest to: question 39
7,600 + (2.40 x 2,170) = 12,808
the materials price variance for November is: question 46
AP= 117,040 / 30800 = 3.8 30800 x (3.8 - 4) = 6,160 F
what was the variable overhead rate variance for the month? question 48
Actual rate= 60390 / 9900 = 6.1 9900 x (6.1 - 6.3) = 1,980 F
Which of the following may appear on a flexible budget performance report?
An unfavorable activity variance A favorable revenue variance An unfavorable spending variance
Production order processing is an example of a:
Batch-level activity
Purchase order processing is an example of a:
Batch-level activity
if the total standard variable cost for one unit of finished product is $78, then the standard price per foot for direct materials is: question 50
Direct labor cost= 1.5 x 12= 18 VMOH = 1.5 x 8 = 12 Standard variable cost excl direct materials cost= 18 + 12= 30 Standard variable cost incl direct materials cost= 78 Direct materials cost= 78 - 30 = 48 Standard price per foot= 48 / 12 = $4
Variable manufacturing overhead is applied to products on the basis of standard direct labor-hours. If the labor efficiency variance is favorable, the variable overhead efficiency variance will be:
Favorable
Meade Nuptial Bakery makes very elaborate wedding cakes to order. The company has an activity-based costing system with three activity cost pools. The activity rate for the Size-Related activity cost pool is $1.13 per guest. (The greater the number of guests, the larger the cake.) The activity rate for the Complexity-Related cost pool is $43.52 per tier. (Cakes with more tiers are more complex.) Finally, the activity rate for the Order-Related activity cost pool is $61.44 per order. (Each wedding involves one order for a cake.) The activity rates include the costs of raw ingredients such as flour, sugar, eggs, and shortening. The activity rates do not include the costs of purchased decorations such as miniature statues and wedding bells, which are accounted for separately. Data concerning two recent orders appear below: Assuming that all of the costs listed above are avoidable costs in the event that an order is turned down, what amount would the company have to charge for the Ericson wedding cake to just break even? question 18
Guests= 60 x 1.13 = 67.80 Tier= 4 x 43.52 = 174.08 Order= 1 x 61.44= 61.44 Total cost= 303.32 303.32 + 16.89 = $320.21
There are various budgets within the master budget. One of these budgets is the production budget. Which of the following BEST describes the production budget?
It is calculated based on the sales budget and the desired ending inventory.
Which of the following statements is NOT correct concerning the Cash Budget?
It is not necessary to prepare any other budgets before preparing the Cash Budget.
Tobler Corporation has budgeted production for next year as follows: budgeted purchases of raw materials in the third quarter would be: question 29
Materials to be purchased= ending + materials used - beginning (14,000 x 10%) + 16,000 - (16,000 x 10%) = 63,200 pounds
Dinham Kennel uses tenant-days as its measure of activity; an animal housed in the kennel for one day is counted as one tenant-day. During March, the kennel budgeted for 2,000 tenant-days, but its actual level of activity was 2,040 tenant-days. The kennel has provided the following data concerning the formulas used in its budgeting and its actual results for March: question 36
Net income= 69,576 - 16,204 - 25,008 - 14,122 - 8,238 = 6,004 Flexible budget net income= (35.40 - 21.30) x 2,040 - 20,800 = 7,964 Overall revenue and spending variance= 7,964 - 6,004 = 1,960 U
Caspion Corporation makes and sells a product called a Miniwarp. One Miniwarp requires 2.5 kilograms of the raw material Jurislon. Budgeted production of Miniwarps for the next five months is as follows: question 27
October's production needs= 22,700 22,700 x 2.5= 56,750 20% of October's production= 56,750 x 20% = 11,350 Cost= 11,350 x 18= $204,300
Parts administration is an example of a:
Product-level activity
Rokosz Corporation makes one product and it provided the following information to help prepare the master budget for the next four months of operations: The budgeted selling price per unit is $104. Budgeted unit sales for October, November, December, and January are 6,900, 7,100, 11,300, and 15,300 units, respectively. All sales are on credit. Regarding credit sales, 30% are collected in the month of the sale and 70% in the following month. The ending finished goods inventory equals 20% of the following month's sales. The ending raw materials inventory equals 30% of the following month's raw materials production needs. Each unit of finished goods requires 5 pounds of raw materials. The raw materials cost $2.00 per pound. The direct labor wage rate is $23.00 per hour. Each unit of finished goods requires 2.5 direct labor-hours. The estimated direct labor cost for November is closest to:
Production unit in November= 7100 + (11,300 x 20%) - 7100 x 20%= 7940 units Direct labor cost= 7940 x 2.5 x 23= $456550
Addleman Corporation has an activity-based costing system with three activity cost pools--Processing, Supervising, and Other. In the first stage allocations, costs in the two overhead accounts, equipment expense and indirect labor, are allocated to the three activity cost pools based on resource consumption. Data used in the first stage allocations follow: question 20
Sales 154100 Direct materials 55300 Direct labor 84100 Overhead costs= 2400 x 1.48 + 900 x 7.50= 10302 Total costs 149612 Product margin 4398 overhead calculations: total processing: 73000 x 0.20 + 1000 x .20 = 14,800 total supervising: 73000 x 0.10 + 1000 x 0.20 = 7,500 total others: 73000 x 0.70 + 1000 x 0.60 = 51,700 activity base rate processing: 14,800 / 10000 = 1.48 activity base rate supervising: 7,500 / 1,000 = 7.50
the selling and admin expenses in the planning budget for July would be closest to: question 38
Selling and admin expenses= fixed costs + variable costs 20,300 + (0.1 x 5000) = 20,800
the spending variance for employee salaries and wages for March would have been closest to: question 40
Spending variance= actual cost incurred - (actual input quantity x budgeted rate) (66,000 - 49,500) - (900 x 18) = 300 U
the labor efficiency variance for the month is closest to: question 49
Standard direct labor hours= 7600 x .10 = 760 18 (820 - 760) = 1,080 U
what is ChocO's variable overhead efficiency variance? question 47
Standard labor hours= 3800 x 1.25= 4750 Actual labor hours= 4,510 Standard rate= 44 44 x (4510 - 4750) = 10,560 F
Scholfield Enterprises makes a variety of products that it sells to other businesses. The company's activity-based costing system has four activity cost pools for assigning costs to products and customers. Details concerning that activity-based costing system are listed below: The cost of serving customers, $1,191.00 per customer, is the cost of serving a customer for one year. Latif Corporation buys only one of the company's products which Scholfield Enterprises sells for $15.60 per unit. Last year Latif Corporation ordered a total of 1,100 units of this product in 2 orders. To fill the orders, 7 batches were required. The direct materials cost is $7.85 per unit and the direct labor cost is $1.90 per unit. Each unit requires 0.10 direct labor-hours. According to the activity-based costing system, the customer margin for this customer this past year was closest to: question 16
Supporting assembly (DLH x activity rate) = 110 x 6.55= 720.5 DLH (units ordered x DLH per unit) = 110 Processing batches (# of batches x activity rate) = 7 x 138.20 = 967.4 Processing orders (# of orders x activity rate) = 2 x 52.60 = 105.2 Serving customers (# of customers x activity rate) = 1 x 1191 = 1191 Total overhead cost for customer = 2984.1 Customer margin (sales - material costs - labor cost - overhead cost) = 1100 (15.60 - 7.80 - 1.90) - 2984.1 = $3,4950.90
In a flexible budget, what will happen to fixed costs as the activity level increases?
The fixed cost per unit will decrease.
When using data from a segmented income statement, the dollar sales for a segment to break even is equal to:
Traceable fixed expenses ÷ Segment CM ratio
Isadore Hospital bases its budgets on patient-visits. the hospitals static planning budget for July appears below: the spending variance for occupancy costs in the flexible budget performance report for the month is: question 37
Units= 7,800 Fixed cost= 67,760 Variable cost per unit= 0 Flexible cost= 7800 x 0 + 67,760= 67,760 Answer= 67,760 - 65,650= 2,110 F
An unfavorable materials quantity variance indicates that:
actual usage of material exceeds the standard material allowed for output.
poorly trained workers could have an unfavorable effect on which of the following variances? question 43
choice c
In its first year of operations, Bronfren Corporation produced 800,000 sets and sold 780,000 sets of artificial tan lines. What would have happened to net operating income in this first year under the following costing methods if Bronfren had produced 20,000 fewer sets? (Assume that Bronfren has both variable and fixed production costs.) question 2
choice d
Which of the following budgets are prepared before the sales budget? question 23
choice d
When using a flexible budget, a decrease in activity within the relevant range:
decreases total costs.
A revenue variance is favorable if the actual revenue is greater than the revenue in the static planning budget.
false
A budget that is based on the actual activity of a period is known as a:
flexible budget.
Allocating common fixed expenses to business segments:
may cause managers to erroneously discontinue business segments.
Departmental overhead rates may not correctly assign overhead costs due to:
overreliance on volume as a basis for allocating overhead costs where products differ regarding the number of units produced, lot size, or complexity of production.
The production department should generally be responsible for materials price variances that resulted from:
rush orders arising from poor scheduling.
The usual starting point for a master budget is:
the sales forecast or sales budget.
If variable manufacturing overhead is applied on the basis of direct labor-hours and the variable overhead rate variance is favorable, then:
the standard variable overhead rate exceeded the actual rate.
When switching from a traditional costing system to an activity-based costing system that contains some batch-level costs:
the unit product costs of high-volume products typically decrease and the unit product costs of low volume products typically increase.
A reason why absorption costing income statements are sometimes difficult to interpret is that:
they shift portions of fixed manufacturing overhead from period to period according to changing levels of inventories.
A cost that would be included in product costs under both absorption costing and variable costing is:
variable manufacturing costs.
