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5) Both the traditional income statement approach and the contribution margin approach will yield the same answer for calculating breakeven points. 6) Arturo Company's Model A generator sells for $456 and Model B sells for $390. The variable cost of Model A is $404 and of Model B is $320. If.
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  Learning Objective 23-1 1) A static budget is prepared for only one level of sales volume. 2) A favorable variance reflects a decrease in operating income. 3) A variance is the difference between an actual amount and a budgeted amount. 4) A flexible budget summarizes revenues and expenses for various levels of sales volume.
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41) Gamma Corp. has prepared a preliminary cash budget for the 3rd quarter as shown below: Cash Budget Jul Aug Sep Beginning cash balance $32,000 $4,400 $6,900 Plus: Cash collections 49,400 51,000 44,600 Cash available $81,400 $55,400 $51,500 Less: Cash payments: Purchases of inventory 36,000 9,000 11,000 Operating expenses 41,000 30,500 30,900 Capital expenditures 0 9,000 7,700 Ending cash balance $4,400 $6,900 $1,900 Subsequently, the marketing department revised its figures for cash collections. New data are as follows: $52,000 in July, $50,000 in August,.
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Learning Objective 20-3 1) In a production cost report, the number of units to account for must always be greater than the number of units accounted for. 2) A production cost report shows only the calculations for the physical flow of products. 3) The task of summarizing the flow of physical units is.
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27) Jackson Company has provided the following information regarding the two products that it sells: Jet Boats Ski Boats Sales price per unit $8,000 $20,000 Variable cost per unit $4,800 $14,000 Annual fixed costs are $280,000. How many units must be sold in order for Jackson to breakeven, assuming that Jackson sells five jet boats for every two ski boats.
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23) Colin was a professional classical guitar player until his motorcycle accident that left him disabled. After long months of therapy, he hired an experienced luthier (maker of stringed instruments) and started a small shop to make and sell Spanish guitars. The guitars sell for $700 and the fixed monthly.
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18) Nevada Manufacturing has two processing departments, Department I and Department II. During 2014, direct materials worth $38,000 purchased on account were assigned to Department I. At the end of 2014, when the production cost report for Department 1 was prepared, Nevada assigned $46,000 to the units transferred from Department.
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11) Which of the following is an example of the coordination and communication function of a budget? A) A budget demands integrated input from different business units and functions. B) Employees are motivated to achieve the goals set by the budget. C) Budget figures are used to evaluate the performance of managers. D) The.
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5) When the variable cost per unit increases, the total number of units required to breakeven also increases. 6) Higher fixed costs decrease the total contribution margin required to break even. 7) Higher fixed costs increase the total number of units required to break even. 8) When the variable cost per unit increases,.
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31) The Carolina Products Company has completed the flexible budget analysis for the 2nd quarter, which is as given below. Actual Results Flexible Budget Variance Flexible Budget Sales Volume Variance Static Budget Units/Volume 12,800 0 12,800 800 F 12,000 Sales Revenue $62,720 $1,280 U $64,000 $4,000 F $60,000 Variable Expenses 27,520 640 U 26,880 1,680 U 25,200 Contribution Margin $35,200 $1,920 U $37,120 $2,320 F $34,800 Fixed Expenses 34,100 100 U 34,000 0 34,000 Operating Income/(loss) $1,100 $2,020 U $3,120 $2,320 F $800 Which of the following statements would be a correct interpretation of the flexible budget variance for fixed expenses? A) decrease in price per unit B) increase in variable.
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  Learning Objective 21-1 1) Fixed costs per unit is inversely proportional to the volume of units produced. 2) Total variable costs change in direct proportion to changes in the volume of production. 3) Variable cost per unit is constant throughout various relevant ranges. 4) Fixed costs per unit decrease as production levels decrease. 5) If.
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11) Diemans Corp. has provided a part of its budget for the 2nd quarter: Apr May June Cash collections $40,000 $45,000 $52,000 Cash payments: Purchases of inventory 4,500 7,200 4,500 Operating expenses 7,900 5,600 9,000 Capital expenditures 0 20,000 4,600 The cash balance on April 1 is $12,000. Assume that there will be no financing transactions or costs during the quarter. Calculate the cash balance at the end of April. A) $50,000 B).
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31) LDR Manufacturing produces a pesticide chemical and uses process costing. There are three processing departments—Mixing, Refining, and Packaging. On January 1, 2012, the Refining Department had 2,000 gallons of partially processed product in production. During January, 32,000 gallons were transferred in from the Mixing Department and 29,000 gallons were.
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15) Young Company has provided the following information: Price per unit $40 Variable cost per unit 12 Fixed costs per month $10,000 What is the contribution margin ratio? A) 12% B) 60% C) 40% D) 70% 16) Garcia Company provides the following information about its product: Targeted operating income $50,000 Selling price per unit 6.00 Variable cost per unit 1.50 Total fixed costs 125,000 What is the contribution margin ratio? A) 75% B).
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21) Which of the following costs does not change in total despite changes in volume? A) Fixed cost B) Variable cost C) Mixed cost D) Total production cost 22) Costs that have both variable and fixed components are called: A) fixed cost. B) variable cost. C) mixed cost. D) contribution cost. 23) Which of the following costs changes in total.
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  Learning Objective 22-1 1) A budget is a financial plan that managers use to coordinate a business's activities. 2) Budgeting requires managers to decide upon the course of action and then to plan for the same. 3) Budgets provide a benchmark that motivates employees and helps managers evaluate performance. 4) A goal of the.
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6) If a business operates in an industry that experiences significant cost changes, it would be to its benefit to use the first-in, first-out (FIFO) method. 7) Significant changes in costs are not exposed in a first-in, first-out (FIFO) method. 8) Under the first-in, first-out (FIFO) method, prior period costs are not.
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21) Onyx Company has prepared a static budget at the beginning of the month. At the end of the month, following information has been retrieved from the records. Static budget: Sales volume: 2,000 units: Price: $50 per unit Variable expense: $12 per unit: Fixed expenses: $25,000 per month Operating income: $51,000 Actual results: Sales volume: 1,800.
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33) Michael Paints has two processes—Coloring Department and Mixing Department. Michael sold 450 gallons on account at $110 per gallon. The total cost of processing was $385,000 for 5,500 gallons of paint. Throughout the year, Michael used a predetermined overhead allocation rate to allocate $80,000 and $90,000 of indirect costs.
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8) Which of the following costs is considered a period cost under variable costing? A) direct labor B) direct materials C) fixed manufacturing overhead D) variable manufacturing overhead 9) Which of the following is true of absorption costing? A) the variable manufacturing costs are considered period costs B) the fixed manufacturing costs are considered period costs C) both.
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11) LDR Manufacturing produces a pesticide chemical and uses process costing. There are three processing departments—Mixing, Refining, and Packaging. On January 1, 2014, the first department, Mixing, had no beginning inventory. During January, 40,000 fl. oz. of chemicals were started in production. Of these, 32,000 fl. oz. were completed and.
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16) During September, the Filtering Department of Olive Company had beginning transferred in units of 500 units with costs of $125,000. During the month, 800 units were transferred in from the Milling Department with transferred in costs of $200,000. It had 400 units in ending Work-in-Process Inventory. What is the.
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31) The phone bill for an accounting firm consists of both fixed and variable costs. Refer to the 4-month data below and apply the high-low method to answer the question. Minutes Total Bill January 460 $3,000 February 200 $2,675 March 160 $2,625 April 300 $2,800 What is the variable cost per minute? A) $1.25 B) $0.67 C) $1.08 D) $0.58 32) The phone bill for an accounting firm consists of.
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11) The high-low method requires the identification of lowest and highest levels of total costs, not activity, over a period of time. 12) Which of the following is a variable cost? A) Property taxes B) Salary of plant manager C) Direct materials cost D) Straight-line depreciation expense 13) A 15% increase in production volume will result.
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11) A process costing system is generally used by companies that produce homogeneous products. 12) Under a process costing system, product costs are accumulated with respect to jobs completed. 13) Under a process costing system, costs of completed products are transferred to the Finished Goods Inventory at the end of the accounting.
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8) Components of the master budget are: the operating budget, the capital expenditures budget and the financial budget. 9) Preparation of the production budget is the first step in the preparation of operating budget. 10) The capital expenditures budget represents the company's plan for purchasing the long-term assets. 11) Which of the following.
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11) Kevin Company prepared the following static budget for the year 2015: Static Budget Units/volume 5,000 Per Unit Sales revenue $3.00 $15,000 Variable expenses $1.50 7,500 Contribution margin 7,500 Fixed expenses 4,000 Operating income/(loss) $3,500 If a flexible budget was prepared at a volume of 7,000, calculate the amount of operating income. A) $3,500 B) $10,500 C) $6,500 D) $4,000 12) Ibis Company prepared the following static budget for the month of.
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15) When the total fixed costs increases, the breakeven point: A) increases. B) decreases. C) decreases proportionately. D) remains the same. 16) When the total fixed costs decreases, the contribution margin per unit: A) increases. B) decreases. C) remains the same. D) decreases proportionately. 17) When the total fixed costs decreases, the breakeven point: A) increases. B) decreases. C) remains the same. D) increases.
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41) An unfavorable sales volume variance in operating income suggests a(n): A) increase in number of actual units sold. B) decrease in number of actual units sold when compared to the expected number of units sold. C) increase in variable expenses per unit. D) decrease in fixed costs. 42) Global Engineering's actual operating income for.
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3) A company with different segments using different software configurations can easily combine budget data of different segments to create the master budget. 4) Which of the following best describes the term sensitivity analysis? A) It is a testing technique to determine how results would differ if key assumptions are changed. B) It.
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17) Evans Company has estimated the following amounts for its next fiscal year: Total fixed expenses $832,500 Sale price per unit 40 Variable expenses per unit 25 If the company spends an additional $30,000 on advertising, sales volume would increase by 2,500 units. What effect will this decision have on the operating income of Evans? A) Operating income.
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12) Kapital Inc. has prepared the operating budget for the first quarter of 2015. They forecast sales of $50,000 in January, $60,000 in February, and $70,000 in March. Variable and fixed expenses are as follows: Variable: Power cost (40% of Sales) Miscellaneous expenses: (5% of Sales) Fixed: Salary expense: $8,000 per month Rent expense:.
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Learning Objective 22-4 1) The capital expenditures budget is prepared before the preparation of the cash budget. 2) For any organization, the primary source of cash is from its customers. 3) The cash budget is the prerequisite for the master budget. 4) The output of a cash budget is input for an operating budget. 5).
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8) Under process costing, depreciation on plant machinery is debited to the respective process's Work-in-Process Inventory. 9) When finished products are sold, Sales Revenue is debited and Cost of Goods Sold is credited. 10) The Work-in-Process Inventory account of a process is credited when overallocation of manufacturing overhead occurs in that process. 11).
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28) Iowa Inc. purchased raw materials for $6,000 and $25,000 for cash and on account, respectively. Provide the journal entry to record purchase of raw materials. Answer:          29) Nevada Manufacturing has two processing departments, Department I and Department II. During 2015, direct materials were assigned to the two production departments: $280,000.
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21) A3+ has prepared its 3rd quarter budget and provided the following data: Jul Aug Sep Cash collections $50,000 $40,000 $48,000 Cash payments: Purchases of inventory 31,000 22,000 18,000 Operating expenses 12,000 9,000 11,600 Capital expenditures 13,000 25,000 0 The cash balance on June 30 is projected to be $4,000. The company has to maintain a minimum cash balance of $5,000 and is authorized to borrow at the end of each.
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26) Bubbly Inc. produces and sells candies. Bubbly purchases raw materials, stores them in warehouse, and then runs them through two processes: production and packaging. During September, the production process incurred the following costs in processing 20,000 candies: Wages of workers operating production equipment $56,500 Manufacturing overhead allocated to the production department 8,500 Direct materials 135,000 Use the.
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7) Gamma Corp. is preparing their budget for the 1st quarter of 2015. The following data is provided: Inventory, Purchases and COGS Budget Jan Feb Mar Cost of goods sold (a) $30,000 $28,500 $22,500 Desired ending inventory(b) 10,700 9,500 9,800 Total inventory required 40,700 38,000 32,300 less Beginning inventory -11,000 -10,700 -9,500 Purchases 29,700 27,300 22,800 (a) COGS = 75% of sales (b) $5,000 + 20% of COGS for next month The amount of Merchandise Inventory to.
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21) The Assembly Department of Smart Computers incurred $250,000 in direct materials and $75,000 in conversion costs. The equivalent units of production for direct materials and conversion costs are 1,000 and 800, respectively. The cost per equivalent unit of production (EUP) for conversion costs is: A) $93.75 per EUP. B) $75.00 per.
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