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Study Resources (Accounting)

7.6   Questions 1) What is the sequence of steps in preparing the master budget? A) Output from the financial budget is used to prepare the operating budget. B) Output from the operating budget is used to prepare the financial budget. C) Output from the financial budget is used to prepare the income statement. D) Output.
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11) A small appliance manufacturer is deciding whether to accept or reject a special order for 1,750 appliances.  There is sufficient capacity available for the special order.  What is relevant information for the decision whether to accept or reject the special order? A) the cost of the parts for the 1,750.
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27) Colbert Company has the following information about its only product: Direct materials used$9,000 Direct labor17,000 Variable factory overhead13,000 Fixed factory overhead8,000 Variable selling and administrative expenses22,000 Fixed selling and administrative expenses11,000 Units produced and sold10,000 Selling price per unit$20 Required: A) Prepare an income statement using the contribution approach. B) Prepare an income statement using the absorption approach. .
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11) Farmers Insurance Company had a static budgeted operating income of $8.6 million.  Actual operating income was $6.4 million.  What is the static-budget variance of operating income? A) $2.2 million Favorable B) $2.2 million Unfavorable C) $6.4 million Favorable D) $8.6 million Unfavorable 12) For the current year, John Company's static budget sales were $225,000. .
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21) Match Company produces a part that is used in the manufacture of one of its products.  The costs associated with the production of 5,000 units of this part are as follows: Direct materials$108,000 Direct labor156,000 Variable factory overhead72,000 Fixed factory overhead168,000 Total costs$504,000 Of the fixed factory overhead costs, $72,000 are avoidable.  Today Company has.
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  6.1   Questions 1) The key to determining the financial difference between two alternative courses of action is to identify the ________. A) opportunity cost of one alternative B) joint cost of both alternatives C) differential costs and revenues D) joint cost of one alternative 2) The term opportunity cost applies to a resource that a company.
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11) With perfect competition, marginal revenue is the additional revenue resulting from the sale of an additional unit. 12) In perfect competition, the marginal revenue curve is a vertical line equal to the price per unit at all volumes of sales. 13) In perfect competition, the profit-maximizing volume is the quantity at.
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21) The operating budget is a better measure of a company's overall performance than the financial budget. 22) Activity-based budgets are an example of functional budgeting. 23) The master budgeting process summarizes the key decisions regarding all aspects of a company's value chain. 24) Financial planning models enable managers to get answers to.
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5.3   Questions 1) Under absorption costing, all ________ costs are product or inventoriable costs. A) direct and indirect manufacturing B) direct manufacturing C) indirect manufacturing D) selling and administrative 2) Under absorption costing, product costs include direct manufacturing costs and ________. A) variable selling and administrative expenses B) indirect manufacturing costs?variable costs only C) indirect manufacturing costs?fixed costs only D).
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11) Bird Company manufactures a part for its production cycle.  The costs per unit for 38,000 units of the part are as follows: Direct materials$3.00 Direct labor5.00 Variable factory overhead4.00 Fixed factory overhead4.00 Total costs$16.00 The fixed factory overhead costs are unavoidable.  Assume no other use for the facilities.  What is the highest price Bird Company.
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11) Tucson Corporation has a joint process that produces three products: X, Y and Z.   Each product may be sold at split-off or processed further and then sold.  Joint-processing costs for a year amount to $100,000.  Other data follows: Sales ValueSeparable ProcessingSales Value Product      at Split-Off     Costs after Split-Off     at Completion X$128,000$16,000$160,000 Y75,00026,00099,000 Z32,60020,00050,000 Processing Product X beyond the.
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11) Sue Company is considering the production of a new product.  Sue Company has the following data available: Expected product life4 years Expected sales(units) over product life2,000 Variable production costs$42 per unit Variable selling costs$16 per unit Annual fixed production costs$15,000 Annual fixed selling costs$5,000 Research and development costs$184,000 Selling price$200 per unit What is the expected profit of.
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11) Which of the following is NOT a component of the operating budget? A) capital budget B) purchases budget C) budgeted income statement D) operating expense budget 12) Which of the following is NOT a component of the financial budget? A) capital budget B) cash budget C) budgeted balance sheet D) budgeted income statement 13) Which of the following is.
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5.5   Questions 1) ________ is the additional cost resulting from producing and selling one additional unit. A) Marginal cost B) Common cost C) Opportunity cost D) Target cost 2) Price elasticity measures the ________. A) amount customers are willing to pay for a product or service B) effect of price changes on sales volume C) number of units a.
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21) When managers are making a decision regarding adding or dropping a product, ethical considerations may also be influential. 22) Freedom Company has three departments.  Data for the most recent year are presented below: Dept. X            Dept. Y            Dept. Z Sales$400$200$80 Variable expenses1285234 Unavoidable fixed expenses965212 Avoidable fixed expenses11610454 Required: A) Compute the operating income for Freedom Company. B) Compute the.
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6.4   Questions 1) ________ is the item that restricts or constrains the production or sale of a product. A) A limiting factor B) A scarce resource C) Floor space D) All of the above 2) When a company has scarce resources, managers should emphasize the product that has ________. A) highest contribution margin per unit B) highest selling.
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5.6   Questions 1) Predatory pricing occurs when a firm sets ________. A) prices below their competitors' prices B) prices so low that competitors are driven out of the market C) different prices for different customers for the same product or service D) uniform prices 2) Discriminatory pricing occurs when a firm sets ________. A) prices below their.
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7.5   Questions 1) Which of the following statements about long-range plans is FALSE? A) Long-range plans provide forecasted financial statements for five to ten year periods. B) Long-range plans guide day-to-day operations. C) Companies coordinate long-range plans with capital budgets. D) A decision made during long-range planning is the acquisition of a plant building. 2) Short-term.
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11) Stevens Company is considering the replacement of a machine that is presently used in production.  The following data are available: Old Machine             New Machine Original cost$60,000$35,000 Useful life in years105 Current age in years50 Book value$25,000- Disposal value now$8,000- Disposal value in 5 years00 Annual cash operating costs$10,000$4,000 Adding all five years together, the total relevant costs to consider.
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20) The following sales budget has been prepared: Month           Cash Sales               Credit Sales September$100,000$200,000 October125,000180,000 November207,000199,000 December67,000144,000 Collection of credit sales are 50% in the month of sale, 40% in the month following sale, and 10% two months following sale.  No uncollectible accounts are expected.  What is the expected balance of Accounts Receivable at October 31? A) $72,500 B) $110,000 C).
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50) Bates Corporation has the following sales budget: Month                   Budgeted Sales May$84,000 June100,000 July92,000 August116,000 September98,000 Credit sales are 80% of total sales.  Collections of credit sales are 80% in the month of sale, 15% in the month after sale and 5% are never collected. Required: Prepare a schedule of cash collections for June, July and August. 51) Dubuque Company has.
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6.5   Questions 1) ________ is(are) an example of joint products. A) Flour B) Chemicals C) Products of petroleum refining D) All of the above 2) Manufacturing costs incurred after the split-off point are known as ________ costs. A) joint B) product C) split-off D) separable 3) The ________ is the juncture in manufacturing where the joint products become individually identifiable. A) joint.
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5.2   Questions 1) ________ is (are) defined as any method used for making a choice. A) A decision model B) An implementation model C) Relevant costs D) The prediction model 2) If perfectly accurate and relevant information is not available for decision making, the accountant should consider using information that is ________. A) precise but irrelevant B) imprecise.
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7.4   Questions 1) You may have various forecasts of sales corresponding to different levels of advertising.  The ________ for the one level of advertising you decide to implement becomes the ________. A) sales forecast; sales budget B) sales budget; sales forecast C) sales forecast; sales goal D) sales goal; sales forecast 2) A sales forecast is.
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11) When absorption costing is used for the income statement, the difference between sales and ________ is gross margin. A) manufacturing cost of goods sold B) selling expenses C) selling and administrative expenses D) variable expenses 12) Wyoming Company has the following data about its only product: Direct materials used$270,000 Direct labor180,000 Indirect manufacturing?fixed130,000 Selling and administrative?fixed150,000 Indirect manufacturing?variable120,000 Selling and.
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11) Budgets that focus on the budgeted cost of activities required to produce and sell products are called ________. A) strategic budgets B) master budgets C) activity-based budgets D) rolling budgets 12) The activity-based budgeting system emphasizes ________. A) the resources needed by a company B) the preparation of budgets by function C) the attainment of long-range goals D).
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5.8   Questions 1) The product strategy in which companies first determine the price at which they can sell a new product and then design a product that can be produced at a low enough cost to provide an adequate profit margin is referred to as ________. A) full costing B) target costing C) predatory.
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40) ________ expense is driven by sales volume. A) Rent B) Insurance C) Depreciation D) Sales commission 41) The Happy Company is preparing a budgeted income statement.  The dollar amount for Sales comes from ________. A) the sales forecast B) the sales manager C) the sales budget D) the sales from competitors 42) The Unhappy Company is preparing a budgeted.
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  7.1   Questions 1) A major benefit of effective budgeting is that ________. A) it compels managers to think ahead B) it aids managers in communicating objectives to employees C) it provides benchmarks to evaluate subsequent performance D) all of the above 2) A(n) ________ starts with the assumption that current activities in a company will not.
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21) The split-off point is the juncture in manufacturing where the joint products become individually identifiable. 22) Examples of joint products include chemicals, lumber and flour. 23) The relevant information for a sell or process further decision for joint products includes the costs incurred before the split-off point. 24) It is profitable to.
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30) Pease Company's expected sales for April are $27,600.  Other information follows: Budgeted Operating Expenses             Amount Wages$2,000 Advertising1,680 Depreciation1,440 Rent2,560 Other expenses5% of sales What are the total expected operating expenses for April? A) $6,240 B) $7,620 C) $7,680 D) $9,060 31) Moran Company's expected sales for April are $27,600.  Other information follows: Budgeted Operating Expenses             Amount Wages$2,000 Advertising1,680 Depreciation1,440 Rent2,560 Other expenses5% of sales All cash expenses are paid as.
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11) When deciding whether to add or delete a department, managers should keep the department as long as ________ from the department exceeds ________. A) contribution margin; variable costs B) contribution margin; common costs C) contribution margin; avoidable fixed costs D) contribution margin; unavoidable fixed costs 12) In deciding whether to add or delete a.
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7.3   Questions 1) Budgeting can result in incentives to lie and cheat that undermine ________. A) the Securities and Exchange Commission B) a company's ethical standards C) a company's value chain D) standards of confidentiality promulgated by the Institute of Management Accountants 2) Managers may ________ their budgeted costs or ________ their budgeted revenues to create.
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5.7   Questions 1) The total of all manufacturing costs plus the total of all selling and administrative costs is equal to ________. A) marginal cost B) target cost C) full cost D) contribution cost 2) Which is NOT a popular markup formula for pricing? A) as a percentage of total manufacturing costs plus total selling and administrative.
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21) Geiger Company is considering the replacement of equipment used in operations.  The following data are available: Old Equipment           New Equipment Original cost$210,000$40,000 Useful life in years127 Current age in years50 Book value$65,000- Disposal value now$30,000- Disposal value in 7 years00 Annual cash operating costs$10,000$9,000 Required: A) Prepare a cost comparison for replacing the old equipment.  Use only relevant items and.
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7.2   Questions 1) Misalignment between the ________ stressed in budgets and ________ used to reward employees and managers can limit the advantages of budgeting. A) performance goals; participative goals B) performance goals; performance measures C) bonuses; sales goals D) bonuses; resource goals 2) One way to reduce negative attitudes of managers toward budgets is by ________. A).
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21) Oregon Company has the following data about its only product: Direct materials used$500,000 Direct labor180,000 Indirect manufacturing?fixed100,000 Selling and administrative?fixed150,000 Indirect manufacturing?variable120,000 Selling and administrative?variable60,000 Selling price(per unit)75 Units produced and sold20,000 Oregon Company uses the contribution approach.  What is the contribution margin? A) $450,000 B) $550,000 C) $640,000 D) $700,000 22) Mexico Company has the following data about its only product: Direct materials.
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6.7   Questions 1) When making operational decisions, managers should use ________ fixed costs instead of ________ fixed costs. A) total; per unit B) per unit; total C) separable; joint D) joint; separable 2) LL Company produces and sells a product that has variable costs of $9 per unit and fixed costs of $200,000 per year.  If.
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6.3   Questions 1) ________ costs will not continue if an ongoing operation is changed or deleted. A) Avoidable B) Common C) Differential D) Incremental 2) ________ costs are costs that continue even if an operation is halted. A) Differential B) Sunk C) Unavoidable D) Avoidable 3) Riverside Industries has three product lines: A, B and C.  The following information is available: Product.
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6.2   Questions 1) Company XYZ  is a small company with limited expertise with information technology.  Company XYZ has a contract with Company ZZ.  Company ZZ handles all of Company XYZ's information technology needs.  For Company XYZ, this is an example of ________. A) joint costs B) joint decision making C) outsourcing D) technology transfer 2) Which.
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11) Precise but irrelevant information may still be useful for decision making. 12) The degree to which information is relevant or precise often depends on the degree to which it is qualitative or quantitative. 13) Accountants are sometimes forced to trade relevant information for accurate information. 14) Imprecise but relevant information can be.
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7.8   Questions 1) A company is preparing the cash budget.  To find the ending cash balance for a month, they should take the beginning cash balance and add ________. A) net cash receipts and disbursements and cash increase or decrease from financing B) minimum cash balance and cash increase or decrease from financing C).
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11) Superbowl Corporation manufactures two products, Footballs and Helmets.  The following annual information was gathered: Footballs           Helmets Retail price per unit$54.00$33.00 Merchandise cost per unit43.0027.00 Total annual fixed costs are $25,000.  Assume Superbowl Corporation can sell either 8,000 footballs or 18,000 helmets at full capacity.  Which product should Superbowl Corporation sell to maximize profits? A) Footballs.
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8.1   Questions 1) A budget prepared for one expected level of activity is called a ________. A) flexible budget B) static budget C) variable budget D) rolling budget 2) A budget prepared for different levels of activity is called a ________. A) rolling budget B) operating budget C) flexible budget D) static budget 3) The static budget is based on the.
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5.4   Questions 1) Which item is usually NOT important to special order decisions? A) affect of special order on regular business B) whether idle capacity is available C) antitrust issues concerning price discrimination D) all are important 2) Missouri Company has a current production capacity level of 200,000 units per month.  At this level of production,.
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26) Leno Company has the following information: Cash Balance, June 30$80,000 Dividends paid in July55,000 Cash paid for operating expenses in July185,500 Depreciation expense in July12,000 Cash collections on sales in July510,000 Merchandise purchases paid in July180,000 Purchase equipment for cash in July94,500 Leno Company wants to maintain a minimum cash balance of $80,000. Required: Prepare a cash budget for.
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28) Georgia Company has been producing and selling 100,000 units per year.  They have excess capacity.  The following budget was prepared for the next year: Selling price per unit$12.50 Direct materials per unit5.00 Direct labor per unit3.00 Variable overhead per unit1.00 Variable selling and administrative per unit0.25 Total fixed overhead costs$80,000 Total fixed selling and administrative35,000 Required: A) Prepare.
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6.6   Questions 1) ________ old equipment is relevant in a decision to replace equipment. A) The cost of B) The book value of C) Accumulated depreciation on D) Future maintenance costs of 2) Book value is defined as ________. A) disposal value B) disposal value less accumulated depreciation C) cost less accumulated depreciation D) disposal value less cost 3) Which of.
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10) Diamond Company has the following sales budget for the last six months of 2010: July$100,000 August80,000 September110,000 October90,000 November100,000 December94,000 Historically, the cash collection of sales has been as follows: 65% of sales collected in month of sale 25% of sales collected in month following sale 8% of sales collected in second month following sale 2% of sales uncollectible What is.
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