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Study Resources (Accounting)

61) AAA Company is preparing its 3rd quarter budget and provides 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 0 19,000 0 Cash balance at June 30 is projected to be $4,000.  The company is required to maintain.
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21) Henderson Industrial Products uses a centralized service department for procurement of raw materials, servicing all three of its divisions-Construction, Manufacturing, and Military.  The Construction Division has been allocated a total of $192,000 of costs from the procurement department.  Of that amount, 75% is considered traceable to the three product.
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31) Purchases for May were $100,000, while expected purchases for June and July are $110,000 and $125,000, respectively.  All purchases are paid 25% in the month of purchase and 75% the following month.  At what amount are June payments for purchases budgeted? A) $102,500 B) $107,500 C) $110,000 D) $121,250 32) Hatfield Company has the.
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21) Compound interest used in discounted cash flow calculations assumes that companies will reinvest future cash flows when they are received. 22) Which of the following is TRUE of discounted cash flow methods like NPV and IRR? A) They use simple interest calculations. B) They assume that cash flows will be reinvested when.
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21) Dong Fang Company fabricates inexpensive automobiles for sale to 3rd world countries.  Each auto includes one wiring harness, which is currently made in-house.  Details of the harness fabrication are as follows: lume 900 Units per month Variable cost per unit $8.00 Per unit Fixed costs $14,000 Per month A factory in Indonesia has offered to.
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31) Clay Corporation manufactures two styles of lamps-a Bedford Lamp and a Lowell Lamp.  The following per unit data are available: Bedford Lamp Lowell Lamp Sale price $25 $35 Variable costs $17 $23 Machine hours required for 1 lamp 2 4 Total fixed costs are $30,000, and Clay can sell a maximum of 10,000 units of each style of lamp annually.  Machine.
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58) Craig Manufacturing Company's budgeted income statement includes the following data: Data extracted from budgeted income statement Mar Apr May Jun Sales $120,000 $90,000 $95,000 $100,000 Commission expense - 15% of sales 18,000 13,500 14,250 15,000 Salary exp 30,000 30,000 30,000 30,000 Miscellaneous expense — 4% of sales 4,800 3,600 3,800 4,000 Rent expense 3,600 3,600 3,600 3,600 Utility expense 1,900 1,900.
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11) Origami Company is a price-taker and uses target pricing.  Please refer to the following information: Production volume 500,000 Units per year Market price $24.00 Per unit Desired operating profit 12% Of total assets Total assets $12,500,000 How much is the target full cost in total for the year? A) $1,440,000 B) $10,500,000 C) $12,000,000 D) $1,500,000 12) Origami Company is a price-taker.
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Learning Objective 21-3 1) If Teddy Godfried invests $400,000 today at a rate of 9% compounding yearly, his investment will grow to $1,000,000 in 10 years. Future Value of $1 4% 5% 6% 7% 8% 9% 1 1.040 1.050 1.060 1.070 1.080 1.090 2 1.082 1.103 1.124 1.145 1.166 1.188 3 1.125 1.158 1.191 1.225 1.260 1.295 4 1.170 1.216 1.262 1.311 1.360 1.412 5 1.217 1.276 1.338 1.403 1.469 1.539 6 1.265 1.340 1.419 1.501 1.587 1.677 7 1.316 1.407 1.504 1.606 1.714 1.828 8 1.369 1.477 1.594 1.718 1.851 1.993 9 1.423 1.551 1.689 1.838 1.999 2.172 10 1.480 1.629 1.791 1.967 2.159 2.367 2) Simms Manufacturing is considering two alternative investment proposals with the following data: Proposal X Proposal Y Investment $620,000 $400,000 Useful life 8 years 8 years Estimated annual net cash inflows.
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11) In making a short-term decision, which of the following is MOST important? A) Separate variable costs from fixed costs B) Focus on total costs C) Use a conventional absorption costing approach D) Focus on the bottom line net income 12) Which of the following describes a sunk cost? A) One that is relevant to a.
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41) Please review the information on 4 potential investments: Project A Project B Project C Project D Initial investment $200,000 $250,000 $300,000 $90,000 PV of cash inflows $285,000 $295,000 $420,000 $94,000 Payback period (years) 7.2 6.0 9.5 2.0 NPV of project $85,000 $45,000 $120,000 $4,000 Profitability index 1.43 1.18 1.40 1.04 Based on the above data, which project carries the.
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41) At June 30, 2012, Alpha Company's cash balance is $4,000.  Alpha is now preparing their cash budget for the third quarter of 2012.  The following data is provided: Cash budget Jul Aug Sep Beginning cash balance $4,000 $8,000 $6,958 Cash collections 50,000 40,000 48,000 Cash available 54,000 48,000 54,958 Cash payments:    Purchases of inventory 31,000 22,000 18,000   .
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Learning Objective 20-3 1) A company has two different products that sell to separate markets.  Financial data are as follows: Product A Product B Total Revenue $12,000 $8,000 $20,000 Variable cost ($7,500) ($8,100) ($15,600) Fixed cost (allocated) ($3,000) ($1,000) ($4,000) Operating income $1,500 ($1,100) $400 Assume that fixed costs are all unavoidable and that dropping one product would not impact sales of the other. Because.
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21) Bartholomew Manufacturing Company is preparing the operating budget for the first quarter of 2012. They forecast sales of $50,000 in January, $60,000 in February, and $70,000 in March.  Cost of goods sold is budgeted at 40% of Sales. Variable and fixed expenses are as follows: Variable:Miscellaneous expenses : 20% of.
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11) Craig Manufacturing Company's budgeted income statement includes the following data: Data extracted from budgeted income statement Mar Apr May Jun Sales $120,000 $90,000 $95,000 $100,000 Commission exp. - 15% of sales 18,000 13,500 14,250 15,000 Salary exp 30,000 30,000 30,000 30,000 Miscellaneous expense — 4% of sales 4,800 3,600 3,800 4,000 Rent expense 3,600 3,600 3,600 3,600 Utility expense 1,900 1,900.
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31) Seven Seas Company manufactures 100 luxury yachts per month.  Included in each yacht is a compact media center.  Seven Seas manufactures the media center in-house, but is considering the possibility of outsourcing that function.  At present, the variable cost per unit is $275, and the fixed costs are $39,000.
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31) Simms Manufacturing is considering two alternative investment proposals with the following data: Proposal X Proposal Y Investment $620,000 $400,000 Useful life 8 years 8 years Estimated annual net cash inflows for 8 years $130,000 $80,000 Residual value $0 $0 Depreciation method Straight-line Straight-line Discount rate 9% 10% What is the net present value of Proposal X, taking into consideration the initial outlay and the subsequent cash inflows? Present Value of an Annuity.
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Learning Objective 19-6 1) When a company produces more units than it sells, absorption costing income will exceed variable costing income. 2) The only difference between absorption costing and variable costing is the way that fixed manufacturing overhead costs are treated. 3) Which of the following accurately describes absorption costing? A) Only variable.
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11) Which of the following BEST describes a post-audit? A) An audit of an operating unit of a company B) An audit performed after financial statements have been issued C) An analysis of an investment's cash flows prior to committing to the initial investment D) An analysis of an investment that is made after.
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  Learning Objective 22-1 1) Budgeting is a technique that is used to plan for future cash inflows and outflows. 2) A goal of the budgeting process is to assist managers with coordinating and implementing the business plan. 3) Budgets provide benchmarks that help managers evaluate performance. 4) A goal of the budgeting process.
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Learning Objective 20-4 1) Dong Fang Company fabricates inexpensive automobiles for sale to 3rd world countries.  Each auto includes one wiring harness, which is currently made in-house.  Details of the harness fabrication are as follows:              Volume 900 Units per month Variable cost per unit $8.00 Per unit Fixed costs $14,000 Per month A factory in.
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Learning Objective 22-3 1) Budgeted operating expenses for the current year include the expiration of insurance that was paid for in a previous period. 2) A department store has budgeted cost of sales of $36,000 for its men's suits in March.  Management also wants to have $15,000 of men's suits in.
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Learning Objective 22-2 1) The capital expenditure budget is part of the operating budget. 2) The master budget includes 3 components-the operating budget, the capital expenditures budget and the financial budget. 3) The production budget must be prepared before any other component of the operating budget. 4) The capital expenditure budget stands alone.
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21) Billy Pierce invests $8,000 at the end of each year for 5 years at 6%.  What is the future value of the investment? Future Value of an Annuity of $1 4% 5% 6% 7% 8% 9% 1 1.000 1.000 1.000 1.000 1.000 1.000 2 2.040 2.050 2.060 2.070 2.080 2.090 3 3.122 3.153 3.184 3.215 3.246 3.278 4 4.246 4.310 4.375 4.440 4.506 4.573 5 5.416 5.526 5.637 5.751 5.867 5.985 6 6.633 6.802 6.975 7.153 7.336 7.523 7 7.898 8.142 8.394 8.654 8.923 9.200 8 9.214 9.549 9.897 10.26 10.64 11.03 9 10.58 11.03 11.49 11.98 12.49 13.02 10 12.01 12.58 13.18 13.82 14.49 15.19 A) $45,096 B) $51,008 C) $49,599 D) $47,523 22) If Billy Pierce invests $1,000 at the end of each year for 8 years, and he.
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41) Grove Company makes special equipment used in cell towers.  Each unit sells for $400.  Grove uses just-in-time inventory procedures: they produce and sell 10,000 units per year.  They have provided the following income statement data: An African cell phone company has offered a one-time deal to buy 200 units.
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41) In making product mix decisions under constraining factors, which of the following is the key to choosing the product type to be maximized? A) Revenue per unit B) Contribution margin per unit of product C) Contribution margin per unit of the constraining factor D) Gross profit per unit using absorption costing 42) Custom Furniture.
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21) Landmark Company is considering an investment in new equipment costing $360,000. The equipment will be depreciated on a straight-line basis over a five-year life and is expected to generate net cash inflows of $70,000 the first year, $80,000 the second year, and $120,000 every year thereafter until the fifth.
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11) The payback method and the rate of return method are powerful, comprehensive evaluation tools, and would normally be sufficient to make a final investment decision. 12) Which of the following methods ignores the time value of money? A) Payback B) Internal rate of return C) Return on assets D) Net present value 13) Which capital.
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51) Pentangle Company 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 Cash collections 49,400 51,000 44,600 Cash available 81,400 55,400 51,500 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 Total cash payments $77,000 $48,500.
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11) If an operating division or a product line of a company was eliminated, which of the following statements would be TRUE? A) Traceable fixed costs would be eliminated. B) Untraceable fixed costs would be eliminated. C) Variable costs of the product would continue, but be reallocated elsewhere. D) Traceable fixed costs would continue,.
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Learning Objective 20-2 1) Special sales orders increase operating income if the revenue from the order exceeds the incremental variable and fixed costs incurred to fill the order. 2) In deciding whether to accept a special sales order, management should consider the quantitative data ONLY and disregard qualitative factors. 3) Fixed costs.
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11) Which of the following describes the operating expenses budget? A) It aids in planning to ensure the company has adequate inventory on hand. B) It captures the variable and fixed expenses of the business. C) It depicts the breakdown of sales based on terms of collection. D) It helps in planning to ensure.
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Learning Objective 22-4 1) The budgeted cash collections for the current month typically take into consideration collections pertaining to credit sales of prior months. 2) The cash budget can be prepared before the sales budget. 3) The cash budget may be used to determine whether a company will need additional financing for.
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21) Easy Cook Company manufactures two products: toaster ovens and bread machines.  The following data are available: Toaster Ovens Bread Machines Sale price $60 $135 Variable costs $38 $62 Easy Cook can manufacture five toaster ovens per machine hour and three bread machines per machine hour. Easy Cook's production capacity is 1,500 machine hours per month.  What is the.
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21) Felton Manufacturing provides the following data excerpted from its 3rd quarter budget: 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 0 25,000 0 The cash balance at June 30 is projected to be $4,000.  Based on the above data, how.
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11) If $5,000 is invested in an account with 7% interest compounding yearly, what will the balance of the account be after 3 years?  Please refer to the following Future Value table: Future Value of $1 4% 5% 6% 7% 1 1.040 1.050 1.060 1.070 2 1.082 1.103 1.124 1.145 3 1.125 1.158 1.191 1.225 4 1.170 1.216 1.262 1.311 5 1.217 1.276 1.338 1.403 6 1.265 1.340 1.419 1.50 A) $6,180 B) $6,211 C) $5,867 D) $6,125 12) If $1,000 is invested in an account with 9% interest compounding.
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Learning Objective 22-6 1) One of the key functions of responsibility accounting is to evaluate the performance of company managers and the units they manage. 2) Henderson Industrial Products uses a centralized service department for procurement of raw materials, servicing all three of its divisions?Construction, Manufacturing, and Military.  The total monthly.
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