Signin/Signup
Signin/Signup
Info
Warning
Danger

Accounting Answers, Flashcards, Essays and Textbook Solutions

The hard task of handling college homework is one of the most common challenges in the path of student success. No student ever says, "Hey I love homework! Give me more!" (However nerdy they are) Yet, it is an unavoidable part of your college experience.

Ask an Expert

Our Experts can answer your tough homework and study questions.

Answers in as fast as 15 minutes
Post a Question
Exercises 1.The following are some of the costs incurred by a consulting firm. Salary paid to consultants Fee for attending training seminar Salary to office administrator Corporate office rent Cost of general-purpose software Travel to client site Required: Classify each cost as a product cost (above the line for gross margin) or a.
9 Views
View Answer
Short Essays 1.Why might investors prefer an income statement in the gross margin format even though managers might prefer to organize the data in the contribution margin format? 2.Why is the contribution margin statement more useful for making short-term decisions than it is for long-term decisions? 3.How can plotting the data help improve.
6 Views
View Answer
56.Packaging materials is an example of: A.Fixed overhead. B.Direct material. C.Variable overhead. D.Period cost. E.Prime cost. 57.Prime costs include: A.Direct material, direct labor, and manufacturing overhead. B.Direct material and direct labor. C.Direct labor and manufacturing overhead. D.Direct material and manufacturing overhead. E.Variable overhead and fixed overhead. 58.In a typical production process, the physical flows for a manufacturer are: A.Work-in-Process Inventory→Material Inventory→Finished Goods Inventory→Cost.
12 Views
View Answer
MULTIPLE CHOICE 26.The costs associated with getting products and services ready for sale are known as: A.Sales costs. B.Conversion costs. C.Opportunity costs. D. Product costs. E.Costs of goods sold. 27.The costs of management salaries that are not a part of the costs of providing programs or services are referred to as: A.Period costs B.Product costs. C.Cost of goods sold. D.Conversion costs. E.None.
8 Views
View Answer
71.The controller of Nationwide Bicycle Parts is evaluating the sensitivity of changes in profit as it relates to proposed adjustments to sales volume and margin of safety.  If sales volume is estimated to decrease by 10%, the contribution margin ratio is 35%, and the margin of safety is 25%, by.
7 Views
View Answer
3.MegaLo Mart provides the following information relating to its most recent year of operations. MegaLo Mart charges off the entire cost of transportation in to the income statement for the period. Revenues $14,568,800 Beginning inventory, 1/1 245,600 Ending inventory, 12/31 260,400 Purchases 10,950,325 Transportation in 102,500 Sales commissions 437,064 Store rent 1,435,000 Store utilities 134,675 Other administration 879,345 Required: Complete a GAAP income statement to determine MegaLo Mart’s profit.
9 Views
View Answer
Short Essay 1Consider a consulting firm that completes large software projects that often take two or more years to complete. What is the nature of inventory for such a firm? How should it value this inventory? 2A restaurant converts inputs into substantially different outputs, a key characteristic of a manufacturing firm. Yet,.
8 Views
View Answer
Exercises 1.The following is the income statement from Ajax Corporation, a merchandising firm. Ajax Corporation Income Statement for the Most Recent Year Revenue$1,525,000 Cost of goods sold      900,000 Transport in        24,500 Gross margin$600,500 Administration costs220,000 Selling costs      240,000 Profit$140,500 You learn that $18,000 in transport in represents fixed costs, and Ajax pays its sales personsa commission of.
10 Views
View Answer
4.Mitchell’s Small Engine Repair Company’s accounting records show the following information relating to its inventories: Beginning Raw Materials Inventory $   45,000 Raw Materials Purchased during year 550,000 Ending Raw Materials Inventory 42,000 Beginning Work In Process Inventory 95,000 Manufacturing costs charged to operations during year 900,000 Ending Work In Process Inventory 125,000 Beginning Finished Goods Inventory 90,000 Ending Finished Goods Inventory 65,000 Required: a. What was the cost.
7 Views
View Answer
5.The following costs relate to a manufacturing organization: Sales commissions Sales manager salary Distribution costs    Production supervisor Factory rent Corporate office expenses Product components Supplies used in manufacturing Direct manufacturing labor      Plant manager salary Required: Classify the costs as product costs or period costs. Also classify the costs as variable or fixed with respect to the.
10 Views
View Answer
Multiple Choice 28.In the short run: A.Most fixed costs are controllable B.Most fixed costs are not controllable C.Most variable costs are not controllable D.Both fixed costs and variable costs are controllable E.Neither fixed costs nor variable costs are controllable 29.A useful step for estimating controllable costs is: A.Separating product costs from administrative costs. B.Separating contribution costs from product costs. C.Separating.
5 Views
View Answer
Exercises Sarah is not currently using the fitness loft, a special area of the gym that houses state-of-the-art cardio and strength training equipment.  Based on a visit as a friend’s guest, Sarah has decided to enroll in the loft. She is deciding between buying a pass to the fitness loft (cost:.
7 Views
View Answer
5Should a retail firm include the cost of receiving and stocking goods when computing inventory values? 6Many merchandising firms charge the entire amount of transportation costs to cost of goods sold. Other merchandising firms perform a year-end allocation to distribute the cost between the inventory and cost of goods sold. How.
8 Views
View Answer
11.In contrast to the high-low method, how many observations does regression analysis use to estimate fixed and variable costs? 12.What are two statistics that help us evaluate the results from regression analysis? 13.What is the relevant range? 14.What is a segment margin? How does it differ from a contribution margin? 15.List three possible ways.
7 Views
View Answer
The Greek Corporation makes two products: Kappa and Gamma. Although each product uses a different type of raw material, the firm produces both products in its Eastern plant. The products make use of the same equipment as well. Greek Corporation produces Kappa during the day shift and Gamma during the night.
11 Views
View Answer
6.What is the key difference between a long-term and a short-term decision? 7.Why is it not possible to sharply distinguish between short- and long-term decisions?   8.What is the central principle underlying the estimation of revenues and costs? 9.Are revenues usually variable, mixed, or fixed?  Why?   10.What are variable, fixed, and mixed costs? .
7 Views
View Answer
38.The contribution margin statement: A.Focuses on revenues and fixed costs which can be controlled in the short-term. B.Focuses on revenues and variable costs which can be controlled in the short-term. C.Focuses on net income and fixed costs which can be controlled in the short-term. D.Focuses on net income and variable costs which can be.
7 Views
View Answer
True/False 1.The contribution margin statement groups costs by their function. 2.The contribution margin is the amount that contributes toward recovering fixed costs and earning a profit. 3.The contribution margin is well suited to evaluate short-term decision options. 4.Most firms rely on future data to estimate their cost structure. 5.Capacity costs are controllable in the short.
11 Views
View Answer
4.Cindy’s Boutique is trying to derive a cost equation that predicts its monthly inventory-handling costs.  Cindy estimates the following two equations using regression analysis: Equation #1 Inventory-handling costs per month = $15,000 + ($0.02 x value of inventory handled) R-square = 27.3% Both coefficients have p-values of 0.05 or lower Equation #2: Inventory handling costs per.
6 Views
View Answer
51.If Company A is heavily labor-intensive and Company B is heavily capital-intensive which of the following is most likely to be true relative to the other company? A.Company A’s contribution margin per unit will be higher B.Company B’s contribution margin per unit will be higher C.Company A’s break-even point will be higher D.Company B’s.
7 Views
View Answer
48.The high-low method provides: A.An exact value for variable and fixed costs. B.An estimate of both the variable and the fixed costs. C.An exact value for the fixed costs and an estimate of the variable costs. D.An estimate of the fixed costs and an exact value of the variable costs. 49.An advantage of estimating variable.
7 Views
View Answer
11.In addition to planning profits, the CVP relation helps organizations make short-term decisions. 12.When all other factors remain the same, if a firm decides to decrease the selling price of its product, its unit contribution margin also decreases. 13.If a firm decides to decrease the selling price of its product, the only.
12 Views
View Answer
6.What is the inventory equation? 7.What is the key characteristic of a manufacturing firm? 8.Why do we frequently refer to materials and labor costs as being both direct and variable? 9.What is the difference between variable manufacturing overhead and fixed manufacturing overhead? 10.Define the terms prime costs and conversion costs. 11.What are the four elements.
8 Views
View Answer
MULTIPLE CHOICE 31.Which of the following equations highlights the cost-volume-profit relation? A.Profit before taxes = [(Price x Unit variable cost) ÷ Sales volume in units] – Fixed costs. B.Profit before taxes = [(Price – Unit fixed cost) x Sales volume in units] – Variable costs. C.Profit before taxes = [(Price – Total variable cost).
7 Views
View Answer
Problems 1.Jerry’s Manufacturing Company provides you with the following income statement. Jerry’s Manufacturing Company Income Statement for Current Year Revenue $250,000 Cost of Goods Sold   125,000 Gross Margin $125,000 Administrative Costs     45,000 Selling Costs     55,000 Profit $  25,000 Jerry’s provides the following information for the current year: Fixed manufacturing overhead costs $22,000 Variable manufacturing overhead costs $-0- Variable selling costs 3% of revenue Fixed administrative costs $45,000 Required: Prepare an income statement in.
7 Views
View Answer
6.What are the three techniques used to estimate costs? 7.What three steps are followed under the account classification method to estimate the change in variable costs? 8.List one advantage and one disadvantage of the account classification method. 9.Which two observations are used by the high low method? 10.List one advantage and one disadvantage of.
11 Views
View Answer
46.Gate Grocery’s most popular candy barscost $0.50 each and sell for $0.75. Management determined that it had purchased 3,000 candy bars in February. It began February with 200 bars and had 150 remaining at the end of February. How much is cost of goods sold for February? A.$1,475 B.$2,287.50 C.$3,050 D.$1,525 47.Prime costs are: A.The sum.
4 Views
View Answer
58.Which of the following is correct with regard to using regression analysis to estimate fixed and variable costs? A.Using the p-value of .05 versus .01 indicates a much better confidence in an estimate. B.Regression makes a number of assumptions about the data used in its analysis. C.Regression is usually limited to one or.
9 Views
View Answer
11.The high-low method uses two observations of aggregate cost data to estimate total fixed costs and the unit variable cost. 12.Using the high-low method, managers use the two observations pertaining to the highest and lowest activity levels because these values are most likely to define any abnormal costs. 13.An advantage of using.
10 Views
View Answer
21.The “segmented” contribution margin statement is one way firms modify the contribution margin statement to reflect GAAP. 22.Contribution margin equals revenues less variable costs. 23.When constructing segmented statements, we use the term segment in a narrow sense. 24.Fixed costs are relevant for decisions involving increasing or decreasing production volumes. 25.Common fixed costs do not.
8 Views
View Answer
36.The income statement for a service firm distinguishes between which of the following costs? A.Cost of goods manufactured and conversion costs. B.Costs of providing services and product costs. C.Cost of providing service and selling and administrative costs. D.Selling and administrative costs and period costs. E.None of the above. 37.A GAAP income statement combines which of the.
8 Views
View Answer
11.Unlike service firms, merchandising firms maintain an inventory of goods that they buy and sell. 12.For financial reporting purposes, merchandising firms expense the cost of items when they purchase them. 13.As with service firms, period costs appear below the line for gross margin. 14.The cost of purchasing goods from suppliers does not include.
10 Views
View Answer
66.The Clarke Company provided the following information for the month of December: Beginning work-in-process$12,000 Ending work-in-process$9,000 Direct labor/materials used$14,000 Manufacturing overhead$7,000 The company’s cost of goods manufactured for December is: A.$42,000 B.$24,000 C.$33,000 D.$28,000 67.The Merchant Tire Company provided the following information for the month of February: Cost of goods manufactured$147,000 Beginning finished goods inventory$23,000 Cost of goods sold$129,000 The company’s balance in their.
7 Views
View Answer
61.Which of the following statements is correct about the relationship of the CVP factors? A.Variable costs will always be more than fixed costs. B.Demand will always be weaker at lower prices. C.Sales volume contributes to more profit at higher volumes. D.Sales price at lower volumes always contributes to higher contribution margins. 62.Which of the following.
10 Views
View Answer
TRUE/FALSE 1.Unit contribution margin equals price less unit variable cost. 2.Contribution margin is not an appropriate measure for evaluating short-term decisions. 3.Both revenues and variable costs are proportional to sales volume. 4.For every unit sold, profit increases by an amount equal to the unit gross margin. 5.Over the short-term, fixed costs do not change with.
16 Views
View Answer
9As you know, direct materials, direct labor, and manufacturing overhead are the three major components of manufacturing costs. Expressing each part as a percentage of the total manufacturing cost, how do you think the percentages of these costs have changed over the last 50 years? 10Give an example of a manufacturing.
9 Views
View Answer
TRUE/FALSE 1.To comply with GAAP, an income statement must separate direct and indirect costs. 2.Product costs always appear “below the line” for gross margin. 3.Period costs are all costs that are not product costs. 4.Period costs are added to gross margin to arrive at profit before taxes. 5.GAAP provides considerable flexibility regarding reporting formats. 6.Service firms.
11 Views
View Answer
68.Which of the following statements is not true? A.The high-low method is a non-statistical method; regression analysis is a statistical method. B.The high-low method and regression analysis use only two observations to estimate fixed and variable costs. C.The mechanics of regression analysis are complex; the mechanics of the high-low method are simple. D.Both A.
9 Views
View Answer
21.When a firm makes multiple products or many versions of the same product, it is not advisable to perform CVP analysis on a product-by-product basis. 22.CVP analysis with many products is essentially the same as for a single product. 23.There are two equivalent methods for performing multi-product CVP analysis:  the contribution margin.
12 Views
View Answer
Short Essay 1.We know that the controllable benefits less the controllable costs of an option equal its value. Can focusing only on relevant costs and benefits ever give us value? 2.Many decisions often involve qualitative factors.  How can you reconcile this fact with the concept of relevant costs? 3.Every relevant cost is controllable..
8 Views
View Answer
41.If selling price is $25, unit contribution margin equals $15 and fixed costs are $12,000, then breakeven volume is: A.300 units. B.1,200 units. C.800 units. D.2,500 units. E.1,500 units. 42.If selling price is $25, unit contribution margin equals $15 and fixed costs are $12,000, then breakeven revenues total: A.$27,000 B.$22,000 C.$30,000 D.$20,000 E.$7,500 43.Palmer’s Custom Saddlery reported sales of $700,000 for the.
8 Views
View Answer
Short Answer 1.Why is the traditional income statement, used for financial reporting, often not helpful for decision making? 2.What is the contribution margin? 3.How does the format for the contribution margin statement differ from the format for the GAAP-based income statement? 4.Does the contribution margin change proportionally with activity volume? 5.How does the organization of.
6 Views
View Answer

Can't find what you're looking for ?

Ask our exprts a study questions, on us.
Get free Homework Help*