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Study Resources (Accounting)

21) In absorption costing, all nonmanufacturing costs are subtracted from gross margin. 22) Direct costing is a perfect way to describe the variable-costing inventory method. 23) The distinction between absorption costing and variable costing is most important for which type of industry? A) manufacturing B) marketing C) retail D) service E) educational 24) When all fixed.
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6) Samson Equipment Ltd. is a company that manufactures an abdominal exerciser called The Ab Rippler. The following information is for three of the company's activities in 2012: Rate per Output unit/Batch Static  Actual ActivityActivity LevelCost DriverBudgetCost ManufacturingOutput unit Machine hours$0.90$1.05 InspectingBatchInspection hours$15.0012.50 PackagingBatchPackaging hours$5.50$5.25 The output measure is the number of units produced. Static  Actual BudgetAmount Number.
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11) A major reason for choosing ________ utilization over ________, is the difficulty in forecasting. A) theoretical capacity; master-budget B) practical capacity; master-budget C) normal capacity utilization; master-budget D) master-budget; theoretical capacity E) master-budget; normal capacity utilization 12) A manufacturing firm is able to produce 2,000 pairs of shoes per hour, at maximum efficiency. There are.
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21) What is the static-budget variance of operating income? A) $175,000 favourable B) $195,000 unfavourable C) $225,000 favourable D) $200,000 unfavourable E) $200,000 favourable 7.2   Develop flexible budgets, and calculate flexible-budget Level 2 and Level 3 variances for direct manufacturing costs. 1) Variances can be expected to vary within some normal limits,.
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11) For the dry ingredients what are the material mix and yield variances respectively? A) $270 favourable/$270 unfavourable B) $360 unfavourable/$360 unfavourable C) $360 favourable/$360 unfavourable D) $360 favourable/$360 favourable E) $270 unfavourable/$270 unfavourable 7.4   Undertake variance analysis in activity-based costing systems. 1) Flexible budget quantity computations should be focused at the appropriate level of the cost.
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11) General Insurance Company had a static budgeted operating income of $4.6 million; however, actual income was $3.0 million. What is the static budget variance of operating income? A) $1,000,000 favourable B) $1,000,000 unfavourable C) $1,600,000 favourable D) $3,000,000 favourable E) $1,600,000 unfavourable Use the information below to answer the following question(s). Ames Golf Company used the.
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16) Different management levels in Bates Inc. require varying degrees of managerial accounting information. Because of the need to comply with the managers' requests, four different variances for manufacturing overhead are computed each month. The information for the September overhead expenditures is as follows: Budgeted output units 3,200 units Budgeted fixed manufacturing.
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50) July's direct manufacturing labour efficiency variance is A) $750.00 unfavourable. B) $262.50 favourable. C) $487.50 favourable. D) $750.00 favourable. E) neither favourable or unfavourable. 51) Use the following data to prepare a flexible budget for possible sales/ production levels of 10,000; 11,000; and, 12,000 units. Show the contribution margin.
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62) The following data for the Lewgrow Garden Supplies Company pertains to the production of 2,500 garden spades during March. The spade consists of a wooden handle and a metal forged tool that comes in contact with the ground. Direct Materials (all materials purchased were used): Standard cost: $1.00 per handle.
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11) Fixed and variable cost variances can ________ be applied to activity-based costing systems. A) occasionally B) always C) seldom D) most times E) never 12) How can a standard costing system be useful in negotiating new sales? 13) Brown Dental Equipment uses a flexible budget for its indirect manufacturing costs. For 2012 the company anticipated that.
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  Use the information below to answer the following question(s). Beauty Supply Company manufactures shampoo. The supervisor has provided the following information and stated that standard costing is used for manufacturing, marketing, and administrative costs. January February Beginning inventory 0 --- Production 2,500 3,000 Sales 2,250 3,025 Other information: Selling price $20.00 Standard variable manufacturing cost/unit $8.00 Standard variable market/admin. cost/unit $4.00 Standard fixed manufacturing overhead cost/month $40,000 Standard fixed market/admin. cost/month.
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8.2   Establish variable overhead cost allocation rates; calculate and analyze flexible-budget variances. 1) Using a standard costing system makes it possible to use a simple recording system. 2) Variable overhead rate variance is the difference between the actual amount of variable overhead incurred and the budgeted amount allowed for the actual quantity.
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41) Gibson Homes has allocated budgeted construction overhead for August of $260,000 for variable costs and $440,000 for fixed costs. Actual costs for the month totalled $275,000 for variable and $445,000 for fixed. Allocated fixed overhead totalled $440,000. The company tracks each item in an overhead control account before allocations.
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9.3   Distinguish absorption from variable costing; prepare and explain the differences in operating income under each costing policy. 1) Full product costs under absorption costing include only inventoriable costs and upstream costs. 2) Variable costing includes all direct manufacturing costs and all manufacturing overhead costs. 3) Many companies using absorption costing do not.
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  9.1   Identify the factors important to choosing the denominator level used to calculate fixed overhead allocation rates. 1) Using either the theoretical capacity or practical capacity as the denominator-level concept will result in the same production-volume variance. 2) Determining the "right" level of capacity is one of the most strategic and difficult.
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16) Mayberry Company had the following journal entries recorded for the end of June. Unfortunately, the company's only accountant quit on July 10 and the president is at a loss as to the company's performance for the month of June. Materials Control150,000 Direct Materials Price Variance5,000 Accounts Payable Control145,000 Work-in-Process Control60,000 Direct Materials Efficiency Variance4,000 Materials.
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57) Glenn's Draperies manufactures curtains. A certain window requires the following: Direct materials standard is 10 square metres at $5 per metre Direct manufacturing labour standard is 5 hours at $10 During the second quarter the company made 1,500 curtains and used 14,000 square metres of fabric costing $68,600. Direct labour totaled.
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  Use the information below to answer the following question(s). Michelle Inc. uses a level 4-variance analysis of its manufacturing overhead costs, and has the following results for April. A.Budgeted direct labour-hours per unit is used to allocate variable manufacturing overhead. Fixed overhead is allocated on a per unit basis. B.Budgeted amounts for April.
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7) The direct manufacturing labour price variance is likely to be favourable if higher-skilled workers are put on a job. 8) If variance analysis is used for performance evaluation, managers are encouraged to meet targets using creativity and resourcefulness. 9) Which of the following is likely to be related to.
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11) Absorption-costing income statements cannot easily differentiate between variable and fixed costs. 12) The period-to-period change in operating income under variable costing is driven by unit level of sales, if the contribution margin is constant. 13) Variable costing will generally report less operating income than absorption costing when the inventory level decreases. 14).
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21) On the line in front of each variance, put the letter of the department that is most likely responsible for that variance. A letter may be used more than once or not at all. A.Production department B.Marketing department C.Purchasing department D.Personnel department ________Direct material price variance ________Direct labour price variance ________Direct labour efficiency variance ________Sales volume variance ________Direct.
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46) Mostly Miniatures has just implemented a new cost accounting system that provides two variances for fixed manufacturing overhead. While the company's managers are familiar with the concept of static-budget variance, they are unclear as to how to interpret the production-volume overhead variances. Currently the company has a production capacity.
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15) Casey Corporation produces a special line of basketball hoops in batches. To manufacture a batch of the basketball hoops Casey Corporation must setup the machines and moulds. Setup costs are batch-level costs because they are associated with batches rather than individual units of products. A separate Setup Department is.
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  Use the information below to answer the following question(s). Robb Industries Inc. (RII), developed standard costs for direct material and direct labour. In 2013, RII estimated the following standard costs for one of their major products, the 10-litre plastic container. Budgeted quantity Budgeted price Direct materials 0.10 kilograms $30 per kilogram Direct labour 0.05 hours $15 per hour During June,.
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21) Actual overhead is $700,000, while budgeted overhead is $598,000. What is the fixed overhead static-budget variance if 250,000 units are produced and 225,000 are budgeted? A) $80,000 favourable B) $100,000 unfavourable C) $100,000 favourable D) $102,000 unfavourable E) $102,000 favourable 22) In flexible budgets, costs that remain the same regardless of the output levels within.
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41) For Consumer Lumber what would be the total difference between operating incomes under absorption costing and variable costing? Beginning fixed manufacturing overhead in inventory $47,500 Fixed manufacturing overhead in production $37,500 Ending fixed manufacturing overhead in inventory $12,500 Beginning variable manufacturing overhead in inventory $5,000 Variable manufacturing overhead in production $25,000 Ending variable manufacturing overhead in inventory $7,500 A) $35,000 B) $25,000 C) $20,000 D).
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11) ________ utilization is an average that provides no meaningful feedback to the marketing manager for a particular year. A) Normal capacity B) Master-budget capacity C) Practical capacity D) Flexible budget capacity E) Planned unused capacity 12) The marketing manager's performance evaluation is most fair when based on a denominator level using A) practical capacity. B).
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  8.1   Assign MOH fixed costs, then calculate and analyze flexible-budget variances. 1) Capacity refers to the quantity of outputs that can be produced from long-term resources available to the company. 2) Capacity cost is a variable overhead cost. 3) Capacity decisions are considered operating decisions because they involve the long-term acquisition of assets.
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38) Zebra Jewellers manufactured 2,000 necklaces during March with a total overhead budget of $49,600. However, while manufacturing the 2,000th necklace the microcomputer that contained the month's cost information broke down. With the computer out of commission, the accountant has been unable to complete the variance analysis report. The missing.
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  7.1   Distinguish between a static budget and a flexible budget. 1) A variance is the difference between the actual result and a budgeted amount. 2) Variances and flexible budgets help managers gain insights into why actual results differ from planned performance. 3) A static budget is a budget that can be changed or.
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54) Whistler Table Company manufactures tables for schools. The current year operating budget is based on sales of 20,000 units at $100 per table. Operating income is anticipated to be $120,000. Budgeted variable costs are $64 per unit while fixed costs total $600,000. Actual income for the year was $354,000 on.
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41) When machine-hours are used as a cost allocation base, the item MOST likely to contribute to an unfavourable production-volume variance is A) a new competitor gaining market share. B) a new manufacturing machine costing considerably more than expected. C) an increase in the cost of energy. D) strengthened demand for.
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11) The fixed manufacturing overhead efficiency variance is used to analyze overhead costs. 12) An unfavourable fixed setup overhead rate variance could be due to higher lease costs of new setup equipment or higher salaries paid to engineers and supervisors. 13) A favourable production-volume variance arises when manufacturing capacity planned for is.
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30) What are the efficiency variances for direct manufacturing labour and direct marketing labour, respectively? A) $25,000 favourable; $18,400 favourable B) $23,750 favourable; $12,650 unfavourable C) $25,000 unfavourable; $18,400 unfavourable D) $23,750 unfavourable; $12,650 unfavourable E) $23,750 favourable; $12,650 favourable Use the information below to answer the following question(s). A company makes table lamps, for which the.
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17) A continuous improvement budgeted cost, in terms of variances and standard costs, A) is held constant regardless of external factors, thus enabling management to isolate internal variance factors. B) is successively reduced over succeeding time periods. C) ensures that managers will avoid unfavourable materials (or labour) variances that are due to external.
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8.3   Calculate ABC overhead variances. Answer the following question(s) using the information below. Munoz Inc. produces a special line of plastic toy racing cars in batches. To manufacture a batch of the cars Munoz Inc. must setup the machines and molds. Setup costs are batch-level costs because they are associated with.
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11) Two of the primary ways to manage variable-overhead costs include A) eliminating non-value-added costs and reducing the consumption of cost drivers. B) eliminating non-value-added costs and increasing fixed overhead expenses. C) reducing the consumption of cost drivers and increasing variable costs. D) using more energy-efficient equipment and planning for appropriate capacity levels. E) increasing.
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8.5   Analyze non-manufacturing variances. 1) Variance analysis of variable nonmanufacturing as well as variable manufacturing costs is used for pricing decisions and for decisions about which products to emphasize. 2) For planning and control purposes, actual energy usage per machine hour compared with budgeted energy usage per machine hour, is a valid.
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31) When machine-hours are used as an overhead cost-allocation base, the LEAST likely cause of a unfavourable variable overhead rate variance is A) excessive machine breakdowns. B) the production scheduler inefficiently scheduled jobs. C) poor coordination between sales and production resulting in displacement of normal batches by. rush orders and excessive.
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20) A packaging company produces cardboard boxes in an automated process. The required direct materials costs $0.30 per unit. Fixed manufacturing overhead costs are budgeted at $24,000 per month and are allocated based on units of production. The budgeted contribution margin per unit is $0.85, and administration fixed costs are.
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51) Which of the following criteria should be used to evaluate management according to critics of absorption costing? A) the extent to which inventory production matches demand B) the extent to which financial performance measures are used C) the extent to which operating income is increased in the short run D) the extent to.
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59) Vienna Chocolate Company produces fudge in large batches. One batch of fudge has the following standard costs and amounts: Standard quantity of sugar (kilograms) 100 Standard cost per kilogram of sugar $1.90 Standard direct labour hours per batch of fudge 2.0 Standard direct labour cost per hour $18.00 Switzer Chocolate Company produced 400 batches of fudge in the.
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31) The production-volume variance A) only pertains to variable overhead costs. B) only pertains to fixed overhead costs. C) is not applicable in analysis of inventory costs. D) pertains to both fixed and variable overhead costs. E) equals the rate variance minus the efficiency variance. 32) Capacity cost is A) only an inventoriable cost. B) only a.
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7.3   Distinguish between Levels 3 and 4 variance analyses for substitute inputs, and calculate Level 4 direct mix and yield variances. 1) The direct materials yield variance is the difference between: 1) the budgeted cost for the actual mix of the total quantity of direct materials used, and 2) the budgeted.
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10) Price variances are considered to be the difference between the actual price and the budgeted price multiplied by the actual quantity of input goods or services. 11) Rate variances are the difference between actual inputs used and budgeted inputs that should have been used, multiplied by the budgeted price. 12) The.
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9.2   Explain how the choice of denominator affects capacity management, costing, pricing, and performance evaluation. 1) The Canada Revenue Agency requires companies to use practical capacity as the denominator-level concept. 2) Theoretical capacity is rarely used to calculate the budgeted fixed manufacturing cost per case because it departs significantly from the real.
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21) If Ferg Company has a $12,000 unfavourable variable-overhead efficiency variance, which of the following statements would be true? A) Ferg would credit the Cost of Goods Sold account to write-off the variance. B) Ferg used the variable overhead components more effectively than expected. C) Ferg made efficient use of the cost driver. D).
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