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24 - 1 Budgetary Control and Responsibility Accounting Ex. 190 Brick Company reported the following: Beginning of year operating assets$4,400,000 End of year operating assets4,200,000 Contribution margin2,000,000 Sales revenue10,000,000 Controllable fixed costs1,286,000 Its required return is 10%. Instructions Compute the company’s ROI. Ex. 191 Cisadhouse Manufacturing Company has two investment centers and has developed the following information: Department ADepartment B Departmental controllable margin$130,000? Average operating assets?$400,000 Sales.
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25 - 1 Standard Costs and Balanced Scorecard 149.All of the following are advantages of standard costs except they a.facilitate management planning. b.are useful in setting selling prices. c.simplify costing in inventories. d.increase net income. 150.Standards based on the optimum level of performance under perfect operating conditions are a.attainable standards. b.ideal standards. c.normal standards. d.practical standards. 151.The direct materials price standard should.
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25 - 1 Standard Costs and Balanced Scorecard TRUE-FALSE STATEMENTS 1.Inventories cannot be valued at standard cost in financial statements. 2.Standard cost is the industry average cost for a particular item. 3.A standard is a unit amount, whereas a budget is a total amount. 4.Standard costs may be incorporated into the accounts in the general ledger. 5.An.
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24 - 1 Budgetary Control and Responsibility Accounting COMPLETION STATEMENTS               195.The use of budgets in controlling operations is known as ________________.               196.A major aspect of budgeting control is the use of budget reports that compare _____________________ with _______________________.               197.In analyzing differences from planned objectives, management may take ___________________, or it could decide.
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25 - 1 Standard Costs and Balanced Scorecard BE 164 In October, Fink Inc. reports 42,000 actual direct labor hours, and it incurs $196,000 of manufacturing overhead costs. Standard hours allowed for the work done is 40,000 hours. Fink’s predetermined overhead rate is $5.00 per direct labor hour. Instructions Compute the total manufacturing overhead variance. aBE.
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25 - 1 Standard Costs and Balanced Scorecard Ex. 186 The standard cost of Product 254 manufactured by Essex Company includes 2 pounds of direct materials at $4.00 per pound. During September, 40,000 pounds of direct materials are purchased at a cost of $3.85 per pound, and all of the direct materials are.
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25 - 1 Standard Costs and Balanced Scorecard 59.The cost of freight-in a.is to be included in the standard cost of direct materials. b.is considered a selling expense. c.should have a separate standard apart from direct materials. d.should not be included in a standard cost system. 60.The direct materials quantity standard would not be expressed in a.pounds. b.barrels. c.dollars. d.board feet. 61.The.
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24 - 1 Budgetary Control and Responsibility Accounting Ex. 183 Data concerning manufacturing overhead for Analina Industries are presented below. The Mixing Department is a cost center. An analysis of the overhead costs reveals that all variable costs are controllable by the manager of the Mixing Department and that 50% of supervisory costs are.
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25 - 1 Standard Costs and Balanced Scorecard Ex. 187 Giraro Company's standard labor cost of producing one unit of product is 2 hours at the rate of $14.00 per hour. During February, 52,000 hours of labor are incurred at a cost of $13.80 per hour to produce 24,500 units of product. Instructions (a)Compute the.
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25 - 1 Standard Costs and Balanced Scorecard 99.Kitzman Inc. produces a product requiring 3 direct labor hours at $15 per hour. During January, 2,000 products are produced using 6,300 direct labor hours. Kitzman actual payroll during January was $98,280.  What is the labor quantity variance? a.$4,680 U b.$4,500 U c.$4,680 F d.$4,500 F 100.A company developed.
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25 - 1 Standard Costs and Balanced Scorecard 119.Toolwork’s has a standard of 2 hours of labor per unit, at $18 per hour. In producing 2,000 units, Toolwork’s used 3,850 hours of labor at a total cost of $70,455. Toolswork’s labor quantity variance is a.$1,155 U. b.$1,545 F. c.$2,895 F. d.$2,700 F. 120.Which one of the following.
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25 - 1 Standard Costs and Balanced Scorecard 69.If actual costs are greater than standard costs, there is a(n) a.normal variance. b.unfavorable variance. c.favorable variance. d.error in the accounting system. 70.A total materials variance is analyzed in terms of a.price and quantity variances. b.buy and sell variances. c.quantity and quality variances. d.tight and loose variances. 71.A company developed the following per-unit standards.
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24 - 1 Budgetary Control and Responsibility Accounting Ex. 173 Whitman Company has prepared the following monthly flexible manufacturing overhead budget for its Mixing Department: WALDMAN COMPANY Monthly Flexible Manufacturing Overhead Budget Mixing Department Activity level Direct labor hours6,0008,000 Variable costs Indirect materials$  3,000$  4,000 Indirect labor30,00040,000 Factory supplies    12,000  16,000 Total variable  45,000  60,000 Fixed costs Depreciation40,00040,000 Supervision20,00020,000  Property taxes  30,000  30,000 Total fixed  90,000  90,000 Total costs$135,000$150,000 Instructions Prepare.
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25 - 1 Standard Costs and Balanced Scorecard 31.In concept, standards and budgets are essentially the same. 32.Standards may be useful in setting selling prices for finished goods. 33.The materials price standard is based on the purchasing department's best estimate of the cost of raw materials. 34.The materials price variance is normally caused by the.
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25 - 1 Standard Costs and Balanced Scorecard Ex. 177 Ravienda Industries provided the following information about its standard costing system for 2014: Standard DataActual Data Materials10 lbs. @ $4 per lbs.Produced4,000 units Labor3 hrs. @ $22 per hr.Materials purchased50,000 lbs. for $210,000 Budgeted production$3,500 unitsMaterials used41,000 lbs. Labor worked11,000 hrs. costing $220,000 Instructions Determine the amount of the.
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25 - 1 Standard Costs and Balanced Scorecard 11.Once set, normal standards should not be changed during the year. 12.In developing a standard cost for direct materials, a price factor and a quantity factor must be considered. 13.A direct labor price standard is frequently called the direct labor efficiency standard. 14.The standard predetermined overhead rate.
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25 - 1 Standard Costs and Balanced Scorecard MULTIPLE CHOICE QUESTIONS 39.What is a standard cost? a.The total number of units times the budgeted amount expected b.Any amount that appears on a budget c.The total amount that appears on the budget for product costs d.The amount management thinks should be incurred to produce a good or service 40.A.
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25 - 1 Standard Costs and Balanced Scorecard Ex. 183 Hawey, Inc. uses standard costing for its one product, baseball bats. The standards call for 3 board-feet of wood at $1.40 per board-foot, and 45 minutes of work at $12 per hour per bat. Total manufacturing overhead costs were estimated at $9,450, of.
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24 - 1 Budgetary Control and Responsibility Accounting Ex. 188 The Tool Division of Cerrani Company reported the following data for the current year. Sales revenue$4,000,000 Variable costs2,600,000 Controllable fixed costs800,000 Average operating assets6,000,000 Top management is unhappy with the investment center's return on investment (ROI). It asks the manager of the Tool Division to submit plans to.
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24 - 1 Budgetary Control and Responsibility Accounting Ex. 172 Bond Company developed its annual manufacturing overhead budget for its master budget for 2014 as follows: Expected annual operating capacity240,000 Direct Labor Hours Variable overhead costs Indirect labor$840,000 Indirect materials180,000 Factory supplies    60,000 Total variable  1,080,000 Fixed overhead costs Depreciation360,000 Supervision240,000 Property taxes    120,000 Total fixed  720,000 Total costs$1,800,000 The relevant range for monthly activity is.
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25 - 1 Standard Costs and Balanced Scorecard Ex. 188 The following direct labor data pertain to the operations of Haieold Manufacturing Company for the month of September: Standard labor rate$10.00 per hr. Actual hours incurred and used9,000 The standard cost card shows that 2.5 hours are required to complete one unit of product. The actual.
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25 - 1 Standard Costs and Balanced Scorecard 21.There could be instances where the production department is responsible for a direct materials price variance. 22.The starting point for determining the causes of an unfavorable materials price variance is the purchasing department. 23.The overhead controllable variance relates primarily to fixed overhead costs. 24.The overhead volume variance.
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25 - 1 Standard Costs and Balanced Scorecard 129.The balanced scorecard approach a.uses only financial measures to evaluate performance. b.uses rather vague, open statements when setting objectives in order to allow managers and employees flexibility. c.normally sets the financial objectives first, and then sets the objectives in the other perspectives to accomplish the financial objectives. d.evaluates.
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24 - 1 Budgetary Control and Responsibility Accounting Ex. 175 Hedfield Corporation's manufacturing costs for July when production was 2,000 units appears below: Direct materials$10 per unit Factory depreciation$14,000 Variable overhead10,000 Direct labor4,000 Factory supervisory salaries11,600 Other fixed factory costs3,000 Instructions How much is the flexible budget manufacturing cost amount for a month when 2,200 units are produced? Ex. 176 Webster Manufacturing uses.
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25 - 1 Standard Costs and Balanced Scorecard 89.Casey Company has a materials price standard of $2.10 per pound. Six thousand pounds of materials were purchased at $2.20 a pound. The actual quantity of materials used was 6,000 pounds, although the standard quantity allowed for the output was 5,400 pounds. Casey Company's materials.
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24 - 1 Budgetary Control and Responsibility Accounting Ex. 193 Data for the following subsidiaries of Orzo Manufacturing, which are operated as investment centers, are as follows: Rooks CompanyMcDonald, Inc. Sales revenue$3,000,000$2,000,000 Controllable margin(1)(3) Average operating assets(2)4,000,000 Contribution margin1,200,000800,000 Controllable fixed costs500,000300,000 Return on Investment10%(4) Instructions Compute the missing amounts using the ROI formula. Ex. 194 The data for an investment center is given.
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25 - 1 Standard Costs and Balanced Scorecard Ex. 180 Peyton Company produces one product, a putter called PAR-putter. Peyton uses a standard cost system and determines that it should take one hour of direct labor to produce one PAR-putter. The normal production capacity for this putter is 100,000 units per year. The.
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25 - 1 Standard Costs and Balanced Scorecard Ex. 175 The following direct materials data pertain to the operations of Oswell Manufacturing Company for the month of December. Standard materials price $5.00 per pound Actual quantity of materials purchased and used 16,500 pounds The standard cost card shows that a finished product contains 4 pounds of.
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25 - 1 Standard Costs and Balanced Scorecard 79.A favorable variance a.is an indication that the company is not operating in an optimal manner. b.implies a positive result if quality control standards are met. c.implies a positive result if standards are flexible. d.means that standards are too loosely specified. 80.The total materials variance is equal to the a.materials.
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25 - 1 Standard Costs and Balanced Scorecard a139.Which of the following statements about overhead variances is false? a.Standard hours allowed are used in calculating the controllable variance. b.Standard hours allowed are used in calculating the volume variance. c.The controllable variance pertains solely to fixed costs. d.The total overhead variance pertains to both variable and fixed.
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24 - 1 Budgetary Control and Responsibility Accounting Ex. 174 Leist Company uses a flexible budget for manufacturing overhead based on machine hours. Variable manufacturing overhead costs per machine hour are as follows: Indirect labor$5.00 Indirect materials2.75 Maintenance.50 Utilities.30 Fixed overhead costs per month are: Supervision$1,200 Insurance400 Property taxes600 Depreciation1,800 The company believes it will normally operate in a range of 4,000 to.
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24 - 1 Budgetary Control and Responsibility Accounting MATCHING 207.Match the items below by entering the appropriate code letter in the space provided. A.Budgetary control              G.              Responsibility reporting system B.Static budget              H.              Return on Investment C.Flexible budget              I.              Profit center D.Responsibility accounting              J.              Investment center E.Controllable costs              K.              Indirect fixed costs F.Management by exception              L.              Direct fixed costs ____              1.The.
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24 - 1 Budgetary Control and Responsibility Accounting S-A E  212(Ethics) Vikolov Corporation evaluates its managers based on return on investment (ROI). Robbie Franco and Jan Mendoza, managers of the electronics and housewares departments respectively, have recently suffered from declining profits in their departments. Over lunch, they discuss the problem, and how they.
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25 - 1 Standard Costs and Balanced Scorecard Ex. 181 Mega Company has developed the following standard costs for its product for 2014: MEGA COMPANY Standard Cost Card Product A Cost ElementStandard Quantity×Standard Price=Standard Cost Direct materials4 pounds$3$12 Direct labor3 hours824 Manufacturing overhead3 hours4  12 $48 The company expected to produce 30,000 units of Product A in 2014 and work 90,000 direct.
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25 - 1 Standard Costs and Balanced Scorecard Ex. 185 Westcoast Sporting Goods Company manufactures aluminum baseball bats that it sells to university athletic departments. It has developed the following per unit standard costs for 2014 for each baseball bat: Manufacturing       Direct Materials Direct Labor           Overhead Standard Quantity2 Pounds (Aluminum)1/2 hour1/2 hour Standard Price$4.00$10.00$7.00 Unit Standard Cost$8.00$5.00$3.50 In.
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25 - 1 Standard Costs and Balanced Scorecard Exercises Ex 170 Griffiti Company is planning to produce 2,500 units of product in 2014. Each unit requires 3 pounds of materials at $8 per pound and a half hour of labor at $16 per hour. The overhead rate is 75% of direct labor. Instructions (a)Compute the budgeted.
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24 - 1 Budgetary Control and Responsibility Accounting Ex. 186 Kelsey Manufacturing Inc. has three divisions which are operated as profit centers. Actual operating data for the divisions listed alphabetically are as follows.       Operating Data      Women's ShoesMen's ShoesChildren's Shoes Contribution margin$210,000(3)$200,000 Controllable fixed costs  100,000(4)      (5) Controllable margin     (1)$  90,000    96,000 Sales revenue  600,000  480,000      (6) Variable costs    .
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24 - 1 Budgetary Control and Responsibility Accounting Ex. 178 Godwin Industries uses flexible budgets to control its selling expenses. Monthly sales are expected to be from $200,000 to $240,000. Variable costs and their percentage relationships to sales are: Sales commissions6% Advertising4% Traveling5% Delivery1% Fixed selling expenses consist of sales salaries $42,000 and depreciation on delivery equipment $10,000. The.
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24 - 1 Budgetary Control and Responsibility Accounting Ex. 177 Haley Company uses flexible budgets to control its selling expenses. Monthly sales are expected to be from $400,000 to $480,000. Variable costs and their percentage relationships to sales are: Sales commissions6% Advertising4% Traveling5% Delivery2% Fixed selling expenses consist of sales salaries $80,000 and depreciation on delivery equipment $20,000. Instructions Prepare.
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25 - 1 Standard Costs and Balanced Scorecard 109.Kent Co. manufactures a product with a standard direct labor cost of two hours at $18.10 per hour. During August, 2,000 units were produced using 4,200 hours at $18.30 per hour.  The labor quantity variance was a.$3,660 F. b.$3,660 U. c.$840 U. d.$3,620 U. 110.Kent Co. manufactures a product.
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25 - 1 Standard Costs and Balanced Scorecard 49.Which of the following is not considered an advantage of using standard costs? a.Standard costs can reduce clerical costs. b.Standard costs can be useful in setting prices for finished goods. c.Standard costs can be used as a means of finding fault with performance. d.Standard costs can make employees.
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24 - 1 Budgetary Control and Responsibility Accounting SHORT-ANSWER ESSAY QUESTIONS S-A E  208 The master budget and flexible budgets are important aids to management in performing the management functions of planning and control. Briefly describe how planning and control are facilitated by preparing a master budget and flexible budgets. How are these two.
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25 - 1 Standard Costs and Balanced Scorecard Ex. 182 Wilson Company developed the following standard costs for its product for 2014: WILSON COMPANY Standard Cost Card Cost ElementsStandard Quantity×Standard Price=Standard Cost Direct materials4 pounds$  5$20 Direct labor2 hours1020 Variable overhead2 hours48 Fixed overhead2 hours2    4 $52 The company expected to work at the 120,000 direct labor hours level of activity and.
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24 - 1 Budgetary Control and Responsibility Accounting Ex. 184 Weston Company's manufacturing overhead budget for the first quarter of 2014 contained the following data: Variable Costs Indirect materials$39,000 Indirect labor24,000 Utilities20,000 Maintenance12,000 Fixed Costs Supervisor's salary$80,000 Depreciation16,000 Property taxes8,000 Actual variable costs for the first quarter were: Indirect materials$37,200 Indirect labor26,400 Utilities21,000 Maintenance10,600 Actual fixed costs were as expected except for property taxes which were $9,000. All.
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25 - 1 Standard Costs and Balanced Scorecard Ex. 172 Race Repair Service, Inc. is trying to establish the standard labor cost of a typical engine tune-up. The following data have been collected from time and motion studies conducted over the past month. Actual time spent on the tune-up1.0 hour Hourly wage rate$16 Payroll taxes10% of.
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25 - 1 Standard Costs and Balanced Scorecard BRIEF Exercises BE 160 Loonis Company uses both standards and budgets. The company estimates that production for the year will be 200,000 units of Product Accelerated. To produce these units of Product Accelerated, the company expects to spend $600,000 for materials and $1,000,000 for labor. Instructions Compute the.
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24 - 1 Budgetary Control and Responsibility Accounting Ex. 185 The Holiday Division, a profit center of Valino Company, reported the following data for the first quarter of 2014: Sales revenue$12,000,000 Variable costs8,400,000 Controllable direct fixed costs1,650,000 Noncontrollable direct fixed costs1,060,000 Indirect fixed costs400,000 Instructions (a)Prepare a performance report for the manager of the Holiday Division. (b)What is the best measure.
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24 - 1 Budgetary Control and Responsibility Accounting EXERCISES Ex. 170 Malcarne Manufacturing's master budget reflects budgeted sales information for the month of June, 2014, as follows: Budgeted QuantityBudgeted Unit Sales Price Product A40,000$6.95 Product B48,000$9 During June, the company actually sold 39,000 units of Product A at an average unit price of $7.10 and 49,600 units of.
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25 - 1 Standard Costs and Balanced Scorecard Ex. 174 The following direct labor data pertain to the operations of Nitro Manufacturing Company for the month of April: Actual labor rate$12.25 per hr. Actual hours used18,000 Standard labor rate$12.00 per hr. Standard hours allowed17,700 Instructions Prepare a matrix and calculate the labor variances. .
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24 - 1 Budgetary Control and Responsibility Accounting Ex. 179 A flexible budget graph for the Grindinb Department shows the following: 1.At zero direct labor hours, the total budgeted cost line intersects the vertical axis at $120,000. 2.At normal capacity of 100,000 direct labor hours, the line drawn from the total budgeted cost line intersects.
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