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Study Resources (Accounting)

41) Boone Hobbies gross margin for next month is expected to be A) $280,000. B) $336,000. C) $356,000. D) $360,000. E) $240,000. 42) Boone Hobbies budgeted purchases for next month is expected to be A) $240,000. B) $264,000. C) $225,000. D) $360,000. E) $244,000. 43) A rolling budget is a budget or plan that A) rolls several budgets together for forecasting purposes. B).
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74) Listed below are elements of the master budget. Determine whether each budget is an operating budget or a financial budget. Place an O for operating budget or F for a financial budget. 1.Capital expenditures budget 2.Cost of goods sold budget 3.Revenues budget 4.Budgeted statement of cash flows 5.Distribution costs budget 6.Marketing costs budget 7.Cash budget 8.Direct materials.
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7) Understanding the hierarchy of costs is critical when allocating costs to products. 8) Unit-level measures can distort product costing because the demand for overhead resources may be driven by batch-level or product-sustaining activities. 9) Output unit-level costs cannot be determined unless you know how many units are in a given.
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29) The Dougherty Furniture Company manufactures tables. In March, the two production departments had budgeted allocation bases of 4,000 machine hours in Department 100 and 8,000 direct manufacturing labour hours in Department 200. The budgeted manufacturing overheads for the month were $57,500 and $62,500, respectively. For Job A, the actual.
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21) ABC provides a straightforward cost-benefit analysis of the unequally shared benefits of a support activity. The technique also clearly discloses the scope of business functions where cost control will have a positive effect. Required: Provide three benefits that the identification of the scope of cost control focused on different activity levels.
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  5.1   Identify the basic elements of activity-based costing systems as distinguished from traditional systems, and explain how preventable undercosting and overcosting of products and services affects profitability. 1) Cost smoothing involves assigning costs in a non uniform manner to reflect the different utilization of resources by different products or services. 2) Using.
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42) An accounting firm provides tax consulting for estates and trusts. Their job costing system has a single direct cost category (professional labour) and a single indirect cost pool (research support). The indirect cost pool contains all the costs except direct personnel costs. All budgeted indirect costs are allocated to.
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10) Allscott Company is developing its budgets for 2013 and for the first time will use the Kaizen approach. The initial 2013 income statement, based on static data from 2012, is as follows: Sales (140,000 units)$420,000 Less: Cost of goods sold280,000 Gross margin140,000 Operating expenses (includes $28,000 of depreciation)112,000 Net income$28,000 Selling prices for 2013 are.
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29) At Deutschland Electronics, product lines are charged for call centre support costs based on sales revenue. Last year's summary of call centre operations revealed the following: Surveillance ProductsSpecialty Products Number of calls for information1,0004,000 Average call length for information3 minutes8 minutes Number of calls for warranties3001,200 Average call length for warranties7 minutes15 minutes Sales.
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6.2   Prepare a master operating budget and all supporting budgets or schedules. 1) Budgets that change (rolling or continuous) are better for the planning than budgets that do not change. 2) The financial budget is that part of the master budget that comprises the capital budget, cash budget, operating budget, and budgeted.
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17) If the cost of an activity increases with the number of purchase orders placed, rather than to the quantity of items purchased, it is which of the following? A) market-sustaining cost B) output unit-level cost C) facility-sustaining cost D) product-sustaining (service-sustaining) costs E) batch-level cost 18) If the cost of an activity increases with the.
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51) What are the 2012 budgeted costs for direct manufacturing labour? A) $62,000 B) $60,000 C) $61,000 D) $59,000 E) $63,000 Use the information below to answer the following question(s). Marguerite Inc.. expects to sell 20,000 pool cues for $20.00 each. Direct materials costs are $2.00, direct manufacturing labour is $12.00, and manufacturing overhead is $0.80.
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  Use the information below to answer the following question(s). Copper Corporation has the following sales budget for the last six months of 2012: July $200,000 October $180,000 August 160,000 November 200,000 September 220,000 December 188,000 Historically, the cash collection of sales has been as follows: 65 percent of sales collected in month of sale, 25 percent of sales collected in month following sale, 8 percent of sales.
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33) Brilliant Accents Company manufactures and sells three styles of kitchen faucets: Brass, Chrome, and White. Production takes 25, 25, and 10 machine hours to manufacture 1,000-unit batches of brass, chrome and white faucets, respectively. The following additional data apply: BRASSCHROMEWHITE Projected sales in units30,00050,00040,000 Per Unit data: Selling price$40$20$30 Direct materials$8$4$8 Direct labour$15$3$9 Overhead cost based.
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16) Describe some of the drawbacks of using the operating budget as a control device. 17) Distinguish between controllable and uncontrollable aspects of revenue and costs. Can a manager totally control all revenue and costs? Why or why not? 18) How is budgeting for a multinational corporation different than budgeting.
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62) Budget Corporation has the following budgeted sales for the next six-month period: MonthUnit Sales September60,000 October 80,000 November140,000 December100,000 January120,000 February 80,000 There were 30,000 units of finished goods in inventory at the beginning of September. Plans are to have an inventory of finished products that equal 20 percent of the unit sales for the next month. Five.
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59) Spirit Company sells three products with the following seasonal sales pattern: Products Quarter A       B       C 140%30%10% 230%20%40% 320%20%40% 410%30%10% The annual sales budget shows forecasts for the different products and their expected selling price per unit as follows: ProductUnitsSelling Price A50,000$4 B125,00010 C62,5006 Required: Prepare a sales budget, in units and dollars, by quarters for the company for the.
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11) Planning the performance of the organization, providing a frame of reference, and investigating variances are part of the A) budgetary cycle. B) cash budget. C) financing budget. D) master budget. E) production budget. 12) The master budget embraces the impact of A) operating and managerial decisions. B) operating and financing decisions. C) financing and managerial decisions. D) operating, managerial,.
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75) Describe operating and financial budgets and give at least two examples of each discussed in the textbook. 6.3   Prepare a cash budget. 1) Beginning with the cash budget, each budget supporting the master budget follows step by step in logical fashion. 2) The cash budget helps avoid unnecessary idle cash and.
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35) Come-On-In Manufacturing produces two types of entry doors: Deluxe and Standard. The assignment basis for support costs has been direct labour dollars. For 2012, Come-On-In compiled the following data for the two products: DeluxeStandard Sales units50,000400,000 Sales price per unit$650.00$475.00 Direct material and labour costs per unit$180.00$130.00 Manufacturing support costs per unit$80.00$120.00 Last year,.
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13) Explain what is meant by sensitivity analysis in budgeting, and discuss how managers might use sensitivity analysis in practice. 6.5   Contrast responsibility against controllability. 1) Responsibility accounting is a budgeting system that measures the plans and objectives of managers. 2) Performance reports for responsibility centres may include uncontrollable costs if they.
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37) Summer Daze Corporation manufactures two products, Bocce Ball Sets and Croquet Sets. Croquet Sets were added as a product line two years ago. Croquet Sets are the more complex of the two products, requiring one hour of direct labour time per unit to manufacture, compared to one-half hours of.
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31) What will be the Fair Score Company budgeted amount of cost of goods sold? A) $8,160,000 B) $6,800,000 C) $6,460,000 D) $6,120,000 E) $5,975,000 Use the information below to answer the following question(s). Layne Cedar manufactures cedar chests. The estimated number of chests for the first three months of 2012 is as follows: Month Sales January 10,000 February 14,000 March 13,000 Finished goods inventory at.
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  Use the information below to answer the following question(s). Bill Cobb Corporation had the following activities, pooled costs, and physical flow of driver units. The company uses activity-based costing. Activities Pooled Costs Physical Flow of Driver Units Account inquiry (hours) $400,000 5,000 Account billing (lines) $280,000 2,000,000 Account verification (accounts) $150,000 20,000 Correspondence (letters) $50,000 2,000 The above activities are used by departments X and Y as follows: X Y Account inquiry.
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6.4   Distinguish among sensitivity analysis, Kaizen budgeting, and activity-based budgeting. 1) Sensitivity analysis helps to evaluate outcomes from changes in data or assumptions. 2) Kaizen budgeting is a budgetary approach that explicitly incorporates continuous improvement during the budget period into the resultant budget numbers. 3) The objective of activity-based budgeting is to refine.
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68) Russell Company has the following projected account balances for June 30, 2012: Accounts payable$40,000Sales$800,000 Accounts receivable100,000Capital stock400,000 Depreciation, factory24,000Retained earnings? Inventories (5/31 & 6/30)180,000Cash56,000 Direct materials used200,000Equipment, net240,000 Office salaries80,000Buildings, net400,000 Insurance, factory4,000Utilities, factory16,000 Plant wages140,000Selling expenses60,000 Bonds payable160,000Maintenance, factory28,000 Required: a.Prepare a budgeted income statement for June 2012. b.Prepare a budgeted balance sheet as of June 30, 2012. 69) Barrieland.
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31) A company manufactures household items sold at trade shows. The items, classified as either Trinkets or Widgets are manufactured on a common assembly line. Although different direct materials are used, the direct labour cost is the same for each product line. The plant-wide rate for allocating manufacturing overhead to its.
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  6.1   Distinguish the long-term from the short-term benefits of budgets (pro forma financial statements). 1) A budget is a quantitative expression for a set time period of a proposed future plan of action by management. 2) A budget is limited in that it can only cover financial aspects of plans. 3) The master.
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5.4   Assign costs using activity-based costing (ABC). 1) Inaccurate product costs can expose a company to the risk of losing market share to competitors. 2) It may be appropriate to use a departmental costing system when costs are incurred on different activities within a department but each activity has the same cost.
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25) A manufacturing company has actual overhead of $570,000, budgeted overhead of $620,000, and budgeted 18,000 direct labour hours. Management believes that direct labour hours are the best allocation base to use for allocation of overhead. Actual direct labour hours were 20,000 hours. Assuming that the company used normal costing.
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65) The Doran Company prepared the following revenue budget: MonthBudgeted Sales March $250,000 April 265,000 May 255,000 June272,500 July 262,500 In addition, the gross profit rate is 40 percent and the desired inventory level is 30 percent of next month's cost of goods sold. Required: Prepare a purchases budget for April through June. 66) Favata Company has the following information:.
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5.3   Apply the cost hierarchy to develop and activity-based costing (ABC) system. 1) A refined costing system results in a better measure of the nonuniformity of a company's resources by jobs, products, or services than by using broad averages to assign costs. 2) A refined costing system accounts for indirect cost allocation.
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11) Which of the following statements about activity-based costing is true? A) It does not affect cost control. B) Indirect cost allocation bases are unlikely to be cost drivers. C) It provides less information than traditional cost systems. D) It provides similar results to traditional costing when one activity creates a substantial amount of.
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21) What is the journal entry used to write-off the difference between allocated and actual overhead using the proration approach? A) Work-in-Process Control 4,750 Finished Goods Control 6,250 Cost of Goods Sold 14,000 Manufacturing Overhead Control 25,000 B) Manufacturing Overhead Allocated 25,000 Work-in-Process Control 4,750 Finished Goods Control 6,250                Cost of Goods Sold 14,000 C) Manufacturing Overhead Control 25,000 Work-in-Process Control 1,250 Finished Goods Control 2,500                Cost of Goods Sold 21,250 D).
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17) What is the ending cash balance for March after borrowing, if required? A) $4,000 B) $3,800 C) $3,200 D) $2,800 E) $3,000 Answer the following question(s) using the information below. Fiscal Company has the following sales budget for the last six months of 2013: July $100,000 October $90,000 August 80,000 November 100,000 September 110,000 December 94,000 Historically, the cash collection of sales has been.
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32) JamJee Enterprises uses a job costing system. Record the following transactions in JamJee Enterprise's general journal for the current month: a.Purchased raw materials on account, $49,000. b.Requisitioned $25,200 of direct materials and $3,400 of indirect materials for use in production. c.Factory payroll incurred, $54,000; 70% direct labour, 30% indirect labour. d.Recorded depreciation expense.
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11) The Manufacturing Overhead Control account is debited for A) the actual costs in all the individual overhead categories ( such as indirect materials and electric power). B) the amount of the under applied overhead. C) the budgeted costs in all the individual overhead categories ( such as indirect materials and electric power). D).
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  Answer the following question(s) using the information below. Products S5 and CP8 each are assigned $50.00 in indirect costs by a traditional costing system. An activity analysis revealed that although production requirements are identical, S5 requires 45 minutes less setup time than CP8. 27) Compared to an activity-based cost system, CP8 is.
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6) An ABC system is one building block of activity-based management (ABM). The second building block is A) that senior management support is crucial. B) understanding the components of indirect cost pools. C) knowing the limitations of allocating indirect costs. D) the ability for managers to understand that the demand for output is central.
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27) What is the budgeted indirect cost allocation rate for Department 2? A) $3.45 B) $3.75 C) $4.60 D) $7.50 E) $8.00 28) What is the total cost assigned to Job 501 based on normal costing? A) $27,600 B) $91,200 C) $96,900 D) $123,900 E) $126,500 29) XYZ Company uses a normal job costing system. The direct labour rate is $27 per.
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11) The first three schedules to complete when preparing the master operating budget are the A) revenue budget, production budget, and direct materials purchases and usage budget. B) costs of goods sold budget, production budget, and cash budget. C) revenue budget, overhead budget, and production budget. D) revenue budget, cash inflows, and production expenditures. E).
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34) Describe each of the four cost hierarchies used to define levels for activities in activity-based costing. 35) Do activity-based costing systems always provide more accurate product costs than conventional cost systems? Why or why not? 36) Explain how traditional cost systems, using a single unit-level cost rate, may distort product.
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19) Analyze the two costing systems below and determine which one is an ABC system, stating the reasons for your choice. System A Total indirect costs $3,250,000 Costs per unit $64.21 Total direct costs $4,565,000 # of Indirect cost pools 10 Direct cost categories 4 System B Total indirect costs $2,750,000 Costs per unit $47.25 Total direct costs $5,065,000 # of Indirect cost pools 1 Direct cost categories 2 20) Hans Sorensen, controller.
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21) How many boxes should Berry's Boxes produce in 2012? A) 24,000 boxes B) 20,000 boxes C) 19,500 boxes D) 20,500 boxes E) 22,500 boxes 22) What will be Berry's Boxes cost of goods sold in 2012? A) $42,000 B) $24,000 C) $38,000 D) $30,000 E) $34,000 23) What will be Berry's Boxes production costs incurred for direct materials, direct manufacturing labour,.
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4.5   Analyze the flow of costs from direct and indirect cost pools to inventory accounts, including adjustments for over- and underallocated costs. 1) The Work-in-Process Control account tracks job costs from the time jobs are started until they are completed. 2) Underallocated indirect costs cannot occur when normal costing is used. 3) Proration.
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