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Study Resources (Accounting)

Ex. 176 Pulham Company is preparing its direct labor budget for 2016 from the following production budget based on a calendar year: Quarter Units 160,000 230,000 345,000 475,000 Each unit requires 2 hours of direct labor. The union contract provides for a 10% increase in wage rate to $11 per hour on October 1. Instructions .
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Ex. 171 Butler Manufacturing manufactures two products, (1) Regular and (2) Deluxe. The budgeted units to be produced are as follows: Units of Product 2016Regular Deluxe  Total July10,00015,00025,000 August6,00010,00016,000 September9,00014,00023,000 October8,00012,00020,000 It takes 2 pounds of direct materials to produce the Regular product and 5 pounds of direct materials to produce the Deluxe product. It is the company's.
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Ex. 181 Walt Bach Company has accumulated the following budget data for the year 2016. 1.Sales: 40,000 units, unit selling price $50. 2.Cost of one unit of finished goods: Direct materials 2 pounds at $5 per pound, direct labor 1.5 hours at $12 per hour, and manufacturing overhead $6 per direct labor hour. 3.Inventories.
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Ex. 184 Taveras Industries developed the following information for the product it sells: Sales price$50 per unit Variable cost of goods sold$28 per unit Fixed cost of goods sold$650,000 Variable selling expense10% of sales price Variable administrative expense$2.00 per unit Fixed selling expense$400,000 Fixed administrative expense$300,000 For the year ended December 31, 2016, Taveras produced and sold 100,000 units.
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Ex. 170 Pitt Corp. makes and sells a single product, widgets. Two pounds of sand are needed to make one widget. Budgeted production of widgets for the next two months follows: September25,000 units October31,000 units The company wants to maintain monthly ending inventories of sand equal to 20% of the following month's production needs..
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Ex. 185 Gordon Manufacturing earned net income of $100,000 during 2015. The company wants to earn net income of $40,000 more during 2016. The company's fixed costs are expected to be $147,000, and variable costs are expected to be 30% of sales. Instructions (a)Determine the required sales to meet the target net income.
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Ex. 181 Henning Co. estimates that variable costs will be 70% of sales and fixed costs will total $2,160,000. The selling price of the product is $10, and 750,000 units will be sold. Instructions Using the mathematical equation, (a)Compute the break-even point in units and dollars. (b)Compute the margin of safety in dollars and as.
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47.It is important that budgets be accepted by a.division managers only. b.department heads only. c.supervisors only. d.All of these answers are correct. 48.Which of the following statements about budget acceptance in an organization is true? a.The most widely accepted budget by the organization is the one prepared by top management. b.The most widely accepted budget by the.
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S-A E  212 How should mixed costs be classified in CVP analysis? What approach is used to effect the appropriate classification? S-A E  213(Ethics) Hanson, Inc. requires its marketing managers to submit estimated cost-volume-profit data on all requests for new products, or expansions of a product line. Nancy Stephens is a new manager. Her.
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BE 167 Beal, Inc. provided the following information: MarchAprilMay Projected merchandise purchases$65,000$75,000$80,000 Beal pays 40% of merchandise purchases in the month purchased and 60% in the following month. General operating expenses are budgeted to be $20,000 per month of which depreciation is $2,000 of this amount. Beal pays operating expenses in the month.
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117.The projection of financial position at the end of the budget period is found on the a.budgeted income statement. b.cash budget. c.budgeted balance sheet. d.sales budget. 118.What is the proper preparation sequencing of the following budgets? 1.Budgeted Balance Sheet 2.Sales Budget 3.Selling and Administrative Budget 4.Budgeted Income Statement a.1, 2, 3, 4 b.2, 3, 1, 4 c.2, 3, 4, 1 d.2, 4, 1,.
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MULTIPLE CHOICE QUESTIONS 37.Why are budgets useful in the planning process? a.They provide management with information about the company's past performance. b.They help communicate goals and provide a basis for evaluation. c.They guarantee the company will be profitable if it meets its objectives. d.They enable the budget committee to earn their paycheck. 38.A budget a.is a substitute.
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EXERCISES Ex. 169 Delta Manufacturing has budgeted the following unit sales: 2016  Units April25,000 May40,000 June60,000 July45,000 Of the units budgeted, 40% are sold by the Coastal Division at an average price of $15 per unit and the remainder are sold by the Central Division at an average price of $12 per unit. Instructions Prepare separate sales budgets for each.
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Ex. 172 Garver Industries has budgeted the following unit sales:    2017   Units January10,000 February8,000 March9,000 April11,000 May15,000 The finished goods units on hand on December 31, 2016, was 2,000 units. Each unit requires 3 pounds of raw materials that are estimated to cost an average of $4 per pound. It is the company's policy to maintain a.
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MATCHING 208.Match the items in the two columns below by entering the appropriate code letter in the space provided.               A.              Activity index              F.              Mixed costs               B.              Variable costs              G.              Break-even point               C.              Fixed costs              H.              Contribution margin               D.              High-low method              I.              Margin of safety               E.              Relevant range             .
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COMPLETION STATEMENTS               197.Knowledge of cost behavior is important in ______________________ analysis.               198.Unit fixed costs __________________ with the changes in the level of activity.               199.Total fixed costs are ___________ over various levels of activities, whereas total variable costs __________________ directly and ________________ with changes in the activity level.               200.An assumption of.
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Ex. 182 Norton, Inc. has the following information available for September 2016. Unit selling price of video game consoles$     400 Unit variable costs$     280 Total fixed costs$48,000 Units sold500 Instructions (a)Prepare a CVP income statement that shows both total and per unit amounts. (b)Compute Norton's breakeven in units. Ex. 183 In the month of April, Avante Salon gave 2,500 haircuts,.
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67.Which of the following is not an operating budget? a.Direct labor budget b.Sales budget c.Production budget d.Cash budget 68.Which of the following is not a financial budget? a.Capital expenditure budget b.Cash budget c.Manufacturing overhead budget d.Budgeted balance sheet 69.Which of the following is done to improve the reliability of the sales forecast? a.Employ financial planning models b.Lengthen the planning horizon to more.
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Ex. 180 Werth & Garza Manufacturing's sales slumped badly in 2016 due to so many people purchasing gifts online. The company's income statement showed the following results from selling 500,000 units of product: net sales $2,125,000; total costs and expenses $2,500,000; and net loss $375,000. Costs and expenses consisted of the.
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87.Which one of the following is not needed in preparing a production budget? a.Budgeted unit sales b.Budgeted raw materials c.Beginning finished goods units d.Ending finished goods units 88.A company budgeted unit sales of 204,000 units for January, 2017 and 240,000 units for February 2017. The company has a policy of having an inventory of units.
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57.The budget committee would not normally include the a.research director. b.treasurer. c.sales manager. d.external auditor. 58.The budget committee in a company is often headed by the a.president. b.controller. c.treasurer. d.budget director. 59.Long-range planning a.generally presents more detailed information than an annual budget. b.generally encompasses a longer period of time than an annual budget. c.is usually more accurate than an annual budget. d.is prepared on.
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Ex. 180 Thread Company is preparing its manufacturing overhead budget for 2016. Relevant data consist of the following. Units to be produced (by quarters): 10,000, 12,000, 14,000, 16,000. Direct labor: Time is 1 hour per unit. Variable overhead costs per direct labor hour: Indirect materials $0.80; indirect labor $1.20; and maintenance $0.50. Fixed overhead costs.
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21.A manufacturing overhead budget is not needed if the company develops a predeter-mined overhead rate to apply overhead. 22.The manufacturing overhead budget generally has separate sections for variable, mixed, and fixed costs. 23.A production budget should be prepared before the sales budget. 24.The direct materials budget contains both quantity and cost data. 25.The budgeted.
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127.Correy Inc. reported the following information for 2016: a.$220,000 b.$490,000 c.$450,000 d.$440,000 128.Correy Company reported the following information for 2016: a.$96,000 b.$144,000 c.$204,000 d.$102,400 129.Petal Co. reported the following information for 2016: a.$900,000 b.$540,000 c.$465,000 d.$435,000 130.Bean Manufacturing reported the following information for 2016: a.$404,000 b.$148,000 c.$188,000 d.$444,000 131.During September, the capital expenditure budget indicates a $420,000 purchase of equipment. The ending September cash balance from operations is budgeted to.
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147.The primary benefits of budgeting include all of the following except it a.requires only top management to plan ahead and formalize their future goals. b.provides definite objectives for evaluating performance. c.creates an early warning system for potential problems. d.motivates personnel throughout the organization. 148.The responsibility for expressing management's budgeting goals in financial terms is performed.
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Ex. 178 The income statement for Bradford Machine Company for 2015 appears below. BRADFORD MACHINE COMPANY Income Statement For the Year Ended December 31, 2015 —————————————————————————————————————————— Sales (40,000 units).............................................$1,000,000 Variable expenses..............................................     700,000 Contribution margin............................................300,000 Fixed expenses................................................     360,000 Net income (loss)..............................................$    (60,000) Instructions Answer the following independent questions and show computations using the contribution margin technique to support your answers: 1.What was the company's.
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Ex. 177 For each item given, identify the budget in which it will appear. If an item will appear on more than one budget, then indicate as many budgets as are relevant. Budget Code: DMDirect Materials Budget DLDirect Labor Budget PProduction Budget SSales Budget CCash Budget BBSBudgeted Balance Sheet BISBudgeted Income Statement SASelling and Administrative Expense Budget MOHManufacturing Overhead Budget ___________1.Ending cash.
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BE 163 Jent Company reported the following information for 2013: OctoberNovemberDecember Budgeted sales$320,000$340,000$360,000 Budgeted purchases$120,000$128,000$144,000 ?All sales are on credit. ?Customer amounts on account are collected 40% in the month of sale and 60% in the following month. Instructions Compute the amount of cash Jent will receive during November. BE 164 Plack Company budgeted the following information for 2013: MayJuneJuly Budgeted purchases$104,000$110,000$102,000 Cost.
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SHORT-ANSWER ESSAY QUESTIONS S-A E  209 A cost-volume-profit graph is frequently used in business meetings because it presents a picture of cost relationships within a company. Briefly describe the type of information and data that you would need in order to prepare a CVP graph. After a CVP graph is prepared, what.
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Ex. 187 Erickson, Inc. makes student book bags that sell for $20 each. For the coming year, management expects fixed costs to be $225,000. Variable costs are $14 per unit. Instructions (a)Compute break-even sales in dollars using the mathematical equation. (b)Compute break-even sales using the contribution margin ratio. (c)Compute margin of safety ratio assuming actual.
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TRUE-FALSE STATEMENTS 1.Budgets are statements of management's plans stated in financial terms. 2.A benefit of budgeting is that it provides definite objectives for evaluating performance. 3.A budget can be a means of communicating a company's objectives to external parties. 4.A budget can be used as a basis for evaluating performance. 5.A well-developed budget can operate.
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BRIEF EXERCISES BE 159 Wynn, Inc. manufactures beanies. The budgeted units to be produced and sold are below: Expected ProductionExpected Sales August3,5002,900 September2,8003,900 It takes 18 yards of yarn to produce a beanie. The company's policy is to maintain yarn at the end of each month equal to 5% of next month's production needs and to.
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aEx. 195 Leoparod Company developed the following unit information for January, 2014, its first month of operations: Per UnitTotal Costs Sales price$20 Variable costs Direct materials5 Direct labor3 Variable manufacturing overhead4 Selling and administrative expenses2 Fixed selling and administrative expenses$31,000 Fixed manufacturing overhead46,000 During January, 16,000 units were produced and 12,000 units were sold. Instructions (a)Prepare an income statement under the variable costing.
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97.Comma Manufacturing budgets on an annual basis for its fiscal year. The following beginning and ending inventory levels are planned for the fiscal year of July 1, 2016 to June 30, 2017: a.1,681,000 b.1,686,000 c.1,680,000 d.1,678,000 98.The following information is taken from the production budget for the first quarter: a.458,000 b.454,000 c.474,000 d.459,200 99.Off-Line Co. has 9,000 units in beginning.
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Ex. 179 Webber, Inc. developed the following information for its product: Per Unit Sales price$90 Variable cost  63 Contribution margin$27 Total fixed costs$1,215,000 Instructions Answer the following independent questions and show computations using the contribution margin technique to support your answers. 1.How many units must be sold to break even? 2.What is the total sales that must be generated for.
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Ex. 194 Malone Company had sales in 2014 of $1,600,000 on 80,000 units. Variable costs totaled $960,000, and fixed costs totaled $400,000. A new raw material is available that will decrease the variable costs per unit by 20% (or $2.40). However, to process the new raw material, fixed operating costs will increase.
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Ex. 173 Benet Company has budgeted the following unit sales:        2017                 2016          Quarter  UnitsQuarter  Units  1105,000190,000 260,000 375,000 4120,000 The finished goods inventory on hand on December 31, 2015 was 21,000 units. It is the company's policy to maintain a finished goods inventory at the end of each quarter equal to 20% of the next quarter's anticipated sales. Instructions Prepare a.
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137.Which one of the following budgets would be prepared for a manufacturer but not for a merchandiser? a.Direct labor budget b.Cash budget c.Sales budget d.Budgeted income statement 138.The formula for determining budgeted merchandise purchases is budgeted a.production + desired ending inventory – beginning inventory. b.sales + beginning inventory – desired ending inventory. c.cost of goods sold + desired.
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11.The longer the budget period, the more reliable the estimates of future outcomes. 12.The budget committee has the responsibility for coordinating the preparation of the budget. 13.The budget is developed within the framework of a sales forecast. 14.Budgeting and long-range planning are two terms that describe the same process. 15.Long-range plans are used more.
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Ex. 176 In the month of September, Matlock Industries sold 800 units of product. The average sales price was $30. During the month, fixed costs were $6,300 and variable costs were 70% of sales. Instructions (a)Determine the contribution margin in dollars, per unit, and as a ratio. (b)Using the contribution margin technique, compute the.
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77.The production budget shows expected unit sales are 100,000. The required production units are 104,000. What are the beginning and desired ending finished goods units, respectively? a.10,0006,000 b.6,00010,000 c.4,00010,000 d.10,0004,000 78.The production budget shows that expected unit sales are 48,000. The total required units are 54,000. What are the required production units? a.6,000 b.9,000 c.12,000 d.Cannot be determined from.
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aEx. 196 Landon Company developed the following information for 2014: Selling and Administrative Expenses Variable$30,000 Fixed$50,000 Units in beginning inventory-0- Units sold26,000 Direct materials used$65,000 Direct labor$105,000 Units produced30,000 Manufacturing overhead Variable$40,000 Fixed$90,000 Instructions Answer the following questions. (a)What would be the amount of the cost of goods sold under the absorption costing approach? (b)What would be the cost of the ending inventory under the variable.
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BE 168 The beginning cash balance is $15,000. Sales are forecasted at $800,000 of which 80% will be on credit. 70% of credit sales are expected to be collected in the year of sale. Cash expenditures for the year are forecasted at $475,000. Accounts Receivable from previous accounting periods totaling $9,000.
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Ex. 179 Shep Company combines its operating expenses for budget purposes in a selling and administrative expense budget. For the first quarter of 2016, the following data are developed: 1.Sales:  20,000 units; unit selling price:$30 2.Variable costs per dollar of sales: Sales commissions6% Delivery expense2% Advertising4% 3.Fixed costs per quarter: Sales salaries$24,000 Office salaries19,000 Depreciation6,000 Insurance2,000 Utilities1,000 Instructions Prepare a selling and administrative expense.
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Ex. 188 Melody Manufacturing produces a hip-hop CD that is sold for $20. The contribution margin ratio is 40%. Fixed expenses total $9,200. Instructions (a)Compute the variable cost per unit. (b)Compute how many CDs Melody Manufacturing will have to sell in order to break even. (c)Compute how many CDs Melody Manufacturing will have to sell.
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