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Study Resources (Accounting)

88.If a company had a contribution margin of $1,000,000 and a contribution margin ratio of 40%, total variable costs must have been a.$1,500,000. b.$600,000. c.$2,500,000. d.$400,000. 89.Which of the following would not be an acceptable way to express contribution margin? a.Sales minus variable costs b.Sales minus unit costs c.Unit selling price minus unit variable costs d.Unit contribution margin divided.
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11.A mixed cost has both selling and administrative cost elements. 12.The fixed cost element of a mixed cost is the cost of having a service available. 13.For planning purposes, mixed costs are generally grouped with fixed costs. 14.The difference between the costs at the high and low levels of activity represents the fixed.
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Ex. 182 Romero Company—Perth Division is a new state of the art production facility that manufactures landing gears for airplanes. The September 30th ending work in process is comprised of labor and overhead and is approximately 60% complete. All materials are assumed to be 100% complete. Total materials costs during the.
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Ex. 170 Corris Co. accumulates the following data concerning a mixed cost, using miles as the activity level. Miles DrivenTotal Cost January10,000$17,000 February8,00013,500 March9,00014,400 April7,00012,500 Instructions Compute the variable and fixed cost elements using the high-low method. Ex. 171 Moresan Co. gathered the following information on power costs and factory machine usage for the last six months: MonthPower CostFactory Machine Hours January$24,40013,900 February30,40017,600 March29,00016,800 April22,34013,200 May19,90011,600 June16,9008,600 Instructions Using.
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Ex. 163 The Nitrogen Fixation Department of Tomco Company began the month of December with beginning work in process of 4,000 units that are 100% complete as to materials and 30% complete as to conversion costs. Units transferred out are 12,000 units. Ending work in process contains 10,000 units that are.
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58.Which of the following is not a plausible explanation of why variable costs often behave in a curvilinear fashion? a.Labor specialization b.Overtime wages c.Total variable costs are constant within the relevant range d.Availability of quantity discounts 59.Firms operating at 100% capacity a.are common. b.are the exception rather than the rule. c.have no fixed costs. d.have no variable costs. 60.Which of.
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Ex. 159 The Pasta Factory manufactures spaghetti sauce through two production departments: Cooking and Packaging. For the month of February, the work in process accounts show the following debits: CookingPackaging Beginning work in process$    -0-$  6,000 Materials40,00026,000 Labor20,0009,000 Overhead30,00015,000 Costs transferred in65,000 Ex. 159(Cont.) Instructions Journalize the February transactions that involved the work in process accounts. Ex. 160 Benson Industries uses a.
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108.The last department in a production process shows the following information at the end of the period: a.240,000. b.265,000. c.290,000. d.215,000. 109.A process began the month with 3,000 units in the beginning work in process inventory and ended the month with 2,000 units in the ending work in process. If 22,000 units were completed and.
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118.A department had the following information for the month: a.150,000. b.100,000. c.60,000. d.Cannot be determined 119.Maisley Company decided to analyze certain costs for June of the current year. Units started into production equaled 28,000 and ending work in process equaled 4,000. With no beginning work in process inventory, how much is the conversion cost per.
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Ex. 176 Grey Building Supplies' total materials costs are $30,000 and total conversion costs are $33,000. Equivalent units of production for materials are 10,000, and 5,000 for conversion costs. Instructions Compute the unit costs for materials, conversion costs, and total manufacturing costs for the month. Ex. 177 Glazer, Inc. has the following production data for.
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EXERCISES Ex. 157 Lutz Company produces a product in two departments: (1) Mixing and (2) Finishing. The company uses a process cost accounting system. (a)Purchased raw materials for $50,000 on account. (b)Raw materials requisitioned for production were: Direct materials Mixing department$20,000 Finishing department14,000 (c)Incurred labor costs of $74,000. (d)Factory labor used: Mixing department$44,000 Finishing department30,000 (e)Manufacturing overhead.
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118.Vintage Wines has fixed costs of $20,000 per year. Its warehouse sells wine with variable costs of 80% of its unit selling price. How much in sales does Vintage need to break even per year? a.$16,000 b.$4,000 c.$25,000 d.$100,000 119.Bruno & Court is a nonprofit organization that captures stray deer bewildered within residential communities..
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SHORT-ANSWER ESSAY QUESTIONS S-A E  196 Why do some companies need a cost accounting system while others do not?  What are the determining characteristics or factors that influence the type of cost accounting system that is appropriate for a company? S-A E  197 The production cost report summarizes the activities that have taken place.
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BRIEF EXERCISES BE 147 Tip Top Painting Company has the following production data for January: Beginning work in process, 0 units Units transferred out, 35,000 Units in ending work in process, 10,000, which are 30% complete for conversion costs Materials are added only at the beginning of the process. Instructions Compute equivalent units of production for both materials.
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Ex. 168 Bill Braddock is considering opening a Fast ‘n Clean Car Service Center. He estimates that the following costs will be incurred during his first year of operations: Rent $9,200, Depreciation on equipment $7,000, Wages $16,400, Motor oil $2.00 per quart. He estimates that each oil change will require 5.
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COMPLETION STATEMENTS               183.Process cost systems are used to apply costs to similar products that are ____________ in a ____________ fashion.               184.Separate _________________ accounts are maintained for each production department or manufacturing process in a process cost system.               185.In a process cost system, manufacturing costs are summarized in a ________________ report.
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128.Many U.S. firms are switching to JIT processing because a.they desire a "push" approach to manufacturing. b.it eliminates conversion costs. c.it can reduce the funds invested in inventories. d.it is a means of building up inventories. 129.In a JIT cost accounting system a.reduced product quality is offset by reduced cost. b.manufacturing overhead is applied in the traditional.
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Ex. 174 Henderson Farms reports the following results for the month of November: Sales (10,000 units)$600,000 Variable costs  420,000 Contribution margin180,000 Fixed costs  110,000 Net income$  70,000 Management is considering the following independent courses of action to increase net income. 1.Increase selling price by 5% with no change in total variable costs. 2.Reduce variable costs to 66% of sales. 3.Reduce.
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Ex. 165 Watts Company adds materials at the beginning of the process and conversion costs are incurred uniformly throughout the process. Instructions Complete the following calculation of equivalent units for materials and conversion costs.     Equivalent Units       Physical UnitsMaterialsConversion Costs Completed and transferred out40,000             Ending work in process Materials             Conversion costs, 75% complete12,000 Total units             Ex. 166 The general ledger of Oates Company.
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Ex. 175 The Polishing Department of Estaban Company has the following production and manufacturing cost data for September. Materials are entered at the beginning of the process. Production: Beginning inventory 2,000 units that are 100% complete as to materials and 40% complete as to conversion costs; units started during the period are.
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S-A E  199(Communication) Lawrence Leather Goods recently instituted just-in-time management of its inventories. The accounting department carefully modified all its reports to reflect these changes. Required: Prepare a short memo to production department managers, briefly explaining the primary changes they will see on the production cost report. .
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Ex. 169 Massey Corporation uses a process cost system and the weighted-average cost flow assumption. Production begins in the Fabricating Department where materials are added at the beginning of the process and conversion costs are incurred uniformly throughout the process. On March 1, the beginning work in process inventory consisted of.
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Ex. 179 Mayer Company uses a process cost system. The Molding Department adds materials at the beginning of the process and conversion costs are incurred uniformly throughout the process. Work in process on May 1 was 75% complete and work in process on May 31 was 60% complete. Ex. 179(cont.) Instructions Complete the Production.
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Ex. 171 The ledger of Kinsler Company has the following work in process account. Work in Process—Painting 5/1 5/31 5/31 5/31 Balance Materials Labor Overhead 5,300 7,740 4,110 2,470 5/31 Transferred out ? 5/31 Balance ? Production records show that there were 700 units in the beginning inventory, 30% complete, 3,800 units started, and 4,000 units transferred. The beginning work in process had materials cost of $3,060 and conversion costs of.
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48.If a firm increases its activity level, a.costs should remain the same. b.most costs will rise. c.no costs will remain the same. d.some costs will change, others will remain the same. 49.The activity that causes changes in the behavior of costs is referred to as the activity a.index. b.multiplier. c.element. d.correlation. 50.Cost activity indexes might help classify costs as a.temporary. b.permanent. c.variable. d.transient. 51.Which of.
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MULTIPLE CHOICE QUESTIONS 38.For an activity base to be useful in cost behavior analysis, a.the activity should always be stated in dollars. b.there should be a correlation between changes in the level of activity and changes in costs. c.the activity should always be stated in terms of units. d.the activity level should be constant over.
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BE 161 Hurly Co. has fixed costs totaling $165,000. Its unit contribution margin is $1.50, and the selling price is $5.50 per unit. Instructions Compute the break-even point in units. BE 162 Salem Bakery sells boxes of donuts each with a variable cost percentage of 35%. Its fixed costs are $54,600 per year. Instructions Determine the sales.
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MATCHING 195.Match the items in the two columns below by entering the appropriate code letter in the space provided. A.Total manufacturing cost per unit              E.              Cost reconciliation schedule B.Equivalent units of production              F.              Units transferred out C.Total units accounted for              G.              Unit production costs D.Production cost report              H.              Physical units ____              1.A summary of both production.
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TRUE-FALSE STATEMENTS 1.An activity index identifies the activity that has a causal relationship with a particular cost. 2.A variable cost remains constant per unit at various levels of activity. 3.A fixed cost remains constant in total and on a per unit basis at various levels of activity. 4.If volume increases, all costs will increase. 5.If.
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Ex. 180 Baker Winery manufactures a fine wine in two departments, Fermenting and Bottling. In the Fermenting Department, grapes are aged in casks for a period of 30 days. In the Bottling Department, the wine is bottled and then sent to the finished goods warehouse. Labor and overhead are incurred uniformly.
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Ex. 181 The Assembly Department of Nitz Company has the following production and cost data at the end of May, 2017. Production:30,000 units started into production; 25,000 units transferred out and 5,000 units 100% completed as to materials and 40% completed as to conversion costs. Manufacturing Costs:Materials added at beginning of process, $90,000;.
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78.Portman Company's activity for the first three months of 2016 are as follows: a.$2.00 b.$3.00 c.$2.26 d.$1.78 79.Ponszko Nursery used high-low data from June and July to determine its variable cost of $12 per unit. Additional information follows: a.$8,000 b.$39,600 c.$27,600 d.$35,600 80.In CVP analysis, the term "cost" a.includes only manufacturing costs. b.means cost of goods sold. c.includes manufacturing costs plus selling and.
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Ex. 170 Given below are the production data for Department No. 1 for the first month of operation: Costs charged to Department 1: Materials$12,000 Labor2,600 Overhead15,900 During this first month of operations, 4,000 units were started into production; 3,500 units were transferred out; and the remaining 500 units are 100% completed with respect to materials and.
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21.Both variable and fixed costs are included in calculating the contribution margin. 22.The break-even point is where total sales equal total variable costs. 23.The break-even point is where total sales equal total fixed costs. 24.If the unit contribution margin is $1 and unit sales are 10,000 units above the break-even volume, then net.
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Ex. 168 The Finishing Department of Edwards Company has the following production and cost data for July: 1.Transferred out, 8,000 units. 2.Ending work in process, 2,000 units that are 40% completed at July 31. 3.Materials added, $30,000; conversion costs incurred, $17,600. Materials are entered at the beginning of the process. Conversion costs are incurred uniformly.
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BRIEF Exercises BE 157 Dollywood Corporation accumulates the following data concerning a mixed cost, using miles as the activity level. Miles Driven Total Cost Miles Driven Total Cost January 10,000 $16,500 March 9,000 $12,500 February 8,000 $14,500 April 7,000 $12,000 Instructions Compute the variable and fixed cost elements using the high-low method. BE 158 Sandel Company makes 2 products, footballs and baseballs. Additional information follows: FootballsBaseballs Units4,0002,500 Sales$60,000 $25,000 Variable costs36,0007,000 Fixed costs    9,000    9,000 Net income$15,000$ .
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128.Reliable Manufacturing wants to sell a sufficient quantity of products to earn a profit of $100,000. If the unit sales price is $10, unit variable cost is $8, and total fixed costs are $200,000, how many units must be sold to earn income of $100,000? a.150,000 units b.100,000 units c.37,500 units d.1,500,000 units 129.How much.
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Ex. 167 The Assembly Department uses a process cost accounting system and a weighted-average cost flow assumption. The department adds materials at the beginning of the process and incurs conversion costs uniformly throughout the process. During July, $190,000 of materials costs and $137,100 in conversion costs were charged to the department..
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Ex. 158 Sanders Company has two production departments: Fabricating and Finishing. Beginning inventories are: Work in Process—Fabricating, $6,030; Work in Process—Finishing, $4,100; and Finished Goods, $5,600. During the month the following transactions occurred: 1.Purchased $40,000 of raw materials on account. 2.Incurred $75,000 of factory labor. Wages are unpaid. 3.Incurred $50,000 of manufacturing overhead; $40,000.
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S-A E  200(Ethics) Dolly's Dream Homes, Inc. manufactures doll houses in a continuous process. Various customizing features and furnishings are added at the end of the process to create the various models that are sold. The basic design and floor plans of all the houses are identical, however. During the most recent.
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138.The following monthly data are available for Seasons Company which produces only one product:  Selling price per unit, $42; Unit variable expenses, $14; Total fixed expenses, $42,000; Actual sales for the month of June, 4,000 units. How much is the margin of safety for the company for June? a.$70,000 b.$105,000 c.$63,000 d.$2,500 139.In evaluating the.
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Ex. 172 The Bradshaw Law Office has the following monthly telephone records and costs: Calls  Costs 2,000$2,400 1,5002,000 2,2002,600 2,5002,800 2,3002,700 1,7002,200 Instructions Identify the fixed and variable cost elements using the high-low method. Ex. 173 Determine the missing amounts. Unit contributionContribution Unit Selling PriceUnit Variable CostsMargin              Margin Ratio 1.$300$210AB 2.$600C$210D 3.EF$36030% .
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Exercises Ex. 167 Sandburg Manufacturing manufactures a single product. Annual production costs incurred in the manufacturing process are shown below for the production of 2,000 units. The Utilities and Maintenance are mixed costs. The fixed portions of these costs are $300 and $200, respectively.      Costs Incurred       Production in Units   2,000 4,000 Production Costs a.Direct Materials$  6,000? b.Direct Labor16,000? c.Utilities1,000? d.Rent3,000? e.Indirect.
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BE 152 Sandusky Widget Company has the following production data for March.  Ending Work in Process  Month Beginning Work in Process Units Transferred Out Units % Complete as to Conversion Cost March 1,200 8,100 1,000 20% Instructions Compute the physical units for March. BE 153 Sequal Company has the following production data for June: units transferred out 50,000, and ending work in process 6,000 units that are 100%.
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98.The following information is available for Wade Corp.: a.gross profit of $190,000. b.contribution margin of $430,000. c.gross profit of $220,000. d.contribution margin of $220,000. 99.Which is the true statement? a.In a CVP income statement, costs and expenses are classified only by function. b.The CVP income statement is prepared for both internal and external use. c.The CVP income statement.
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108.Nelson Manufacturing has the following data: a.$500,000 + .60X = X b.$500,000 + .40X = X c.$500,000 ÷ $500 = X d.$500,000 ÷ .40 = X 109.Boswell company reported the following information for the current year: Sales (50,000 units) $1,000,000, direct materials and direct labor $500,000, other variable costs $50,000, and fixed costs $360,000. What.
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Ex. 173 Wilkinson Company has gathered the following information. Units in beginning work in process-0- Units started into production54,000 Units in ending work in process10,000 Percent complete for conversion costs in ending work in process60% Costs incurred: Direct materials$  81,000 Direct labor$  99,000 Overhead$131,000 Instructions (a)Compute equivalent units of production for materials and for conversion costs. (b)Determine the unit costs of production. (c)Show the.
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Ex. 161 Hardy Company manufactures a single product by a continuous process, involving two production departments. The records indicate that $140,000 of direct materials were issued to and $200,000 of direct labor was incurred by Department 1 in the manufacture of the product. The factory overhead rate is $25 per machine.
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