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Study Resources (Accounting)

Learning Objective 21-3 1) Absorption costing is more appropriate when determining the product costs for long-term planning. 2) Some costs are not controllable in the long-run. However, in the short run, all costs are controllable. 3) A business segment is an identifiable part of the company for which financial information is available. 4) For.
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Learning Objective 22-3 1) The production budget determines the number of units to be produced during the period. 2) If the cost of indirect materials needed for production is insignificant, it should not be included in the budgeting process. 3) Magnolia Inc. has budgeted sales for the first quarter of the next.
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Learning Objective 24-4 1) Companies evaluate investment centers using the same measures as the profit centers. 2) Operating income alone does not indicate how efficiently a segment is using its assets. 3) Return on investment focuses on net income in the numerator of the ratio. 4) Managers of investment centers are responsible not only.
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11) High-Tech Computer Services provide services to corporate and individual customers. During the month of June, the corporate business segment provided services to 500 customers and earned $60,000 in revenue. The individual business segment provided services to 400 customers and earned $35,000 in revenue. The variable costs for the corporate.
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Learning Objective 23-6 1) A favorable variance has a debit balance and is a contra-revenue. 2) An unfavorable variance for an expense means more expense has been incurred than planned. 3) Favorable variances have credit balances. They are contra-expenses and therefore decrease the expense Cost of Goods Sold. 4) When a manufacturing company uses.
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11) Kapital Inc. has prepared the operating budget for the first quarter of 2015. They forecast sales of $50,000 in January, $60,000 in February, and $70,000 in March. Variable and fixed expenses are as follows: Variable: Power cost (40% of Sales) Miscellaneous expenses: (5% of Sales) Fixed: Salary expense: $8,000 per month Rent expense:.
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11) Both the sales volume variance and the flexible budget variance help revenue center managers understand why they have exceeded or fallen short of budgeted revenue. 12) Milliken Inc. provides the following information: Actual Sales Static Budget Flexible Budget Sales Volume Variance Sale Revenue $556,500 $525,000 $450,000 ? Calculate the sales volume variance. A) $31,500 F B) $31,500 U C) $75,000 U D) $106,500 F 13).
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11) Which of the following budgets focuses on the income statement and its supporting schedules? A) the operating budget B) the cash budget C) the capital expenditures budget D) the sales budget 12) The starting point in the budgeting process is the preparation of the ________. A) cash budget B) production budget C) sales budget D) budgeted income statement 13).
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11) The product line of a manufacturing company is most likely to be considered as a(n) ________. A) cost center B) profit center C) revenue center D) investment center 12) Responsibility reports for a profit center include ________. A) revenues only B) invested capital C) both revenues and costs D) returns on investments 13) Long-term investments are made by the.
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11) Atlas Inc. uses a standard costing system. Atlas's year ending balances at December 31, 2015 are shown here: What is the standard net operating income of the company for the year ended December 31, 2015? A) $8,780 B) $6,290 C) $8,470 D) $7,530 12) Alpine Productions uses a standard costing system for recording transactions..
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21) Moon Beverages Corporation provides the following financial information: Minimum acceptable operating income $556,600 Average total assets $2,530,000 Operating income $708,400 Return on investment 28% Net sales $900,000 Calculate the residual income (RI) of Moon Corp. A) $1,156,000 B) $300,000 C) $151,800 D) $58,200 22) Moon Beverages Corporation provides the following financial information: Minimum acceptable operating income $556,600 Average total assets $2,530,000 Operating income $708,400 Return on investment 28% Net sales $900,000 Calculate the target rate of.
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Learning Objective 24-2 1) Performance evaluation systems provide top management with a framework for maintaining control over the entire organization. 2) Communicating the expectations of top management to segment managers improves goal congruence. 3) The practice of comparing a company's achievements against the best practices in the industry is known as goal congruence. 4).
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Learning Objective 23-1 1) A static budget is prepared for only one level of sales volume. 2) A favorable variance reflects a decrease in operating income. 3) A variance is the difference between an actual amount and a budgeted amount. 4) A flexible budget summarizes revenues and expenses for various levels of sales volume.
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11) The return on investment of a company can be improved by either increasing average total assets or decreasing operating income. 12) Residual income is used as a key performance indicator for evaluating an investment center's financial performance. 13) Recreation Equipment Company has several divisions that are investment centers. Data for the.
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21) Which of the following is a key performance indicator of the financial perspective in a balanced scorecard? A) hours of employee training B) number of warranty claims C) percentage of market share D) return on investment 22) Which of the following is a key performance indicator of the internal business perspective in a balanced.
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11) Kevin Couriers Company prepared the following static budget for the year 2015: Static Budget Units/Volume 5,000 Per Unit Sales Revenue $3.00 $15,000 Variable Expenses 1.50 7,500 Contribution Margin 7,500 Fixed Expenses 4,000 Operating Income/(Loss) $3,500 If a flexible budget was prepared at a volume of 7,000, calculate the amount of operating income. A) $3,500 B) $10,500 C) $6,500 D) $4,000 12) Ibis Paper Company prepared the following static budget for the.
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41) Danby Inc. has the following cost data: Direct materials $38 per unit Direct labor 52 per unit Variable manufacturing overhead 15 per unit Fixed manufacturing overhead 10,000 per year Calculate the unit product cost using absorption costing when production is 200 units, 400 units, and 800 units. .
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24) Edge Inc. had two products—Le Chaud and Le Frais. Financial data for both the products follow: Le Chaud Le Frais Unit sold 2,200 units 800 units Sale price per unit $500 $1,000 Variable manufacturing cost per unit 320 750 Sale commission (% of sales) 7% 5% It had two sale executives—Jack and Peter. Each of them sold a total of 1,500 units during the.
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11) Diemans Corp. has provided a part of its budget for the second quarter: Apr May June Cash collections $40,000 $45,000 $52,000 Cash payments: Purchases of inventory 4,500 7,200 4,500 Operating expenses 7,900 5,600 9,000 Capital expenditures 0 20,000 4,600 The cash balance on April 1 is $12,000. Assume that there will be no financing transactions or costs during the quarter. Calculate the cash balance at the end of April. A) $50,000 B).
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11) Elite Brands Company uses standard costs for its manufacturing division. Standards specify 0.1 direct labor hours per unit of product. At the beginning of the year, the static budget for variable overhead costs included the following data: Production volume 6,000 units Estimated variable overhead costs $13,500 Estimated direct labor hours (DLHr) 600 hours At the end.
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Learning Objective 22-4 1) The capital expenditures budget is prepared before the preparation of the cash budget. 2) For any organization, the primary source of cash is from its customers. 3) The cash budget is the prerequisite for the master budget. 4) The output of a cash budget is input for an operating budget. 5).
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Learning Objective 23-4 1) When management is investigating overhead variances, they need to further determine whether cost increases were controllable or if the cost standard needs to be updated. 2) The fixed overhead cost variance measures the difference between actual fixed overhead and budgeted fixed overhead to determine the controllable portion of.
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Learning Objective 24-3 1) Management by exception directs the management's attention to important differences between the actual and the budgeted amounts. 2) Uncontrollable costs are the costs that can be influenced by the decisions of a manager. 3) Cost center responsibility reports typically focus on the flexible budget variance. 4) A unique factor of.
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Learning Objective 23-5 1) Fixed overhead volume variance is a flexible budget variance. 2) The aggregate of direct materials cost and efficiency variances results in total direct materials variance. 3) The total production cost flexible budget variance is obtained by adding direct labor efficiency variance and fixed overhead volume variance. 4) The total fixed.
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Learning Objective 22-5 1) Use of advanced technology makes it more cost effective for managers to conduct sensitivity analysis. 2) Sensitivity analysis is a what-if technique. 3) A company with different segments using different software configurations can easily combine budget data of different segments to create the master budget. 4) Which of the following.
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Learning Objective 23-2 1) A standard is a price, cost, or quantity that is expected under normal conditions. 2) A standard cost system is an accounting system that uses standards for product costs. 3) Standard costs help motivate employees by serving as benchmarks against which their performance is measured. 4) A standard cost system.
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11) Which of the following is most likely a key performance indicator of the internal business perspective of the balanced scorecard? A) number of units produced per hour B) employee turnover C) cash flow D) number of cross-trained employees 12) One part of the balanced scorecard helps management answer the question, "How do we look.
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31) The Carolina Products Company has completed the flexible budget analysis for the second quarter, which is as given below. Actual Results Flexible Budget Variance Flexible Budget Sales Volume Variance  Static Budget Units/Volume 12,800 0 12,800 800 F 12,000 Sales Revenue $62,720 $1,280 U $64,000 $4,000 F $60,000 Variable Expenses 27,520 640 U 26,880 1,680 U 25,200 Contribution Margin $35,200 $1,920 U $37,120 $2,320 F $34,800 Fixed Expenses 34,100 100 U 34,000 0 34,000 Operating Income/(loss) $1,100 $2,020 U $3,120 $2,320 F $800 Which of the following statements would be a correct interpretation of the flexible budget variance for fixed expenses? A) decrease.
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11) Emerald Marine Stores Company manufactures special metallic materials and decorative fittings for luxury yachts that require highly skilled labor. Emerald uses standard costs to prepare its flexible budget. For the first quarter of 2015, direct material and direct labor standards for one of their popular products were as follows: Direct.
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21) Edge Inc. had two products—Le Chaud and Le Frais. Financial data for both the products follow: Le Chaud Le Frais Unit sold 2,200 units 800 units Sale price per unit $500 $1,000 Variable manufacturing cost per unit 320 750 Sale commission (% of sales) 7% 5% It had two sale executives—Jack Lynch and Peter Cho. Each of them sold a total of 1,500 units.
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Learning Objective 23-3 1) Only unfavorable variances should be investigated, if substantial, to determine their causes. 2) A favorable direct materials cost variance occurs when the actual direct materials cost incurred is less than the standard direct materials cost. 3) A favorable direct materials cost variance occurs when the actual direct materials cost.
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11) The management of Zeta Fire Alarms Company has calculated the following variances: Direct materials cost variance $8,000 U Direct materials efficiency variance 35,000 F Direct labor cost variance 15,000 F Direct labor efficiency variance 12,000 U Total variable overhead variance 7,000 F Total fixed overhead variance 3,050 F What is the total direct labor variance of the company? A) $15,000 F B) $10,050 F C).
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21) Wood Designs Company, a custom cabinet manufacturing company, is setting standard costs for one of its products. The main material is cedar wood, sold by the square foot. The current cost of cedar wood is $4.00 per square foot from the supplier. Delivery costs are $0.25 per board foot..
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Learning Objective 21-4 1) Absorption costing is the only method used in short-term decision making. 2) Service companies do not have fixed costs; all costs incurred by service companies are variable costs. 3) The contribution margin for service companies is calculated by subtracting fixed costs from service revenue. 4) The calculation of contribution margin.
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21) Onyx Décor Company has prepared a static budget at the beginning of the month. At the end of the month, following information has been retrieved from the records. Static budget: Sales volume: 2,000 units: Price: $50 per unit Variable expense: $12 per unit: Fixed expenses: $25,000 per month Operating income: $51,000 Actual results: Sales volume:.
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Learning Objective 22-1 1) A budget is a financial plan that managers use to coordinate a business's activities. 2) Budgeting requires managers to decide upon the course of action and then to plan for the same. 3) Budgets provide a benchmark that motivates employees and helps managers evaluate performance. 4) A goal of the.
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31) Groovelex Inc. reports the following information for the year ended December 31, 2014: Units sold 500 units Sale price $120 per unit Direct materials $25 per unit Direct labor $12 per unit Variable manufacturing overhead $13 per unit Fixed manufacturing overhead $16.50 per unit Variable selling and administrative costs $6 per unit Fixed selling and administrative costs $12,500 per year The operating profit calculated using variable costing and absorption costing amounted to $9,270 and.
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Learning Objective 22-7 1) The financial budget of a merchandising company is similar to that of a manufacturing company. 2) The budgeted income statements of both manufacturing and merchandising companies include the calculation of gross profit. 3) While calculating the budgeted cash payments for selling and administrative expenses, noncash expenses like depreciation.
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Learning Objective 22-2 1) A strategic budget is a long-term financial plan used to coordinate the activities needed to achieve the long-term goals of the company. 2) An operational budget is a short-term financial plan that coordinates activities to achieve short-term goals. 3) A strategic budget will be as detailed as an operational.
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Learning Objective 24-1 1) A company in which the major planning and controlling decisions are made by top management is considered as a centralized company 2) In a decentralized company, all the planning and controlling decisions are made by top management. 3) Centralized operations are better for small companies due to the smaller.
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21) Acme Inc. has prepared its third quarter budget and provided the following data: Jul Aug Sep Cash collections $50,000 $40,000 $48,000 Cash payments: Purchases of inventory 31,000 22,000 18,000 Operating expenses 12,000 9,000 11,600 Capital expenditures 13,000 25,000 0 The cash balance on June 30 is projected to be $4,000. The company has to maintain a minimum cash balance of $5,000 and is authorized to borrow at the end of.
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13) Fly GenX Inc. has the following budgeted sales for the next quarter. Month: 1 2 3 Units 10,000 11,000 12,000 Inventory of finished goods on hand at the beginning of the quarter is 4,000 units. The company desires to maintain ending inventory equal to beginning inventory plus 1,000 units every month. Calculate the quantity to be produced during the.
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21) What does a favorable direct materials cost variance indicate? A) The actual quantity of materials used was less than the standard quantity. B) The actual cost of materials purchased was less than the standard cost of materials purchased. C) The actual cost of materials purchased was greater than the standard cost of.
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11) Companies use techniques like time-and-motion studies, and consult industry "best practices" when developing standards. This is referred to as benchmarking. 12) The static budget is used to compute flexible budget variance or price and efficiency variances. 13) Which of the following is the correct formula to measure cost variance? A) Cost Variance.
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41) An unfavorable sales volume variance in operating income suggests a(n) ________. A) increase in number of actual units sold when compared to the expected number of units sold B) decrease in number of actual units sold when compared to the expected number of units sold C) increase in variable expenses per unit D).
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42) Silver Rex Inc. has provided the following data for the year 2015: Direct materials $10 per unit Direct labor $15 per unit Variable manufacturing overhead $20 per unit Fixed manufacturing overhead $25,000 per year Fixed selling and administrative costs $15,000 per year Sale price $75 per unit Beginning inventory 500 units Units produced 5,000 units Units sold 4,500 units Requirements: a) What is Silver Rex's product cost under absorption costing and variable costing? b) Prepare income statements for Silver.
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21) Which of the following is a responsibility that is common to the managers of cost, profit, and investment centers? A) generating revenues B) generating profits C) managing the invested capital D) controlling costs 22) Qvoware Inc. sells cosmetic products in the United States. Which one of the following is most likely to be a.
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