Accounting Expert Answers & Study Resources : Page 128

9) Product costs used for pricing and product-mix decisions generally include A) manufacturing costs only. B) design costs plus manufacturing costs. C) all costs incurred along the value chain. D) distribution costs only. E) prime costs but not conversion costs. 10) Product costs used for external reporting under GAAP include A) manufacturing costs.

11) It is not a requirement to identify the indirect costs associated with each job when assigning costs to individual jobs. 12) Process costing is a useful system for tracking the costs of building a house. 13) A job cost record (or job cost sheet) is a document where the costs are.

48) Big Bird Pet Store had the following financial activities for June. Revenue was $860,000 with cost of goods sold equalling $440,000. Salaries and wages of all employees were $100,000. Fringe benefits were 15 percent of salaries and wages. Rent on the building was $100,000 and equipment amortization was $46,000..

36) Auto Tires Inc. sells tires to service stations for an average of $45 each. The variable costs of each tire are $30 and monthly fixed manufacturing costs total $15,000. Other monthly fixed costs of the company total $12,000. Required: a.What is the break-even level in tires? b.What is the margin of safety.

9) Which of the following statements about sensitivity analysis is true? A) It is a technique which is used to examine past results. B) It can be used in CVP to show changes in operating income if variable costs per unit change. C) It examines the relationship between production and service departments. D) It.

31) Which of the following is an indirect production cost? A) materials placed into production B) calibrating factory equipment C) labour placed into production D) cost of shipping a product to the customer E) advertising 32) Actual costs are defined as A) costs incurred. B) direct costs. C) indirect costs. D) predicted costs. E) sunk costs. 33) Whether a company traces costs.

58) Helmer Sporting Goods Company manufactured 100,000 units in 20X5 and reported the following costs: Sandpaper$32,000Leasing costs-plant$384,000 Materials handling320,000Amortization-equipment224,000 Coolants & lubricants22,400Property taxes-equipment32,000 Indirect manufacturing labour275,200Fire insurance-equipment16,000 Direct manufacturing labour2,176,000Direct material purchases3,136,000 Direct materials, 1/1/X5384,000Direct materials, 12/31/X5275,200 Finished goods, 1/1/X5672,000Sales revenue12,800,000 Finished goods, 12/31/X51,280,000Sales commissions640,000 Work-in-process, 1/1/X596,000Sales salaries576,000 Work-in-process, 12/31/X564,000Advertising costs480,000 Administration costs800,000 Required: a.What is the cost of direct materials used during.

21) Conversion costs are all manufacturing costs other than direct materials. 22) Overtime premium is always a component of direct labour. 23) Products, services, departments, and customers may be cost objects. 24) Costs are accounted for in two basic stages: assignment followed by accumulation. 25) A cost object is always either a.

11) The agency supervisor of a non-profit organization wants to know how many individuals may receive financial assistance during the year. The organization has fixed costs of $600,000. They aid the unemployed by supplementing their incomes by $8,000 annually, while they seek new employment skills. The budgeted appropriation for the.

38) Karen Hefner, a florist, operates retail stores in several shopping malls. The average selling price of an arrangement is $30 and the average cost of each sale is $18. A new mall is opening where Karen wants to locate a store, but the location manager is not sure about.

26) Whippany manufacturing wants to estimate costs for each product they produce at its Troy plant. The  Troy plant produces three products at this plant, and runs two flexible assembly lines. Each assembly  line can produce all three products. Required: a.Classify each of the following costs as either direct or indirect.

21) The process of assigning costs to a particular product or service is called A) a cost allocation system. B) a cost assigning system. C) a job costing system. D) a process costing system. E) a cost recording system. 22) Which of the following would most likely be a direct cost in a manufacturing company? A) supervision.

21) Fixed costs A) may include either direct or indirect costs. B) vary with production or sales volumes. C) include parts and materials used to manufacture a product. D) can be adjusted in the short run to meet actual demands. E) remain fixed regardless of the relevant range of production. 22) Fixed.

11) The vice president of production has just completed the January meeting with all production department heads. Everyone is upset that the production variances for the month were unfavourable. They do not understand why everything was unfavourable. January is typically the company's lowest production month of the year. The company uses.

  Answer the following question(s) using the information below. The Singer Company manufactures several different products. Unit costs associated with Product ICT101 are as follows: Direct materials $60 Direct manufacturing labour 10 Variable manufacturing overhead 18 Fixed manufacturing overhead 32 Sales commissions (2% of sales) 4 Administrative salaries     16        Total $140 39) What are the variable costs per unit associated with Product ICT101? A) $18.

37) Describe job-costing and process-costing systems. Explain when it would be appropriate to use each. 38) In a job-costing system, explain why it is necessary to apply indirect costs to production through the use of a manufacturing overhead cost allocation rate. 4.2   Apply the decision framework in a seven-step method.

30) Blankinship, Inc., sells a single product. The company's most recent income statement is given below. Sales$200,000 Less variable expenses(120,000) Contribution margin80,000 Less fixed expenses(50,000) Net income$30,000   Required: a.Contribution margin ratio is________ % b.Break-even point in total sales dollars is$ ________ c.To achieve $40,000 in operating income, sales must total$ ________ d.If sales increase by $50,000, net income.

21) Which of the following is an assumption of CVP analysis? A) Costs must be separated into separate fixed and variable components. B) Total revenues and total costs are curvilinear in relation to output units. C) Given revenue mixed of products is dynamic. D) There will be a change between beginning and ending levels.

  3.1   Identify the essential elements of cost-volume-profit analysis and calculate the break-even point (BEP). 1) The contribution margin is computed by deducting all costs which vary on the basis of an output-related cost driver from revenues. 2) To perform cost-volume-profit analysis, a company must be able to separate costs into fixed and.

26) Widget Company sells widgets for $20.00 each. The manufacturing costs, all variable, are $6 each. The company is planning on renting an exhibition booth ,for both display and selling purposes, at the annual candy convention. The company's sales manager will earn a vacation bonus if she can earn a.

14) A local engineering firm is bidding on a design project for a new client. The total budgeted direct labour costs for the firm are $800,000. The total budgeted indirect costs are $1,200,000. It is estimated that there are 16,000 billable hours in total. Required: a.What is the budgeted direct labour cost.

21) Popcorn Inc. currently sells plain popcorn at the ballpark. During a typical month the stand reports a profit of $18,000 with sales of $100,000 and fixed costs of $42,000 and variable costs of $0.64 per box. Next year the company plans to start selling candy-coated popcorn for $3 a.

56) Each of the following items pertains to one of these companies: Bedell Electronics (a manufacturing company), Gregory Food Retailers (a merchandising company), and Larson Real Estate (a service sector company). Classify each item as either inventoriable (I) costs or period (P) costs. inventoriable (I) costs or period (P) costs a. Salary of.

3.2   Apply the CVP model to calculate a target operating profit before interest and tax. 1) Operating margin is the same as operating revenues in CVP analysis. 2) Operating income is equal to net income plus income taxes. 3) Revenues less all costs that vary with respect to an output level is the.

3) When a manager is making a decision based on cost figures, it is preferable that he (she) thinks in terms of unit costs. 4) When 50,000 units are produced the fixed costs are $10 per unit. Therefore when 100,000 units are produced fixed costs will remain at $10 per unit. 5).

7) Hill Manufacturing uses departmental cost driver rates to apply manufacturing overhead costs to products. Manufacturing overhead costs are applied on the basis of machine hours in the Machining Department and on the basis of direct labour hours in the Assembly Department. At the beginning of 2012, the following estimates.

52) Farley Muffler Inc. received the following monthly report from its newly hired accountant, who quit after only a week on the job. Farley Muffler Inc. Cost of Goods Sold Schedule Finished Goods Inventory (beginning)$15,000 Work-in-Process Inventory (beginning)   3,000 Total$18,000 Current Manufacturing Costs:   Salaries and wages: Direct manufacturing labour$5,000 Indirect manufacturing labour2,000 Sales salaries4,000 Administrative 3,000$14,000 Other: Manufacturing supplies$1,500 Manufacturing amortization3,500 Insurance on showroom1,000 Miscellaneous.

14) Berhannan's Cellular sells phones for $100. The unit variable cost per phone is $50 plus a selling commission of 10%. Fixed manufacturing costs total $1,250 per month, while fixed selling and administrative costs total $2,500. Required: a.What is the contribution margin per phone? b.What is the break-even point in phones? c.How many phones.

11) Which of the following statements is a fixed cost in a clothing store? A) store manager's salary B) electricity C) sales commissions D) inventory E) paper for the cash register 12) If each furnace required a hose that costs $20 and 2,000 furnaces are produced for the month, the $40,000 total cost for hoses A) is.

27) What is the margin of safety in units assuming the procedure is performed 200 times? A) 200 units B) 130 units C) 140 units D) 160 units E) 20 units 28) What is the margin of safety assuming 100 procedures are performed? A) $16,000 or 40 times B) $20,000 or 50 times C) $24,000 or 60 times D) $40,000.

9) Which of the following statements about using the equation method to determine the break-even point is true? A) Operating income in the equation is set equal to the target income for the year. B) Operating income in the equation assumes that fixed costs are nil. C) Revenue in the equation includes only.

7) John wants to identify the total cost for computing the corporate tax return he prepared for his client. Labour is the only direct cost at $50 per hour. Indirect costs are $60 per labour hour. What is the total direct cost, indirect cost, and job cost, respectively, if 15.

4.1   Identify and explain the elements of an effective job-costing system. 1) Cost assignment includes cost allocation for indirect costs and direct costs. 2) Cost pools are defined as groupings of individual cost items which can range from broad, company-wide categories to very narrow categories. 3) A cost allocation base is only financial.

19) How many dresses must the Bridal Shoppe sell to yield after-tax net income of $18,000, assuming the tax rate is 40%? A) 180 dresses B) 170 dresses C) 150 dresses D) 200 dresses E) 270 dresses 20) To determine the effect of income tax on a decision, managers should evaluate.

29) What is the amount of gross margin? A) $1,475,000 B) $1,500,000 C) $1,047,250 D) $1,032,500 E) $1,007,425 Use the information below to answer the following question(s). Frazer Inc. had the following activities in the year: Direct materials:      Beginning inventory $100,000      Purchases 308,000      Ending inventory 52,000 Direct manufacturing labour 80,000 Manufacturing overhead 60,000 Ending work in process inventory 20,000 Beginning work in process inventory 4,000 Ending.

2.2   Differentiate fixed from variable cost behaviour and explain the relationship of cost behaviour to direct and indirect cost classifications. 1) A relevant range is the range of the cost driver in which a specific relationship between cost and driver is valid. 2) Changes in particular cost drivers automatically result in decreases.

40) Suppose a company decided to automate a production line. Explain what effects this would have on a company's cost structure using CVP terminology. Could these changes have any possible negative effect on the firm? 41) Bonnie and Clyde started the BC Restaurant a few years ago. They rented a.

3.5   Interpret the results of CVP analysis in complex multi-product and multiple cost driver situations. 1) The relative combination of quantities of products or services that constitute total revenues are called the sales target. 2) The key to applying CVP analysis in non-profit and service organizations is to measure their output. 3) Changes.

17) How many people must purchase tickets assuming option two is chosen, and Big Sports expects to raise $4,820 for the athletic fund? Assume no one pays more than the cost of his/her ticket. A) 258 people B) 173 people C) 243 people D) 276 people E) 310 people 18) An expected value decision model is.

53) Find the required amounts, assuming each is an independent case. a.Direct MaterialsBeginning balance$14,000 Ending balance28,000 Purchases96,000 Direct materials used? b.Finished Goods InventoryCost of goods manufactured124,000 Ending balance40,000 Cost of goods sold122,000 Beginning balance? c.Work in Process InventoryEnding Balance44,000 Cost of goods manufactured42,000 Beginning balance16,000 Current manufacturing costs? d.Merchandise InventoryPurchases420,000 Cost of goods sold446,000 Beginning balance82,000 Ending balance? 54)  Evans Inc., had the following activities during 2012: Direct.

  Use the information below to answer the following question(s). Consider the following data of the Vancouver Company for the year 20X4: Sandpaper-Plant $10,000 Leasing costs - plant $120,000 Materials handling-Plant 100,000 Amortization- equip. 70,000 Coolants-Plant 7,000 Property taxes - equip. 10,000 Indirect manufacturing labour 86,000 Fire insurance - equip. 5,000 Direct manufacturing labour 680,000 Direct material purchases 980,000 Direct materials, 1/1/X4 120,000 Direct materials 12/31/X4 86,000 Finished goods, 1/1/X4 210,000 Sales 4,000,000 Finished goods, 12/31/X4 400,000 Sales commissions 200,000 WIP, 1/1/X4 30,000 Sales salaries 180,000 WIP, 12/31/X4 20,000 Advertising costs 150,000 Administration.

11) If sales increase by $25,000, operating income will increase by A) $10,000. B) $15,000. C) $22,200. D) $12,500. E) $8,000. 12) Stephanie's Stuffed Animals reported the following: Revenues$1,000 Variable manufacturing costs$200 Variable nonmanufacturing costs$230 Fixed manufacturing costs$150 Fixed nonmanufacturing costs$140 Required: a.Compute contribution margin. b.Compute gross margin. c.Compute operating income. 13) Arthur's Plumbing reported the following: Revenues$4,500 Variable manufacturing costs$900 Variable nonmanufacturing.

30) A manufacturing company contracts with the labour union to guarantee full employment for all employees with at least 10 years seniority. The Company expects to be working at capacity for the next 2 years (the life of the contract), so this was seen as a bargaining concession without any.

31) Many large companies which have multiple production methods and processes have hybrid costing systems that are A) mostly job-costing. B) combined using actual and normal costing. C) mostly process costing. D) a mix of job-costing and process costing. E) combined using joint allocation costing. 32) Place the following steps in the order suggested by the.

51) The following information is taken from the records of Britton Company for March: Purchases: Direct materials$9,000,000 Indirect materials200,000 Office supplies420,000 Sales36,000,000 Salaries and Benefits: Selling and administrative4,000,000 Direct manufacturing labour6,000,000 Rent*4,000,000 Utilities*1,200,000 Advertising700,000 Inventories: March 1              March 31 Direct materials$4,400,000$1,600,000 Indirect materials500,000600,000 Office supplies150,000180,000 Finished goods24,000,00016,000,000 * Of these costs, 60 percent are assigned to manufacturing and 40 percent to selling and administration. Required: a.Prepare a schedule of.

41) Which statement about conversion costs is correct, using the three-part classification of costs? A) They include only direct manufacturing labour costs. B) They include only indirect manufacturing costs. C) They include both direct manufacturing labour costs and manufacturing overhead costs. D) They include indirect manufacturing labour costs but not manufacturing overhead costs. E) They.

19) What is Montreal's cost of goods sold during the year? A) $260,000 B) $232,000 C) $220,000 D) $200,000 E) $240,000 20) Manufacturing-sector companies A) purchase materials and convert them to finished goods. B) buy goods and resell them. C) provide services or intangible products. D) have only period costs. E) have one classification of inventory. 21) Merchandising-sector companies A) purchase materials and.

11) A profit-volume graph shows the impact on operating income from changes in the output level. 12) The contribution margin method of CVP analysis uses the equation: break-even units = unit contribution margin/fixed costs. 13) The contribution margin method can be used to verify a break-even calculation. 14) The total costs line.

49) Eichhorn Company's Process Engineering department has the responsibility of rearranging the individual work tasks for each assembly line worker, with the goal of utilizing each worker as much as possible. Currently, on average, each assembly line worker only has tasks that require 47 minutes per hour, and the plant.

11) Cowley County Hospital uses a job-costing system for all patients who have surgery. In March, the Pre-Operating Room (PRE-OP) and Operating Room (OR) had budgeted allocation bases of 4,000 nursing hours and 2,000 nursing hours, respectively. The budgeted nursing overhead costs for each department for the month were $168,000.