Accounting Expert Answers & Study Resources : Page 726

11.Budget preparation is best determined in a top-down managerial approach. a.True b.False 12.Past performance is the best overall basis for evaluating current performance and assessing the need for correctiveaction. a.True b.False 13.The responsibility for coordinating the preparation of a master budget should be assigned to the CEO of a firm. a.True b.False 14.The financial budgets of a business include.

131.Flying Cloud Co. has the following operating data for its manufacturing operations: Unit selling price$250 Unit variable cost100 Total fixed costs$840,000 The company has decided to increase the wages of hourly workers which will increase the unit variable cost by10%. Increases in the salaries of factory supervisors and property taxes for the factory will.

21.A rental cost of $20,000 plus $0.70 per machine hour of use is an example of a mixed cost. a.True b.False 22.For purposes of analysis, mixed costs can generally be separated into their variable and fixed components. a.True b.False 23.The contribution margin ratio is the same as the profit-volume ratio. a.True b.False 24.Variable costs as a percentage of sales.

181.  The Klein Company reports the following data: Sales $980,000 Variable costs 500,000 Fixed costs 350,000 Determine Klein Company’s operating leverage. Round your answer to two decimal places. 182.  The Tom Company reports the following data: Sales $600,000 Variable costs 400,000 Fixed costs 100,000 Determine Tom Company’s operating leverage. 183.  The Dean Company has sales of $500,000, and the break-even point in sales dollars of $300,000..

145.  On March 1, Upton Company’s Packaging Department had work in process inventory of 8,820 units, which hadbeen transferred in from the Finishing Department.  These units had accumulated costs of $315,000 in previousdepartments and $16,000 for conversion costs in the Packaging Department. During March, 30,000 units were transferred into the department. .

51.Detailed supplemental schedules based on department responsibility are often prepared for major items in theoperating expenses budget. a.True b.False 52.The capital expenditures budget details future plans for acquisition of fixed assets. a.True b.False 53.The cash budget summarizes future plans for acquisition of fixed assets. a.True b.False 54.The cash budget is affected by the sales budget, the various budgets for.

181.  Trail Bikes, Inc. sells three Deluxe bikes for every seven Standard bikes.  The Deluxe bike sells for $1,800 and hasvariable costs of $1,200.  The Standard bike sells for $600 and has variable costs of $200. Required (a)    If Trail Bikes has fixed costs that total $1,702,000, how many bikes must be.

31.The master budget of a small manufacturer would normally include all necessary component budgets except thecapital expenditures budget. a.True b.False 32.The master budget of a small manufacturer would normally include all necessary component budgets except thebudgeted balance sheet. a.True b.False 33.The master budget of a small manufacturer would normally include all component budgets that impact on.

181.  Douglas Company has a contribution margin ratio of 30%.  If Douglas has $336,420 in fixed costs, what amount ofsales will need to be generated in order for the company to break even? 182.  The Waterfall Company sells a product for $150 per unit. The variable cost is $80 per unit,.

68.A variant of fiscal-year budgeting whereby a twelve-month projection into the future is maintained at all times istermed a.flexible budgeting b.continuous budgeting c.zero-based budgeting d.master budgeting 69.Jase Manufacturing Co.'s static budget at 10,000 units of production includes $40,000 for direct labor and $4,000 forelectric power. Total fixed costs are $24,000. At 12,000 units of production,.

141.The point where the sales line and the total costs line intersect on the cost-volume-profit chart represents a.the maximum possible operating loss b.the maximum possible operating income c.the total fixed costs d.the break-even point 142.The point where the profit line intersects the horizontal axis on the profit-volume chart represents a.the maximum possible operating loss b.the maximum possible.

145.  The inventory at June 1 and costs charged to Work in Process—Department 60 during June are as follows: 3,800 units, 80% completed ($25,000 materials, $35,400 conversion)              $  60,400Direct materials, 32,000 units                            368,000 Direct labor244,000 Factory overhead188,000 Total cost to be accounted for$860,400 During June, 32,000 units were placed into production and 31,200 units.

Match each phrase that follows with the term (a-e) it describes. cost of production report equivalent units of production manufacturing cells yield just-in-time processing 146.  measures the quantity of output of production relative to the inputs 147.  provides information for controlling and improving operations 148.  focuses on reducing time, cost, and poor quality within the process 149.  the portion.

1.The task of preparing a budget should be the sole task of the most important department in an organization. a.True b.False 2.A formal written statement of management's plans for the future, expressed in financial terms, is called a budget. a.True b.False 3.Budgets are normally used only by profit-making businesses. a.True b.False 4.The objectives of budgeting are (1) establishing specific.

1.Cost behavior refers to the methods used to estimate costs for use in managerial decision making. a.True b.False 2.Cost behavior refers to the manner in which a cost changes as the related activity changes. a.True b.False 3.The fixed cost per unit varies with changes in the level of activity. a.True b.False 4.A production supervisor's salary that does not vary.

121.If fixed costs are $500,000 and the unit contribution margin is $20, what is the break-even point in units if fixedcosts are reduced by $80,000? a. 25,000 b. 29,000 c. 4,000 d. 21,000 122.If fixed costs are $600,000 and the unit contribution margin is $40, what is the break-even point if fixed costs areincreased by.

171.  Copper Hill Inc. manufactures laser printers within a relevant range of production of 70,000 to 100,000 printers peryear. The following partially completed manufacturing cost schedule has been prepared: Number of Printers Produced 70,000 90,000 100,000 Total costs: Total variable costs $350,000 (d) (j) Total fixed costs 630,000 (e) (k) Total costs $980,000 (f) (l) Cost per unit: Variable cost per unit (a) (g) (m) Fixed cost per unit (b) (h) (n) Total cost per unit (c) (i) (o) Complete.

181.  Roller Paint Co. reported the following data for the month of September. There were no beginning inventories andall units were completed (no work in process). ? Total Cost Number of Units ? Unit Cost Manufacturing costs: Variable $465,000 30,000 $15.50 Fixed 210,000 30,000 7.00 Total $675,000 $22.50 Selling and administrative expenses: Variable $2 per unit sold Fixed $39,000 In the month of September, 28,000 of the 30,000 units manufactured were sold.

Match each business that follows to the type of costing system (a or b) it would typically use. Job order costing Process costing 146.  Movie studio 147.  Gasoline refinery 148.  Home construction 149.  Paper manufacturer 150.  Flour mill .

171.  Bluegill Company sells 45,000 units at $18 per unit. Fixed costs are $62,000 and income from operations is$298,000. Determine the (a) variable cost per unit, (b) unit contribution margin, and (c) contribution margin ratio. 180. (a)If Swannanoa Company's budgeted sales are $1,000,000, fixed costs are $350,000, andvariable costs are $600,000,.

41.The budgeted volume of production is normally computed as the sum of (1) the expected sales volume and (2) thedesired ending inventory. a.True b.False 42.If Division Inc. expects to sell 200,000 units in the current year, desires ending inventory of 24,000 units, and has22,000 units on hand as of the beginning of the.

181.  The following data are available from the accounting records of Willow Creek Co. for the month ended May 31.During the accounting period, 17,000 units were manufactured and sold at a price of $60 per unit. There were nobeginning inventories, and all units were completed (no work in process). Cost Total Cost Number.

21.A budget procedure that provides for the maintenance at all times of a twelve-month projection into the future iscalled master budgeting. a.True b.False 22.The budget procedure that requires all levels of management to start from zero in estimating sales, production, andother operating data is called zero-based budgeting. a.True b.False 23.The budget procedure that requires all levels.

145.  Discuss how equivalent units are computed under the average cost method. 146.  Kamin Company’s Mixing Department had a beginning inventory of 4,000 units which had accumulated conversioncosts of $55,000.  During the period, the Mixing Department accumulated conversion costs of $92,000 and started8,000 new units.  Ending inventory was 2,500 units which.

11.Because variable costs are assumed to change in direct proportion to changes in the activity level, the graph of thevariable costs when plotted against the activity level appears as a circle. a.True b.False 12.Variable costs are costs that remain constant in total dollar amount as the level of activity changes. a.True b.False 13.Variable costs are costs.

101.What ratio indicates the percentage of each sales dollar that is available to cover fixed costs and to provide aprofit? a.margin of safety ratio b.contribution margin ratio c.costs and expenses ratio d.profit ratio 102.A firm operated at 90% of capacity for the past year, during which fixed costs were $420,000, variable costs were40% of sales,.

111.If the contribution margin ratio for France Company is 45%, sales were $425,000, and fixed costs were $100,000,what was the income from operations? a. $233,750 b. $91,250 c. $191,250 d. $133,750 112.If fixed costs are $250,000, the unit selling price is $125, and the unit variable costs are $73, what is the break-evensales (units)? a.3,425 units b.2,381.

91.Thompson Company manufactures and sells cookware. Because of current trends, it expects to increase sales by15% next year. If this expected level of production and sales occurs and plant expansion is not needed, how shouldthis increase affect next year’s total amounts for the following costs? Variable CostsFixed CostsMixed Costs a.increaseincreaseincrease b.increaseno changeincrease c.no changeno.

81.Strait Co. manufactures office furniture. During the most productive month of the year, 3,000 desks weremanufactured at a total cost of $59,000. In the month of lowest production the company made 1,125 desks at a costof $38,000. Using the high-low method of cost estimation, total fixed costs are a. $21,000 b. $25,400 c..

171.  The following is a list of various costs of producing T-shirts. Classify each cost as either a variable, fixed, or mixedcost for units produced and sold. (a)          Ink used for screen printing (b)         Warehouse rent of $8,000 per month plus $0.50 per square foot of storage used (c)          Thread (d)         Electricity costs of.

171.  The manufacturing cost of Mocha Industries for three months of the year are provided below: Total Cost Production April $ 63,100 1,100 units May 80,920 1,800 June 100,900 2,600 Using the high-low method, determine the (a) variable cost per unit, and (b) the total fixed costs. 172.  Blane Company has the following data: Total sales $800,000 Total.

61.Cost behavior refers to the manner in which a.a cost changes as the related activity changes b.a cost is allocated to products c.a cost is used in setting selling prices d.a cost is estimated 62.The three most common cost behavior classifications are a.variable costs, product costs, and sunk costs b.fixed costs, variable costs, and mixed costs c.variable costs,.

88.For February, sales revenue is $700,000; sales commissions are 5% of sales; the sales manager's salary is $96,000;advertising expenses are $90,000; shipping expenses total 2% of sales; and miscellaneous selling expenses are$2,500 plus 1/2 of 1% of sales. Total selling expenses for the month of February are a. $161,000 b. $237,500 c. $235,000 d..

71.Most operating decisions of management focus on a narrow range of activity called the a.relevant range of production b.strategic level of production c.optimal level of production d.tactical operating level of production 72.Costs that vary in total in direct proportion to changes in an activity level are called a.fixed costs b.sunk costs c.variable costs d.differential costs 73.Which of the following is.

58.A formal written statement of management's plans for the future, expressed in financial terms, is a a.gross profit report b.responsibility report c.budget d.performance report 59.The budget process involves doing all of the following except a.establishing specific goals b.executing plans to achieve the goals c.periodically comparing actual results with the goals d.dismissing all managers who fail to achieve operational goals.

78.At the beginning of the period, the Assembly Department budgeted direct labor of $110,000, direct materials of$170,000, and fixed factory overhead of $28,000 for 8,000 hours of production. The department actually completed10,000 hours of production. What is the appropriate total budget for the department, assuming it uses flexiblebudgeting? a. $288,000 b. $305,000 c..

Match each phrase that follows with the term (a-h) it describes. direct labor and factory overhead direct labor and direct materials transferred in costs equivalent units process costing job order costing first-in, first-out method cost of production report 146.  a process costing method that costs each period’s equivalent units of work with that period’s costs per equivalentunit 147.  measure of.

161.What was Rusty Co.’s weighted average unit selling price? a. $180.00 b. $75.00 c. $100.00 d. $110.00 162.What was Rusty Co.’s sales mix last year? a. 58% X, 42% Y b. 60% X, 40% Y c. 30% X, 70% Y d. 12.5% X, 87.5% Y 163.What was Rusty Co.’s unit variable cost of E? a. $52.50 b. $70.00 c. $120.00 d. $50.00 164.What was Rusty.

181.  For the coming year, River Company estimates fixed costs at $109,000, the unit variable cost at $21, and the unitselling price at $85. Determine (a) the break-even point in units of sales, (b) the unit sales required to realizeoperating income of $150,000 and (c) the probable operating income if.

181.  Given the following: Variable cost as a percentage of sales = 60%Unit variable cost = $30 Fixed costs = $200,000 What is the break-even point in units? 182.  Gladstorm Enterprises sells a product for $60 per unit. The variable cost is $20 per unit, while fixed costs are$85,000. Determine the (a) break-even point.

181.  Cordell, Inc. has an operating leverage of 3. Sales are expected to increase by 9% next year. What is the expectedchange in operating income next year? 182.  Silver River Company sells Products S and T and has made the following estimates for the coming year: Product Unit Selling Price Unit Variable Cost Sales Mix S $30 $24 60% T 70 56 40 Fixed.

151.What was Carter Co.'s unit contribution margin of E? a. $24 b. $60 c. $92 d. $20 152.Assuming that last year's fixed costs totaled $960,000, what was Carter Co.'s break-even point in units? a.40,000 units b.12,000 units c.35,000 units d.28,000 units 153.If a business had sales of $4,000,000 and a margin of safety of 25%, the break-even point was a. $5,000,000 b..

181.  A company has a margin of safety of 25%, a contribution margin ratio of 30%, and sales of $1,000,000. (a)   What is the break-even point in sales dollars? (b)   What is the operating income? (c)    If neither the relationship between variable costs and sales nor the amount of fixed costs isexpected to.

41.If fixed costs are $450,000 and the unit contribution margin is $50, the sales necessary to earn an operating incomeof $50,000 are 10,000 units. a.True b.False 42.If fixed costs are $650,000 and the unit contribution margin is $30, the sales necessary to earn an operating incomeof $30,000 are 14,000 units. a.True b.False 43.Only a single line,.

Match the following terms with their definitions. a.  Relevant range b.  Break-even point c.  Contribution margin d.  Fixed costs e.  Variable costs 181.  Vary in proportion to changes in activity levels 182.  Remain the same in total dollar amount as the level of activity changes 183.  Where a business’s revenues exactly equal costs 184.  A specific activity range over.

51.If the volume of sales is $6,000,000 and sales at the break-even point amount to $4,800,000, the margin of safety is25%. a.True b.False 52.If the volume of sales is $7,000,000 and sales at the break-even point amount to $4,800,000, the margin of safety is45.8%. a.True b.False 53.Companies with large amounts of fixed costs will generally have.

171.  The cost graphs in the illustration below shows various types of cost behaviors. For each of the following costs, identify the cost graph that best describes its cost behavior as the number of unitsproduced and sold increases: (a)          Sales commissions of $6,000 plus $0.05 for each item sold. (b)         Rent on warehouse.

31.If fixed costs are $850,000 and the unit contribution margin is $50, profit is zero when 15,000 units are sold. a.True b.False 32.The point in operations at which revenues and expenses are exactly equal is called the break-even point. a.True b.False 33.Break-even analysis is one type of cost-volume-profit analysis. a.True b.False 34.If the property tax rates are increased, this.

181.  For the current year ending April 30, Hal Company expects fixed costs of $60,000, a unit variable cost of $70, andanticipated break-even of 1,715 sales units. (a)          Compute the unit sales price. (b)         Compute the sales (units) required to realize an operating profit of $8,000.Round your answer to the nearest whole.

145.  Zang Co. manufacturers its products in a continuous process involving two departments, Machining and Assembly.Prepare journal entries to record the following transactions related to production during June: (a)          Materials purchased on account, $180,000 (b)         Materials requisitioned by: Machining, $73,000 direct and $9,000 indirect materials; Assembly, $4,900 indirect materials (c)          Direct labor used by.