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98 Cards in this Set
- Front
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The cost of an asset less its salvage value is referred to as: A. book value. B. market value. C. depreciable cost. D. historical cost |
C
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An exclusive right issued by the U.S. Patent Office that enables the recipient to manufacture, sell, or otherwise control an invention for a period of 20 years from the date of the grant is a: A. trademark. B. license. C. goodwill. D. patent. |
D
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The most widely used method of depreciation is the: A. straight-line method. B. declining-balance method. C. units-of-activity method. D. sum-of-the-years-digits method. |
A
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The cost of fencing is considered to be a Land Improvement. True False |
TRUE
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Equipment was purchased for $2,145. In addition, the purchaser paid $310 for freight and $545 for installation. The original cost of the equipment would be (i.e., the amount to be debited to the equipment account): A. $2,145 B. $2,455 C. $3,000 D. none of the above. |
C
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A business van has a book value of $18,000 and it originally cost $30,000. What is the van’s accumulated depreciation? A. $18,000. B. $15,000. C. $12,000. D. $ 6,000. |
C
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The following method(s) is (are) accelerated method(s) of depreciation: A. straight-line. B. declining-balance method. C. MACRS. D. both b and c above. |
D
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Depreciation is dependent on a number of estimates. When a change in an estimate is required, the change is made: A. in the current year. B. in the future years. C. to prior periods. D. both a and b above. |
D
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All of the following are intangible assets except: A. goodwill. B. trademarks. C. coal reserves. D. patents. |
C
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An exclusive right to reproduce and sell artistic or published work is a: A. patent. B. copyright. C. license. D. franchise. |
B
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Just in time inventory reduces the amount of inventory that management needs to keep on hand. True False |
TRUE
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Which one of the following is indirect labor considered? A. Product cost B. Nonmanufacturing cost C. Period cost D. Raw material cost |
A
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For 2006, Sparkman Company has cost of goods manufactured of $200,000, beginning finished goods inventory of $40,000, and ending finished goods inventory of $30,000. How much is cost of goods sold? A. $210,000 B. $240,000 C. $190,000 D. $230,000 |
A
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Which of the following represents the correct order in which inventories are reported on a manufacturer's balance sheet? A. Raw materials, work in process, finished goods B. Work in process, finished goods raw materials C. Finished goods, work in process, raw materials D. Work in process, raw materials, finished goods |
C
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Which one of the following managerial accounting approaches attempts to allocate manufacturing overhead in a more meaningful fashion? A. Theory of constraints B. Just-in-time inventory C. Activity-based costing D. Total-quality management |
C
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Managerial accounting information is generally prepared for A. stockholders. B. managers. C. regulatory agencies. D. investors. |
B
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Managerial accounting is also called A. inside reporting. B. cost accounting. C. management accounting. D. strategic management. |
C
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Ranger Company reported total manufacturing costs of $65,000, manufacturing overhead totaling $13,000, and direct materials totaling $16,000. How much is direct labor cost? A. Cannot be determined from the information provided. B. $94,000 C. $29,000 D. $36,000 |
D 13000 + 16000 = 29000
65000-29000 = 36000 |
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Zirk, Inc. incurred cost of goods manufactured totaling $900,000, manufacturing overhead of $120,000, and direct materials totaling $400,000. How much is the amount of direct labor? A. Cannot be determined from the information provided. B. $380,000 C. $520,000 D. $900,000 |
A Did not include total manufacturing cost just cost of goods manufactured.
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Which of the following are period costs? A. selling expenses B. raw materials C. depreciation of factory equipments D. all of the above |
A
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Which one of the following is not a depreciable asset? A. LandB. Buildings C. Driveways D. Equipment |
A Land is not a depreciable asset because its usefulness and revenue-producing ability generally stay intact over time. Buildings, driveways, and equipment are all depreciable assets.
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Which of the following is not a way to express the useful life of a depreciable asset? A. Five yearsB. Ten thousand machine hours C. Thirty thousand units D. Cost of acquisition |
D
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What is depreciation? A. A valuation approachB. A cost allocation method C. A cash accumulation approach D. An adjustment to market value over time |
B
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Cuso Company purchased equipment on January 1, 2011, at a total invoice cost of $400,000. The equipment has an estimated salvage value of $10,000 and an estimated useful life of 5 years. What is the amount of accumulated depreciation at December 31, 2012, if the straight-line method of depreciation is used? A. $80,000B. $160,000 C. $78,000 D. $156,000 |
D 400000 - 10000 = 390000
390000 / 5 = 78000 78000 x 2 (years) = 156000 |
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Which one of the following will minimize depreciation expense in the first year of owning an asset? A. A long estimated life, a high salvage value, and declining-balance depreciationB. A short estimated life, a high salvage value, and straight-line depreciation C. A long estimated life, a high salvage value, and straight-line depreciation D. A short estimated life, a low salvage value, and declining-balance depreciation |
C Straight-line depreciation method will yield a smaller depreciation charge in the first year than the declining balance method
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At the beginning of the year, Powers Company purchased a piece of machinery for $50,000. It has a salvage value of $5,000, an estimated useful life of 9 years, and estimated units of output of 90,000 units. Actual units produced during the first year were 11,000. How much is depreciation expense for the first year under the straight-line method? A. $5,556B. $5,500 C. $5,300 D. $5,000 |
D The annual depreciation is calculated as the sum of the purchase price ($50,000) less the salvage value ($5,000) divided by the life (9 years) resulting in an annual depreciation value of $5,000.
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A company purchased a dump truck for $25,000. In addition, freight charges were $500, and an additional payment of $800 was made to paint the company's logo on the truck. The estimated salvage value and useful life are $3,800 and 5 years, respectively. How much is annual depreciation expense under the straight-line method? A.$4,500B.$5,260 C.$4,240 D.$5,000 |
C 25000 - 3800 = 21200
21200 / 5 = 4240 |
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A permanent decline in the market value of an asset is called: A. an impairment.B. a disposal. C. a capital expenditure. D. a write-down. |
A
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An asset purchased on January 1 for $60,000 has an estimated salvage value of $3,000. The current useful life is 8 years. How much is total accumulated depreciation using the straight-line method at the end of the second year of life? A. $14,250B. $7,125 C. $15,000 D. $7,500 |
A 60000 - 3000 = 57000
57000 / 8 = 7125 7125 x 2 = 14250 |
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Revenue expenditures are expensed as incurred. A.TrueB.False |
TRUE Revenue expenditures are expensed immediately when incurred. Capital expenditures are incorporated into the value of the asset on the balance sheet.
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On January 1, 2010, Jamacha Company purchased some equipment for $15,000. The estimated salvage value and useful life are $3,000 and 4 years, respectively. On January 1, 2012, the company determines that the asset's remaining useful life is 3 years. What is the revised depreciation expense for 2012 if the company uses the straight-line method? A. $2,500B. $2,000 C. $4,000 D. $2,250 |
B The annual depreciation for the first two years of life is calculated as the sum of the purchase price less the salvage value divided by the life: ($15,000 - $3,000)/4 years = $3,000 per year. The depreciable cost that remains is $15,000 - $3,000 – (2 years × $3,000) = $6,000. This amount is allocated over the remaining useful life of 3 years, which is $2,000 per year.
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Bennie Razor Company has decided to sell one of its old manufacturing machines on June 30, 2012. The machine was purchased for $80,000 on January 1, 2008, and was depreciated on a straight-line basis over a 10-year life assuming no salvage value. If the machine was sold for $26,000, how much is the gain or loss to be recorded at the time of the sale? A. $18,000 lossB. $54,000 gain C. $22,000 loss D. $46,000 loss |
A The selling price less the book value of the machine equals the gain or loss on the sale. Book value of the machine: $80,000 – [($80,000 ÷ 10) × 4.5 yr.] = $44,000.
Loss on sale = $26,000 - $44,000 = $18,000 loss |
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When the book value of a piece of equipment is less than the proceeds from the sale of that equipment, the result is a loss on disposal of plant asset. A.TrueB.False |
FALSE When book value is less than the proceeds from a sale, the result is a gain on disposal of plant assets.
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When a plant asset is retired, the difference between selling price and the book value of the asset is A. recognized on the income statement as a gain or loss on disposal of plant asset.B. debited to the Sale of Plant Assets account. C. an increase to cash. D. subtracted from the Accumulated Depreciation account. |
A When assets are retired, the entry credits the Equipment account for its original cost, debits the Accumulated Depreciation account for the entire amount of depreciation recorded, debits the cash account for the proceeds received from the sale, and recognized a gain or loss on the income statement.
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Which of the following measures provides an indication of how efficient a company is in employing its assets? A. Current ratioB. Profit margin ratio C. Debt to total assets ratio D. Asset turnover ratio |
D
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Which one of these statements is true? A. Since intangible assets lack physical substance, they need to be disclosed only in the notes to the financial statements.B. Goodwill should be reported as a contra account in the stockholders' equity section. C. Totals of major classes of assets can be shown in the balance sheet, with asset details disclosed in the notes to the financial statements. D. Intangible assets are typically combined with plant assets and natural resources and then shown in the property, plant, and equipment section. |
C
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If a company reports goodwill as an intangible asset on its books, what is the one thing you know with certainty? A. The company is a valuable company worth investing in.B. The company has a well-established brand name. C. The company purchased another company. D. The goodwill will generate a lot of positive business for the company for many years to come. |
C In order to report goodwill, a company must have entered into an exchange transaction that involves the purchase of an entire business.
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Which of the following statements is false? A. If an intangible asset has a finite life, it should be amortized.B. The amortization period of an intangible life can exceed 20 years. C. Goodwill is recorded only when a business is purchased. D. Research and development costs are expensed when incurred, except when the research and development expenditures result in a successful patent. |
D Research and development costs are expensed when incurred whether they produce a patent or not.
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A company has the following asset account balances: Buildings and equipment $6,200,000 Accumulated depreciation 1,800,000 Patents 950,000 Inventory 1,000,000 Goodwill 4,000,000 How much is the total amount reported on the balance sheet under property, plant & equipment? A. $4,400,000B. $9,350,000 C. $10,350,000 D. $6,200,000 |
A
Only plant and equipment amounts are included. Patents and goodwill are intangible assets. 6,200,000-1,800,000 = 4,400,000 |
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Kant Enterprises purchased a truck for $11,000 on January 1, 2011. The truck will have an estimated salvage value of $1,000 at the end of 5 years. If you use the units-of-activity method, which formula can be used to calculate the balance in accumulated depreciation at December 31, 2012? A. ($11,000/Total estimated activity) × Units of activity for 2012B. ($10,000/Total estimated activity) × Units of activity for 2012 C. ($11,000/Total estimated activity) × Units of activity for 2011 and 2012 D. ($10,000/Total estimated activity) × Units of activity for 2011 and 2012 |
D
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What term is used by IFRS that is equivalent to “salvage value” for GAAP? A. Component valueB. Waste value C. Residual value D. Depreciable value |
C Residual value is the correct term for salvage value. This value can be salvaged at the end of the asset's depreciable life.
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Corristan Company purchased equipment and incurred these costs: Cash price $24,000 Sales taxes 1,200 Insurance during transit 200 Annual maintenance costs 400 Total costs $25,800
B. $25,200 C. $25,800 D. $25,400 |
D All costs necessary to get the asset ready to use should be included as part of the cost of the equipment.
24000 + 1200 + 200 = 25400 |
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Land improvements are depreciable assets. A.TrueB.False |
TRUE Improvements to land are structural additions made to land, such as driveways, parking lots, fences, landscaping, and sprinklers. Land improvements are depreciated to allocate the cost to periods that benefit from the land improvements
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Which one of the following costs will not be included in the cost of equipment? A. Annual insuranceB. Installation C. Testing D. Freight |
A Because annual insurance costs are ongoing and do not benefit multiple periods, they are expensed in the year incurred. Insurance costs incurred while the equipment is in transit can be appropriately included in the cost of the equipment.
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Book value and market value are synonymous terms as they relate to plant assets. A.TrueB.False |
FALSE Market value represents a value at which an asset can be sold. Book value is the net amount at which an asset appears on a company's balance sheet. It is equal to acquisition cost less accumulated depreciation.
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When using the straight-line depreciation method, which of the following is not a factor affecting the computation of depreciation? A. Useful lifeB. Salvage value C. Book value D. Cost |
B
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Which depreciation method calculates annual depreciation expense based on book value at the beginning of each year? A. Straight-lineB. Salvage method C. Units-of-activity D. Declining-balance |
D
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purchase of equipment for $18,000 also involves freight charges of $500 and installation costs of $2,500. The estimated salvage value and useful life are $2,000 and 4 years, respectively. Under the straight-line method, how much is annual depreciation expense?
A. $4,750 |
A 18000 + 500 + 2500 = 21000
21000 - 2000 = 19000 19000 / 4 = 4750 |
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Monthly depreciation expense of $600 is recorded on a truck that was purchased for $27,000 and has a $3,000 estimated salvage value. How much is the annual depreciation rate? A. 25%B. 27% C. 30% D. 33% |
C The depreciable cost is the purchase price less the salvage value. The annual depreciation cost is multiplied times 12 months to get the annual depreciation, which is then divided by the depreciable cost to get the annual rate.
27000 - 3000 = 24000 600 x 12 = 7200 7200 / 2400 = 30% |
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On September 1, 2012, West Buy purchased an asset for $9,000, with a $1,500 estimated salvage value, and a 4-year useful life. How much is the 2012 depreciation expense using the straight-line method? A. $625B. $750 C. $1,875 D. $2,250 |
A
9000 - 1500 = 7500 7500 / 4 = 1875 1875 x 4/12 = 625 |
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When there is a change in estimated depreciation A. previous depreciation should be corrected.B. current and future years' depreciation should be revised. C. only future years' depreciation should be revised. D. new plant assets should be acquired to replace the old. |
B When estimated depreciation changes, the changes should be reflected in the current and future years, not in prior years.
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Which statement is true about additions to plant assets? A. They are revenue expenditures.B. They increase a Repair Expense account. C. They increase the Purchases account. D. They are capitalized. |
D
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Sonoma Company purchased land for $70,000 on December 31, 2009. As of May 31, 2012, the land's value had increased to $71,500. On December 31, 2012, the land was appraised for $74,000. By what amount should the Land account be increased? A. $4,000B. $1,150 C. $2,500 D. $0 |
D Plant assets are not written up to reflect increasing values. This increase in value will be recognized when the land is sold.
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On April 1, 2012, La Presa Company sells some equipment for $18,000. The original cost was $50,000, the estimated salvage value was $8,000, and the expected useful life was 6 years. On December 31, 2011, the Accumulated Depreciation account had a balance of $29,400. How much is the gain or loss on the sale? A. $2,600 lossB. $300 gain C. $850 loss D. $5,400 gain |
C First, the accumulated depreciation must be brought up to date for the 3 months through April 1, 2012. Next, the book value must be determined at the date of sale. The gain or loss is the selling price less the book value.
Don't understand how to compute. |
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A company sold for $3,000 a plant asset that had a cost of $10,000 and accumulated depreciation of $7,500. What gain or loss did the company experience? A. Loss of $500B. Gain of $500 C. Gain of $3,000 D. Loss of $7,000 |
B 10000 - 7500 = 2500
3000 - 2500 = 500 gain. |
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On June 1, 2012, Brislin Company sold some equipment for $22,000. The original cost was $80,000, the estimated salvage value was $8,000, and the expected useful life was 8 years. The equipment was fully depreciated. How much is the gain or loss on the sale? A. $14,000 gainB. $50,000 loss C. $850 loss D. $5,400 gain |
A
22000 - 8000 = 14000 gain |
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Research and development costs are capitalized as intangible assets. A.TrueB.False |
FALSE Due to the uncertainty of research and development efforts, the related costs are usually expensed as incurred. Intangible assets are rights, privileges, and competitive advantages that result from ownership of long-lived assets that do not possess physical substance.
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Given the following account balances at year end, how much are total intangible assets on the balance sheet of Alisha Enterprises? Sales revenue $45,000,000 Cash 1,500,000 Accounts receivable 4,000,000 Land 15,000,000 Equipment 25,000,000 Trademarks 1,000,000 Goodwill 4,500,000 Research & development 2,000,000 A. $11,500,000 B. $7,500,000 C. $5,500,000 D. $9,500,000 |
C 1,000,000 + 4,500,000 = 5,500,000
Goodwill + Trademarks |
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Which of the following gives the recipient the right to manufacture, sell, or otherwise control an invention for a period of 20 years? A. PatentB. Copyright C. Trademark D. License |
A Patents give the recipient rights for 20 years. A copyright protects literary and artistic works, and a trademark is a word, phrase, jingle, or symbol that distinguishes or identifies an enterprise or product. A license is an operating right.
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With respect to plant assets, which of the following need not be disclosed in the financial statements or notes to the financial statements? A. The balances of major classes of assetsB. Accumulated depreciation by major classes of assets C. Depreciation methods used D. Useful life of each plant asset |
D
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A company has the following asset account balances: Buildings and equipment $9,200,000 Accumulated depreciation 1,200,000 Patents 750,000 Land Improvements 1,000,000 Land 5,000,000 How much will be reported on the balance sheet under property, plant, & equipment? A. $14,000,000B. $13,000,000 C. $12,800,000 D. $13,550,000 |
A Buildings and equipment, land improvements, and land, less accumulated depreciation are included
9,200,000 + 1,000,000 + 5,000,000 = 15,200,000 15,200,000 - 1,200,000 = 14,000,000 |
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Schneider Trucking Inc. purchased a new semi-truck on January 1, 2012 for $200,000. Its useful life is expected to be 4 years and its salvage value is estimated at $25,000. What is the depreciation for 2012 using the declining-balance method at a double the straight-line rate? A. $50,000B. $43,750 C. $87,500 D. $100,000 |
D The depreciation for 2012 would be the book value at the beginning of the first year times the declining-balance rate. The rate is twice the straight-line rate or 2 × 25%.
100/4 years = 25% 2 x 25% = 50% 200000 - 50% = 100000 |
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What type of cost has a unit cost that declines as activity increases? A. Fixed costsB. Activity costs C. Product costs D. Variable costs |
A
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Which one of the following is not an assumption of cost-volume-profit analysis? A. The behavior of costs is curvilinear throughout the relevant range.B. Costs can be classified accurately as either variable or fixed. C. Changes in activity are the only factors that affect costs. D. There is no change in inventory levels. |
A
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Masters Inc. provided 700 massages during May. The contribution margin per massage is $22 and the contribution margin ratio is 41%. If sales increase by 50 massages during June, by how much will profit increase? A. $287B. $20.50 C. $78.57 D. $1,100 |
D The contribution margin per unit indicates the increase in profit if one more massage is sold.
700 x 22 = 15400 750 x 22 = 16500 16500 -15400 = 1100 or $22x50 = 1100 |
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What is the mathematical equation for computing required sales to obtain target net income? A. Required sales = Variable costs + Target net incomeB. Required sales = Variable costs + Fixed costs + Target net income C. Required sales = Fixed costs + Target net income D. Required sales = Fixed costs + Variable costs |
B
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Milton Company had actual sales $1,000,000 and its break-even sales were $800,000. How much is Milton's margin of safety ratio? A. 20%B. 25% C. 75% D. 80% |
A The amount by which sales can decline before the company incurs a loss is measured by the margin of safety. Margin of safety in dollars divided by actual sales is the margin of safety ratio.
1,000,000 - 800,000 = 200,000 200,000 / 1,000,000 = 20% |
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Which of the following is a variable cost for a cruise ship? A. Diesel fuel to power the shipB. Interest cost on the ship's financing C. Captain's salary D. Entertainment staff's equipment |
A
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Why is determination of a relevant range important? A. Costs that occur outside this range are assumed to be linear.B. Most companies operate at 100% of capacity. C. Costs outside this range cause losses to companies. D. Cost behavior outside the relevant range may be distorted. |
D
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Kendra Corporation's total utility costs during the past year were $1,200 during its highest month and $600 during its lowest month. These costs corresponded with 1,000 units of production during the high month and 200 units during the low month. How much are the fixed and variable components of its utility costs using the high-low method? A. $0.75 variable and $450 fixedB. $1.33 variable and $200 fixed C. $1.50 variable and $0 fixed D. $1.33 variable and $600 fixed |
A The variable component is computed by dividing the change in cost by the change in activity at the two activity levels. The variable cost per unit is plugged into the cost equation using the cost and units at either data point to determine the total fixed cost.
Variable 1200- 600 = 600 / 1000-200 = 800 600 / 800 = 0.75 per unit 0.75 x 1000 = 750 1200 - 750 = 450 Fixed Costs |
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Which one of the following is not an interrelationship used in CVP analysis? A. Volume/level of activityB. Total fixed costs C. Unit selling price D. Profit for the period |
D
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Which statement describes contribution margin? A. It is the amount of revenue remaining after deducting fixed costs.B. It is the amount available to cover fixed costs and contribute to income for the company. C. It is sales less fixed costs. D. It is the unit selling price less unit fixed costs. |
B Contribution margin is the amount of revenue remaining after deducting variable costs.
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Cruz Company's breakeven level is 500,000 units at a selling price of $6 per unit. The contribution margin ratio is 30%. How much are fixed costs? A. $150,000B. $300,000 C. $900,000 D. $2,100,000 |
C First, determine the break-even point in sales. Determine the dollar amount of contribution margin, which is 30% of sales. At breakeven, profit is $0, so contribution margin less fixed costs must equal zero.
500,000 x 6 = 3000000 3,000,000 / 30% = 900000 |
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Towson Company has total fixed costs of $300,000 and a contribution margin ratio of 40%. Towson's target net income is $240,000. How much is sales in dollars to meet the target net income? A. $600,000B. $750,000 C. $900,000 D. $1,350,000 |
D Sales in dollars to meet target net income is determined by dividing total fixed costs plus target income by the contribution margin ratio.
300000 + 240000 = 540000 540000 / .4 = 1350000 |
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In September, Smith Company had the following financial statement amounts related to producing 1,000 units: How much is contribution margin per unit? DIRECT MATERIALS 30000 DEPRECIATION EXPENSE 12000 SALES REVENUE 88000 DIRECT LABOR 10000 RENT EXPENSE 13000 A. $48 B. $58 C. $35 D. $13 |
A 30000 + 10000 = 40000
88000 - 40000 = 48000 48000 / 1000 = $48 |
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Carrot Takers, Inc. provided the following results: 2004 2003 UNITS 2400 3000 TOTAL COSTS 19200 24000 A. Fixed Cost B. Sunk Cost C. Mixed Cost D. Variable Cost |
D
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Which one of the following is a cost which remains constant in total at various levels of activity? A. A variable cost B. A mixed cost C. A fixed cost D. A contribution margin |
C
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Disney's variable costs are 30% of sales. The company is contemplating an advertising campaign that will cost $22,000. If sales are expected to increase $40,000, by how much will the company's net income increase? A. $18,000 B. $28,000 C. $12,000 D. $6,000 |
D 40000 / 30% = 12000 40000 -12000 = 28000 28000 - 22000 = 6000 |
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H55 Company sells two products, beer and wine. Beer has a 10 percent profit margin and wine has a 12 percent profit margin. Beer has a 27 percent contribution margin and wine has a 25 percent contribution margin. If other factors are equal, which product should H55 push to customers? A. Beer B. Wine C. Selling either results in the same additional income for the company D. It should sell an equal quantity of both. |
A Beer has a higher contribution margin.
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Hartley, Inc. has one product with a selling price per unit of $200, the unit variable cost is $75, and the total monthly fixed costs are $300,000. How much is Hartley's contribution margin ratio? A. 62.5%. B. 37.5%. C. 150.0%. D. 266.6%. |
A 200 - 75 = 125
125 / 200 = 62.5% |
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Gift Gallery sold 2,000 zooglars during 2006. Information is provided concerning for the zooglar product: SALES 60000 VARIABLE COSTS 24000 FIXED COSTS 10000 NET INCOME 26000 A. $18 B. $540 C. $390 D. $900 |
B
Cant figure out compution. |
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Which statement describes a fixed cost? A. It varies in total at every level of activity. B. The amount per unit varies depending on the activity level. C. Its total varies proportionally to the level of activity. D. It remains the same per unit regardless of activity level. |
B.
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At January 1, 2004, Barry, Inc. has beginning inventory of 4,000 widgets. Barry estimates it will sell 35,000 units during the first quarter of 2004 with a 10% increase in sales each quarter. Barry's policy is to maintain an ending inventory equal to 25% of the next quarter's sales. Each widget costs $1 and is sold for $1.50. How much is budgeted sales revenue for the third quarter of 2004? A. $57,525 B. $63,000 C. $63,525 D. $42,350 |
C 1st Qtr. 35000 2nd Qtr. 38500 (35000 x 10% = 3500) 35000 + 3500 = 38500 3rd Qtr 42350 (38500 x 10% = 3850) 38500 + 3850 = 42350 42350 x 1.50 = 63525 |
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Waco's Widgets plans to sell 22,000 widgets during May, 19,000 units in June, and 20,000 during July. Waco keeps 10% of the next month's sales as ending inventory. How many units should Waco produce during June? A. 18,900 B. 21,000 C. 19,100 D. 19,000 |
C
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Gottberg Mugs is planning to sell 2,000 mugs and produce 2,200 mugs during April. Each mug requires 2 pounds of resin and one-half hour of direct labor. Resin costs $1 per pound and employees of the company are paid $12.50 per hour. Manufacturing overhead is applied at a rate of 120% of direct labor costs. Gottberg has 2,000 pounds of resin in beginning inventory and wants to have 2,400 pounds in ending inventory. How much is the total amount of budgeted direct labor for April? $12,500 $13,750 $25,000 $27,500 |
B
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During December, the capital budget indicates a $280,000 purchase of equipment. The ending November cash balance is budgeted to be $40,000. Cash receipts are $840,000, and cash disbursements are $610,000 during December. The company wants to maintain a minimum cash balance of $20,000. What is the minimum cash loan that must be planned to be borrowed from the Bank during December? $30,000 $10,000 $50,000 $0 |
A
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Lewis Hats is planning to sell 600 straw hats. Each hat requires .50 pound of straw and .25 hour of direct labor. Straw costs $0.20 per pound and employees of the company are paid $22 per hour. Lewis has 80 pounds of straw and 40 hats in beginning inventory and wants to have 50 pounds of straw and 60 hats in ending inventory. How many units should Lewis Hats produce in April? 600 620 580 630 |
B
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Looker Hats is planning to sell 600 felt hats, and 700 will be produced during June. Each hat requires .50 yard of felt and .25 hour of direct labor. Felt costs $3.00 per yard and employees of the company are paid $20 per hour. How much is the total amount of budgeted direct labor for June? $3,000 $48,000 $3,500 $2,400 |
C .25/$20 = $5 $5 x 700 = 3500 |
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weaver, Inc. has budgeted direct materials purchases of $150,000 in March and $240,000 in April. Past experience indicates that the company pays for 70% of its purchases in the month of purchase and the remaining 30% in the next month. Other costs are all paid during the month incurred. During April, the following items were budgeted: WAGE EXPENSE 75000 PURCHASE OF OFFICE EQUIPMENT 36000 SELLING AND ADMINISTRATIVE EXP 24000 DEPRECIATION EXPENSE 18000 $324,000 $213,000 $348,000 $366,000 |
C 75000 + 36000 + 24000 + 18000 = 153000 240000 + 153000 = 393000 393000 - 45000 = 348000 (150000x 30%) = 45000 |
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1.
2. Which one of the following is not a correct statement about a budget? A. It is a formal written statement of management's plans for the past year.B. It becomes an important basis for evaluating performance. C. It promotes efficiency and serves as a deterrent to waste and inefficiency. D. Budgets are prepared before the actual results are known. |
A
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Operating budgets include all of the following except the A. sales budget.B. production budget. C. capital expenditure budget. D. budgeted income statement. |
C
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Expected direct materials purchases for Read Company are $70,000 in the first quarter and $90,000 in the second quarter. Forty percent of the purchases are paid in cash as incurred, and the balance is paid in the following quarter. How much are the budgeted cash payments for purchases in the second quarter? A. $96,000B. $90,000 C. $78,000 D. $82,000 |
C Budgeted cash payments for the second quarter are equal to 40% of the purchases for the second quarter, plus 60% of the purchases for the first quarter.
For the second quarter purchases = 40% × $90,000 = $36,000 For the first quarter purchases = 60% × $70,000 = $42,000 Total = $36,000 + $42,000 = $78,000 |
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Which one of the following budgets would not be prepared for a merchandising company? A. Production budgetB. Capital expenditures budget C. Cash budget D. Merchandise purchases budget |
A
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Long-range planning usually encompasses a period of A. a quarter.B. a year. C. at least two years. D. at least five years. |
D
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Each of the other budgets in the master budget depends on the A. budgeted income statement.B. cash budget. C. production budget. D. sales budget |
D
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Which one of the following budgets is not used in preparing the budgeted income statement? A. Sales budgetB. Selling and administrative budget C. Capital expenditure budget D. Direct labor budget |
C
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The budget that is often considered to be the most important financial budget is the A. cash budget.B. capital expenditure budget. C. budgeted income statement. D. budgeted balance sheet |
A
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Which one of the following budgets would not be prepared for a merchandising company? A. Production budgetB. Capital expenditures budget C. Cash budget D. Merchandise purchases budget |
A
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