Question;24. In the Green Company, the beginning and ending balances in Land were $198,000 and $240,000 respectively. During the year, land costing $45,000 was sold for $45,000 cash, and land costing $87,000 was purchased for cash. The entries in the reconciling columns of the worksheet will include a:credit to Land $45,000 and a debit to Sale of Land $45,000 under financing activities.credit to Land $45,000 and a debit to Sale of Land $45,000 under investing activities.debit to Land $87,000 and a credit to Purchase of Land $87,000 under financing activities.net debit to Land $42,000 and a credit to Purchase of Land $42,000 under investing activities.25. For each of the following items, indicate by using the appropriate code letter, how the item should be reported in the statement of cash flows, using the indirect method. A. Added to net income B. Deducted from net income C. Cash outflow?investing activity D. Cash inflow?investing activity E. Cash outflow?financing activity F. Cash inflow?financing activity G. Significant noncash investing and financing activity BFEGDCA 1. Decrease in accounts payable during a period BGEACDF 2. Declaration and payment of a cash dividend. ABCDEGF 3. Loss on sale of land. ADCGBEF 4. Decrease in accounts receivable during a period. EBDACFG 5. Redemption of bonds for cash. FGBDACE 6. Proceeds from sale of equipment at book value. FBGACDE 7. Issuance of common stock for cash. AGBDEFC 8. Purchase of a building for cash. AFBDCEG 9. Acquisition of land in exchange for common stock. AFGCDEB 10. Increase in merchandise inventory during a period.26. The statement of cash flows is the only required financial statement that is not prepared from an adjusted trial balance. What are the sources of information for preparing a statement of cash flows? Explain how the accrual basis of accounting affects the statement of cash flows.27. The current assets of Kile Company are $150,000. The current liabilities are $100,000. The current ratio expressed as a proportion is$150,000 ? $100,000..67: 11.5: 1150%.28. The following information pertains to Soho Company. Assume that all balance sheet amounts represent both average and ending balance figures. Assume that all sales were on credit.AssetsCash and short-term investments$45,000Accounts receivable (net)25,000Inventory20,000Property, plant and equipment210,000Total Assets$300,000Liabilities and Stockholders' EquityCurrent liabilities$50,000Long-term liabilities90,000Stockholders' equity-common160,000Total Liabilities and Stockholders' Equity$300,000Income StatementSales$120,000Cost of goods sold66,000Gross margin54,000Operating expenses30,000Net income$24,000Number of shares of common stock6,000Market price of common stock$20Dividends per share.50What is the current ratio for Soho?.641.301.801.4029. The following amounts were taken from the financial statements of Palmer Company:20102009Total assets$800,000$1,000,000Net sales720,000650,000Gross profit352,000320,000Net income126,000117,000Weighted average number of common shares outstanding90,00090,000Market price of common stock$35$39The profit margin ratio for 2010 is18.4%.36.0%.18.0%.17.5%.30. The following financial statement information is available for Howard Corporation:20102009Stockholders' equity common$330,000$270,000Net sales784,000697,000Cost of goods sold406,000377,000Net income112,00080,000Tax expense48,00029,000Interest expense14,00014,000Dividends paid to preferred stockholders22,00020,000Dividends paid to common stockholders15,00010,000The return on common stockholders? equity for 2010 is25.0%.37.3%.30.0%.27.3%.31. Direct materials and direct labor of a company total $6,000,000. If manufacturing overhead is $3,000,000, what is direct labor cost?$6,000,000$3,000,000$0Cannot be determined from the information provided32. Cost of goods manufactured is calculated as follows:Direct materials used + direct labor + manufacturing overhead ? beginning WIP + ending WIP.Beginning WIP + direct materials used + direct labor + manufacturing overhead ? ending WIP.Direct materials used + direct labor + manufacturing overhead ? ending WIP ? beginning WIP.Beginning WIP + direct materials used + direct labor + manufacturing overhead + ending WIP.33. Dolan Manufacturing Company's accounting records reflect the following inventories:Dec. 31, 2010Dec. 31, 2009Raw materials inventory$310,000$260,000Work in process inventory300,000160,000Finished goods inventory190,000150,000During 2010, $400,000 of raw materials were purchased, direct labor costs amounted to $500,000, and manufacturing overhead incurred was $480,000.The total raw materials available for use during 2010 for Dolan Manufacturing Company is$350,000$660,000$260,000$710,00034. Given the following data for Mehring Company, compute (A) total manufacturing costs and (B) cost of goods manufactured:Direct materials used$180,000Beginning work in process$30,000Direct labor150,000Ending work in process15,000Manufacturing overhead225,000Beginning finished goods38,000Operating expenses263,000Ending finished goods23,000(A)(B)$555,000$540,000$540,000$570,000$570,000$585,000$555,000$570,00035. Barr Mfg. provided the following information from its accounting records for 2010:Expected production30,000 labor hoursActual production28,000 labor hoursBudgeted overhead$600,000Actual overhead$580,000How much is the overhead application rate if Barr bases the rate on direct labor hours?$18.67 per hour$20.71 per hour$20.00 per hour$19.33 per hour36. Gulick Company developed the following data for the current year:Beginning work in process inventory$120,000Direct materials used72,000Actual overhead144,000Overhead applied108,000Cost of goods manufactured132,000Total manufacturing costs360,000Gulick Company's direct labor cost for the year is$180,000.$108,000.$144,000.$36,000.37. Greer Company developed the following data for the current year:Beginning work in process inventory$68,000Direct materials used104,000Actual overhead88,000Overhead applied92,000Cost of goods manufactured450,000Total manufacturing costs428,000How much is Greer Company's direct labor cost for the year?$164,000$254,000$300,000$232,00038. Essay Question(a) Distinguish between the two types of cost accounting systems. (b) May a company use both types of cost accounting systems?39. In applying the high-low method, what is the fixed cost?MonthMilesTotal CostJanuary80,000$ 96,000February50,00080,000March70,00094,000April90,000130,000$14,000$50,000$36,000$17,50040. Fessler, Inc. has a 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 Fessler's contribution margin ratio?37.5%62.5%150&6.6%41. A company sells a product which has a unit sales price of $5, unit variable cost of $3 and total fixed costs of $120,000. The number of units the company must sell to break even is24,000 units.40,000 units.60,000 units.240,000 units.42. Fixed costs are $300,000 and the variable costs are 75% of the unit selling price. What is the break-even point in dollars?$1,200,000$400,000$900,000$700,00043. Sales (50,000 units) $1,000,000, direct materials and direct labor $500,000, other variable costs $50,000, and fixed costs $180,000. What is Boswell break-even point in units?28,125.25,556.16,364.20,000.44. A company's planned activity level for next year is expected to be 100,000 machine hours. At this level of activity, the company budgeted the following manufacturing overhead costs:VariableFixedIndirect materials$140,000Depreciation$60,000Indirect labor200,000Taxes10,000Factory supplies20,000Supervision50,000A flexible budget prepared at the 80,000 machine hours level of activity would show total manufacturing overhead costs of$384,000.$408,000.$360,000.$288,000.45. A company's planned activity level for next year is expected to be 100,000 machine hours. At this level of activity, the company budgeted the following manufacturing overhead costs:VariableFixedIndirect materials$120,000Depreciation$50,000Indirect labor160,000Taxes10,000Factory supplies20,000Supervision40,000A flexible budget prepared at the 90,000 machine hours level of activity would show total manufacturing overhead costs of$300,000.$360,000.$370,000.$270,000.46. A company's planned activity level for next year is expected to be 100,000 machine hours. At this level of activity, the company budgeted the following manufacturing overhead costs:VariableFixedIndirect materials$90,000Depreciation$37,500Indirect labor120,000Taxes7,500Factory supplies15,000Supervision30,000A flexible budget prepared at the 90,000 machine hours level of activity would show total manufacturing overhead costs of$202,500.$277,500.$225,000.$270,000.47. Match the items below by entering the appropriate code letter in the space provided.Direct fixed costs- -123456789101112Investment center- -123456789101112Flexible budget- -123456789101112Return on Investment- -123456789101112Budgetary control- -123456789101112Indirect fixed costs- -123456789101112Controllable costs- -123456789101112Profit center- -123456789101112Static budget- -123456789101112Responsibility reporting system- -123456789101112Responsibility accounting- -123456789101112Management by exception- -1234567891011121.A measure of the profitability of an investment center computed by dividing controllable margin (in dollars) by average operating assets.2.A part of management accounting that involves accumulating and reporting revenues and costs on the basis of the individual manager who has the authority to make the day-to-day decisions about the items.3.A projection of budget data at one level of activity.4.The use of budgets to control operations.5.Costs which are incurred for the benefit of more than one profit center.6.A responsibility center that incurs costs, generates revenues, and has control over the investment funds available for use.7.The review of budget reports by top management directed entirely or primarily to differences between actual results and planned objectives.8.The preparation of reports for each level of responsibility shown in the company's organization char.9.Costs that relate specifically to a responsibility center and are incurred for the sole benefit of the center.10.Costs that a manager has the authority to incur within a given period of time.11.A responsibility center that incurs costs and also generates revenues.12.A projection of budget data for various levels of activity.48. Essay QuestionThe master budget and flexible budgets are important aids to management in performing the management functions of planning and control. Briefly describe how planning and control are facilitated by preparing a master budget and flexible budgets. How are these two types of budgets interrelated with planning and control?49. Essay QuestionManagers are motivated to accomplish objectives if they feel that their efforts will be fairly evaluated. Explain why an organization may use different bases for evaluating the performance of managers of different types of responsibility centers.
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