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Question;1) A cost management system provides ________.A) measures of inventory value and cost of goods sold for financial reportingB) cost information for strategic management decisionsC) cost information for operational controlD) all of the above2) Cost accounting is that part of the cost management system that measures costs for the sole purpose of financial reporting. True or False3) Which of the following costs is a direct cost to a manufactured product?A) depreciation expense on factory equipment used for the productB) the wages of an assembly worker who works specifically on the productC) accountants who accumulate the costs of the productD) a factory supervisor who oversees the production of several different types of products4) Physically tracing ________ costs is usually straightforward, but allocating ________ costs is usually more complex.A) indirect, directB) direct, productC) direct, indirectD) unallocated, indirect5) Unallocated costs ________.A) have an identifiable relationship to a cost poolB) lack an identifiable relationship to a cost poolC) have an identifiable relationship to a cost objectD) lack an identifiable relationship to a cost object6) Unallocated costs ________.A) are not recorded in the cost accounting systemB) are not allocated to cost objectsC) are direct costs for service firmsD) are indirect costs for merchandising firms7) The manufacturing division of an electronics company uses activity-based costing. The company has identified three activities and the related cost drivers for indirect production costs.Activity Cost DriverActivity 1 Direct materials costActivity 2 Direct labor costActivity 3 Kilowatt hoursThree types of products are produced. Direct costs and cost-driver activity for each product for a month are as follows: Product A Product B Product CDirect materials cost $75,000 $50,000 $125,000Direct labor cost $6,000 $1,000 $3,000Direct labor hours 1,000 500 1,500Kilowatt hours 150,000 200,000 150,000Indirect production costs for the month are as follows:Activity 1 $12,000Activity 2 20,000Activity 3 16,000Total $48,000Required:A) Compute the indirect production costs allocated to each product using the ABC system.B) Compute the indirect production costs allocated to each product using a traditional costing system. Assume indirect production costs are allocated to each product using the cost driver: direct labor hours.8) Historical or past information can have an indirect bearing on a decision because ________.A) the past can be changedB) it can help predict the futureC) past decisions are always good decisionsD) none of the above9) ________ is the predicted future costs and revenues that will differ among alternative courses of action.A) Relevant informationB) Sunk costsC) Predictable informationD) Target pricing10) Information is relevant in business decisions if it is a(n) ________.A) expected future cost or it differs among alternativesB) expected future cost and it differs among alternativesC) historical cost and it differs among alternativesD) expected future cost that differs from a past cost11) The accountant's role in decision making involves providing the relevant information for decision makers. True or False12) If perfectly accurate and relevant information is not available for decision making, the accountant should consider using information that is ________.A) precise but irrelevantB) imprecise but irrelevantC) imprecise but relevantD) imprecise but timely13) In decision making, relevance is more crucial than ________.A) precisionB) predictabilityC) variable costsD) fixed costs14) The ________ approach is useful for short-run decisions and the ________ approach is useful for long-run decisions.A) contribution, absorptionB) absorption, contributionC) full costing, target costingD) full costing, contributionComment on why an MBA should be knowledgeable about contribution and absorption methods. Short answer please. 15) Washington Company has the following data about its only product:Direct materials used $200,000Direct labor 80,000Indirect manufacturing?fixed 100,000Selling and administrative?fixed 300,000Indirect manufacturing?variable 20,000Selling and administrative?variable 60,000Selling price(per unit) 100Units produced and sold 10,000Washington Company uses the absorption approach. What is the gross margin?A) $240,000B) $540,000C) $600,000D) $660,00016) Timmerman Company has budgeted sales of $30,000 with the following budgeted costs:Direct materials $6,300Direct labor 4,100Variable factory overhead 3,700Fixed factory overhead 5,600Variable selling and administrative costs 2,400Fixed selling and administrative costs 3,200Required:Compute the average target markup percentage for setting prices as a percentage of:A) Total costsB) Total variable costsC) Variable manufacturing costsD) Total manufacturing costs17) Stangle Company manufactures ties. When 28,000 ties are produced, the costs per unit are:Direct materials $0.60Direct manufacturing labor 3.00Variable manufacturing overhead 1.20Fixed manufacturing overhead 1.60Variable selling 0.80Fixed selling 1.13The ties normally sell for $22 each. The company has received a special order for 2,000 ties at $10.00 per tie. The company has excess capacity.Required:Compute the amount by which the operating income would change if the order were accepted.Comment on other non ?numeric factors that would influence your decision as a manager to accept or reject a special order. See your lecture notes, this answer will not be found in the text book. 18) An opportunity cost is ________.A) the additional costs generated by a proposed alternativeB) the difference in total cost between two alternativesC) a cash disbursement in the futureD) the maximum available benefit foregone by using a resource for a particular purpose instead of the best alternative use19) Company XYZ is a small company with limited expertise with information technology. Company XYZ has a contract with Company ZZ. Company ZZ handles all of Company XYZ's information technology needs. For Company XYZ, this is an example of ________.A) joint costsB) joint decision makingC) outsourcingD) technology transfer20)What would be a consideration in a make-or-buy decision?A) excess capacityB) variable factory overhead costsC) rental income from idle facilities when not making a partD) all of the above21)Fixed overhead costs that will continue regardless of a make-or-buy decision are ________ to the make-or-buy decision.A) relevantB) irrelevantC) avoidableD) incremental22) Goldwater Company manufactures a part for its production cycle. The annual costs per unit for 10,000 units of the part are as follows:Direct materials $20.00Direct labor 15.00Variable factory overhead 16.00Fixed factory overhead 10.00Total costs $61.00The fixed factory overhead costs are unavoidable. Olson Company has offered to sell 10,000 units of the same part to Goldwater Company for $60 per unit. The facilities currently used to make the part could be used to make 10,000 units per year of a new product that has a contribution margin of $20 per unit. No additional fixed costs would be incurred with the new product. Goldwater Company should ________.A) make the part to save $10,000B) make the part to save $90,000C) make the new product and buy the part to save $90,000D) make the new product and buy the part to save $110,000Comment on some of the issues of buying critical parts from a vendor verses manufacturing them yourself. See lecture notes, answer is not found in the text. 23) Each year, Mother Company purchases 8,000 units of a part that it needs for production of its product. The supplier notified Mother Company that a price increase will take effect shortly, which will bring the price of the part to $25 per part. Mother Company is considering the use of idle facilities to produce the part. The annual production costs to produce the needed 8,000 parts are as follows:Direct materials $17,500Direct labor 30,000Indirect production costs?variable 14,000Indirect production costs?fixed 33,500The idle facilities could also be rented out at an annual rent of $99,000. All the fixed indirect production costs are avoidable.Required:Determine if Mother Company should buy the part or produce it internally.24) Olson Company has three departments. Data for the most recent year is presented below: Dept. C Dept. A Dept. TSales $4,000 $1,920 $2,240Variable expenses 3,280 1,420 520Unavoidable fixed expenses 480 180 440Avoidable fixed expenses 555 265 360Operating income(loss) $(315) $55 $920Olson Company is considering eliminating Dept. C because it is operating at a loss.Required:A) Compute the change in operating income if Olson Company eliminates Dept. C and does not replace it.B) Compute the change in operating income if Olson Company eliminates Dept. C and doubles the sales of Dept. T without increasing fixed costs.25) A major benefit of effective budgeting is that ________.A) it compels managers to think aheadB) it aids managers in communicating objectives to employeesC) it provides benchmarks to evaluate subsequent performanceD) all of the above26) The most effective budget processes facilitate communication from top management to ________ and from lower level managers and employees to ________.A) the SEC, the audit committeeB) stockholders, creditorsC) lower level managers and employees, top managementD) creditors, stockholders27) A major drawback of using historical results for judging current performance is that ________.A) past results may be inaccurateB) results may refer to a different managerC) inefficiencies may be concealed in past resultsD) managers may have cooked the books28) Budgets are generally more effective if they are ________.A) created with the active participation of all affected employeesB) understood and accepted by affected managersC) supported by top managementD) all of the above29) Managers may ________ their budgeted costs or ________ their budgeted revenues to create a budget target that is easier to achieve.A) understate, overstateB) overstate, understateC) understate, understateD) overstate, overstate30) A sales forecast is ________.A) a prediction of sales under a given set of conditionsB) the sales budgetC) based on input from the board of directorsD) based on input from the audit committee31) Which of the following statements about long-range plans is FALSE?A) Long-range plans provide forecasted financial statements for five to ten year periods.B) Long-range plans guide day-to-day operations.C) Companies coordinate long-range plans with capital budgets.D) A decision made during long-range planning is the acquisition of a plant building.32) ________ set the overall goals and objectives of the organization.A) Capital budgetsB) Cash budgetsC) Master budgetsD) Strategic plans33) Which of the following is a component of the financial budget?A) budgeted balance sheetB) budgeted income statementC) sales budgetD) purchases budget34) What is the final result of the operating budget process?A) budgeted balance sheetB) budgeted income statementC) budgeted cash flow statementD) cash budget35) A decision made during long-range planning includes whether to delete a product from a company's product line. True or False. 36) Bates Corporation has the following sales budget:Month Budgeted SalesMay $84,000June 100,000July 92,000August 116,000September 98,000Credit sales are 80% of total sales. Collections of credit sales are 80% in the month of sale, 15% in the month after sale and 5% are never collected.Required:Prepare a schedule of cash collections for June, July and August.Answer: June July AugustCash sales $20,000 $18,400 $23,200Collections of credit sales:Current month 64,000 58,880 74,240Previous month 10,080 12,000 11,040Total collections $94,080 $89,280 $108,480Extend the three month to an annual budget.Based on the annual budget that you have just calculated, comment on what the line items of the following years budget need the most attention from you the manager. What are some of the possible errors that can occur if you prepare subsequent budgets by simply increasing a line item by a percentage? For example annual sales of 246,400 will increase by 7 percent to $263,648 (246,400 X 1.07). Comment on why a well prepared well thought out budget is a good offense as well as a good defense.Comment on how you would obtain information in estimating critical line items of the budget.37) Divine Intervention Company uses activity-based costing. The company is trying to estimate the costs of the processing activity in the factory. The company has developed the following flexible budget formula:Y = $10.50X + $13,000Where: Y = Total processing cost per quarter and X = Number of machine hoursWhat are the expected total processing costs if 10,000 machine hours are expected next quarter?A) $13,000B) $105,000C) $113,000D) $118,00038) Puppy Company planned to produce 12,000 units. This level of activity required 20 setups at a cost of $22,000 plus $500 per setup. Actual production was 10,000 units, requiring 15 setups. Actual setup cost was $26,000. At 10,000 units, what is the flexible budget amount for total setup costs?A) $7,500B) $22,000C) $26,000D) $29,500Please see Page: 308 of the text book39) Which is NOT a reason for a static budget variance?A) Actual sales volume was higher than projected sales volume.B) Actual variable costs per unit were higher than expected variable costs per unit.C) Actual fixed costs per unit were higher than expected fixed costs per unit.D) Actual sales volume in current period was higher than projected sales volume in last period.Please see Page: 308 of the text book

 

Paper#44818 | Written in 18-Jul-2015

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