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managerial accounting
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Managerial Accounting
The total factory overhead for Lifestyle Furniture Company is budgeted at $600,000 for the year, divided between two departments: Fabrication, $420,000, and Assembly, $180,000. Lifestyle manufactures
The total factory overhead for Lifestyle Furniture Company is budgeted at $600,000 for the year, divided among four activities: fabrication, $300,000; assembly, $120,000; setup, $100,000; and
Which of the following activity bases would best be used to allocate setup activity to products?a. Number of inspectionsb. Direct labor hoursc. Direct machine hoursd. Number of production runs
Metro University uses activity-based costing to assign indirect costs to academic departments, using four activities.The activity base, budgeted activity cost, and estimated activity-base usage for
Production Department 1 (PD1) and Production Department 2 (PD2) had factory overhead budgets of $26,000 and $48,000, respectively. Each department was budgeted for 5,000 direct labor hours of
The following activity rates are associated with moving rail cars by train: $4 per gross ton mile; $50 per rail car switch; $200 per rail car. A train with 20 rail cars traveled 100 miles.Each rail
Support Department 1 has $200,000 in costs distributed to it. Costs from Support Department 1 will be allocated to other departments based on labor hours. Support Department 2 uses 50 labor hours
Maeser Productions, a film production company, allocates support activity costs to production activities using the reciprocal services method. Specifically, the costs from two support activities,
Jupiter Enterprises LLC has two support departments and two production departments. Support Department 1 has $500,000 in costs distributed to it. Costs from Support Department 1 will be allocated to
Which of the following is the most accurate method of support department cost allocation?a. The direct methodb. The indirect methodc. The sequential methodd. The reciprocal services method
Which of the following is not true of the sequential method of support department cost allocation?a. The sequential method is more complex than the direct method.b. The sequence used for allocating
Based on the following table, and using the direct method, what percent of Support Department 2 costs will be allocated to Production Department 2? Support Department 1 cost driver Support Department
Three products result from a joint production process. There are 50 units of product B158, 100 units of product B159, and 50 units of product B160. Using the physical units method, what percent of
Guybrush Enterprises produces two types of particle board: high and low density. Both types of wood go through a joint production process where wood chips are milled and mixed with resin, wax, water,
O&W Metal Company makes designer emblems for luxury vehicles. Each emblem is handcrafted out of titanium to the customer’s design specifications. O&W’s artisans are paid an hourly wage
Based on the data presented in Question 4, and using the sequential method, what percent of Support Department 2 costs will be allocated to Production Department 2 (assume Support Department 1 costs
Which of the following describes variable costs?a. Costs that vary on a per-unit basis as the level of activity changesb. Costs that vary in total in direct proportion to changes in the level of
Toussant Company sells 20,000 units at $120 per unit. Variable costs are $90 per unit, and fixed costs are $250,000.a. Prepare an income statement for Toussant in contribution margin format.b.
Based on the following operating data, what is the operating leverage?a. 0.8b. 1.2c. 1.8d. 4.0 Sales...... Variable costs Contribution margin..... Fixed costs..... Operating income.. $ 600,000
If sales are $500,000, variable costs are $200,000, and fixed costs are $240,000, what is the contribution margin ratio?a. 40%b. 48%c. 52%d. 60%
Blueberry Inc., a consumer electronics company, manufactures and sells two products, smartphones and tablet computers. The unit selling price, unit variable cost, and sales mix for each product are
DeHan Company, a sporting goods manufacturer, sells binoculars for $140 per unit. The variable cost is $100 per unit, while the fixed costs are $1,200,000.a. Compute:1.The anticipated break-even
If the unit selling price is $16, the unit variable cost is $12, and fixed costs are $160,000, what is the break-even sales (units)?a. 5,714 unitsb. 10,000 unitsc. 13,333 unitsd. 40,000 units
Third Street Manufacturing Company has no beginning inventory, and sales are estimated to be 30,000 units at $100 per unit. Third Street’s management is evaluating whether to manufacture 30,000
Based on the data presented in Question 3, how many units of sales would be required to realize operating income of $20,000?a. 11,250 unitsb. 5,000 unitsc. 40,000 unitsd. 45,000 units
Walsh Company manufactured 30,000 units during July. There were no units in inventory on July 1. Costs and expenses for July were as follows:If the company sells 25,000 units at $75 (units
Vintage Apparel Company manufactures and sells two styles of baseball jerseys, the Retro and the New Age.These jerseys are sold in two regions, East and West. Information about the two jerseys and
Sales were $750,000, the variable cost of goods sold was $400,000, the variable selling and administrative expenses were $90,000, and fixed costs were $200,000. The contribution margin
During the year in which the number of units manufactured exceeded the number of units sold, the operating income reported under the absorption costing concept would be:a. larger than the operating
During a year in which the number of units manufactured is less than the number of units sold, the operating income reported under the variable costing concept would be:a. larger than the operating
The beginning inventory consists of 6,000 units, all of which are sold during the period. The beginning inventory fixed costs are $20 per unit, and the variable costs per unit are $90 per unit.
O-wen Snowboard Company designs and manufactures snowboards. The boards are assembled in the company’s Assembly Department in Colorado. Information for the Assembly Department is as follows:Prepare
Variable costs are $70 per unit and fixed costs are $150,000. Sales are estimated to be 10,000 units. How much would absorption costing operating income differ between a plan to produce 10,000 units
Cooperstown Retros makes replica major league baseball jerseys that match those worn in the 1950s. The company budgeted production of 15,000 jerseys in 20Y1. Each jersey requires 1.5 square yards of
A tight budget may create:a. budgetary slack.b. discouragement.c. a flexible budget.d. a “spend it or lose it” mentality.
Quincy Company has both cash and credit customers. The company expects that 40% of total monthly sales will be collected in cash in the month of sale, and the remaining 60% will be collected in the
The first step of the budget process is to:a. plan.b. direct.c. control.d. analyze feedback.
Static budgets are often used by:a. production departments.b. administrative departments.c. responsibility centers.d. capital projects.
The actual and standard factory overhead costs for producing a specified quantity of product are as follows:If 1,000 hours were unused, the fixed factory overhead volume variance would be:a. $1,500
The total estimated sales for the coming year is 250,000 units. The estimated inventory at the beginning of the year is 22,500 units, and the desired inventory at the end of the year is 30,000 units.
Menounos Manufacturing Co. uses standard costs. Standard costs and actual costs for direct materials and direct labor for the manufacture of 3,000 units during 20Y6 were as follows:Each unit requires
Menounos Manufacturing Co. uses standard costs. Standard costs and actual costs for direct labor and factory overhead for the manufacture of 3,000 units during 20Y6 were as follows:Each unit requires
Dixon Company expects $650,000 of credit sales in March and $800,000 of credit sales in April. Dixon historically collects 70% of its sales in the month of sale and 30% in the following month. How
The actual and standard direct materials costs for producing a specified quantity of product are as follows:The direct materials price variance is:a. $50 unfavorable.b. $2,500
Bower Company produced 4,000 units of product. Each unit requires 0.5 standard hour. The standard labor rate is $12 per hour. Actual direct labor for the period was $22,000 (2,200 hrs. × $10 per
Twitchell Industries produces three products. All of the products use a furnace operation, which is a production bottleneck. The following data are available:Which product is most profitable and
Ramathan Company produced 6,000 units of Product Y, which is 80% of capacity. Each unit required 0.25 standard machine hour for production. The standard variable factory overhead rate is $5 per
Delinco Tech Inc. manufactures corrosion-resistant water pumps and fluid meters. Its Commercial Products Division is organized as a cost center. The division’s budget for the month ended July 31 is
Applegate Company has a normal budgeted capacity of 200 machine hours. Applegate produced 600 units. Each unit requires a standard 0.2 machine hour to complete. The standard fixed factory overhead is
Johnson Company has two divisions, East and West, that operate as profit centers. Sales, cost of goods sold, and selling expenses for the two divisions for the year ended December 31 are as
When the manager has the responsibility and authority to make decisions that affect costs and revenues but no responsibility for or authority over assets invested in the department, the department is
The Accounts Payable Department has expenses of $600,000 and makes 150,000 payments to the various vendors who provide products and services to the divisions. Division A has operating income of
Yummy Foods Company is a diversified company with three divisions organized as investment centers.Condensed data taken from the records of the three divisions for the year ended December 31 are as
Division A of Kern Co. has sales of $350,000, cost of goods sold of $200,000, operating expenses of $30,000, and invested assets of $600,000. What is the return on investment for Division A?a. 20%b.
The materials used by the South Division of Eagle Company are currently purchased from outside suppliers at $30 per unit. These same materials are produced by Eagle’s North Division. Operating
Division L of Liddy Co. has a return on investment of 24% and an investment turnover of 1.6. What is the profit margin?a. 6%b. 15%c. 24%d. 38%
Which approach to transfer pricing uses the price at which the product or service transferred could be sold to outside buyers?a. Cost price approachb. Negotiated price approachc. Market price
For the three cases that follow, prepare a differential analysis.Case A (Discontinue a Product): Product K has revenue of $65,000, variable cost of goods sold of $50,000, variable selling expenses of
SMB Company recently began production of a new product, Q, which required an investment of $2,500,000 in assets. The costs of producing and selling 100,000 units of Product Q are estimated as
Johnston Company is considering discontinuing a product. The costs of the product consist of $20,000 fixed costs and $15,000 variable costs. The variable operating expenses related to the product
Madden Company is considering disposing of equipment that was originally purchased for $200,000 and has $150,000 accumulated depreciation to date. The same equipment would cost $310,000 to replace.
Tyme Manufacturing Inc. is evaluating a capital investment proposal for a new machine. The new machine has a cost of $230,000, an expected useful life of six years, and a residual value of $20,000.
Which method of setting normal product selling prices includes administrative and selling expenses in the markup that is added to the cost amount?a. Target costing methodb. Demand-based methodc.
The management of Broncial Industries Inc. is considering a capital investment project. The net cash flows expected from the project are $50,000 a year for seven years. The project requires an
Methods of evaluating capital investment proposals that ignore present value include:a. average rate of return.b. cash payback.c. both a and b.d. neither a nor b.
Management is considering a $100,000 investment in a project with a five-year life and no residual value. If the total income from the project is expected to be $60,000 and straight-line depreciation
Acme Company is evaluating two projects with unequal lives. Project 1 requires an original investment of$50,000. The project will yield cash flows of $12,000 per year for five years. Project 1 could
The expected period of time that will elapse between the date of a capital investment and the complete recovery of the amount of cash invested is called the:a. average rate of return period.b. cash
A project that will cost $120,000 is estimated to generate cash flows of $25,000 per year for eight years. What is the net present value of the project, assuming an 11% required rate of
I. Lean Concepts Match the following lean concepts with the appropriate description.II. Lead Time Analysis The Helping Hands Company manufactures designer gloves. Gloves are manufactured in 50-glove
A project is estimated to generate cash flows of $40,000 per year for 10 years. The cost of the project is $226,009. What is the internal rate of return for this project?a. 8%b. 10%c. 12%d. 14%
Which of the following is not a characteristic of the lean manufacturing philosophy?a. Product-oriented layoutb. Push manufacturing (make to stock)c. Short lead timesd. Reducing setup time as a
The budgeted conversion costs for a lean cell are $142,500 for 1,900 production hours. Each unit produced by the cell requires 10 minutes of cell process time. During the month, 1,050 units are
A quality control activity analysis indicated the following four activity costs of an administrative department:Sales are $2,000,000. Prepare a cost of quality report. Verifying the accuracy of a
Accounting for lean manufacturing is best described as:a. more complex.b. focused on direct labor.c. providing detailed variance reports.d. providing less transaction control.
A product cell for Dynah Company has budgeted conversion costs of $420,000 for the year.The cell is planned to be available 2,100 hours for production. Each unit requires $12.50 of materials cost.
In-process inspection activities are an example of what type of quality cost?a. Preventionb. Appraisalc. Internal failured. External failure
A Pareto chart is used to display:a. a ranking of attribute totals, by category, in the form of a bar chart.b. important trends in the form of a line chart.c. percentage information in the form of a
Cameron Tools Inc. has developed a balanced scorecard with six objectives under the four standard performance perspectives. In the learning and growth perspective, the company has strategic
Which of the following is not an example of a metric that companies are likely to use to measure some aspect of performance?a. Operating incomeb. CEO salaryc. Cash flowsd. Average employee tenure
Building on the Cameron Tools Inc. balanced scorecard example, assume that the company has the following performance metrics for each strategic objective:▪ Promote from within: Percentage of new
Which of the following are elements of the balanced scorecard?i. Performance targets ii. Strategy maps iii. Performance forecasts iv. Strategic initiativesa. i onlyb. iii and ivc. i, ii, and ivd. i,
Which of the following statements is true regarding the balanced scorecard?a. Strategic objectives are the same as the overall mission statement of a company.b. All effective performance metrics of a
Which of the following statements most accurately describes the difference between a strategy map and a measure map?a. Strategy maps show which performance metrics are leading or lagging indicators
Which of the following best describes one of the main reasons why most Fortune 500 companies now issue CSR reports?a. Investors and consumers are increasingly rewarding companies that are engaged in
Journalize the following transactions, using the direct write-off method of accounting for uncollectible receivables: June 2. Received $1,200 from Melissa Crone and wrote off the remainder owed of
At the end of the fiscal year, before the accounts are adjusted, Accounts Receivable has a balance of $200,000 and Allowance for Doubtful Accounts has a credit balance of $2,500.If the estimate of
Journalize the following transactions, using the allowance method of accounting for uncollectible receivables: June 2. Received $1,200 from Melissa Crone and wrote off the remainder owed of $4,000 as
At the end of the current year, ARS Industries has the following account balances before making an adjusting entry for uncollectible accounts:The company recorded $3,500,000 of credit sales during
At the end of the fiscal year, Accounts Receivable has a balance of $100,000 and Allowance for Doubtful Accounts has a balance of $7,000. The expected net realizable value of the accounts receivable
Icebreaker Company receives a 120-day, 6% note for $40,000, dated May 14, in settlement of a $40,000 account that is past due.a. Determine the due date of the note.b. Determine the maturity value of
What is the maturity value of a 90-day, 12% note for $10,000?a. $8,800b. $10,000c. $10,300d. $11,200
What is the due date of a $12,000, 90-day, 8% note receivable dated August 5?a. October 31b. November 2c. November 3d. November 4
Chiro-Solutions Company reported the following for two recent years:a. Determine the accounts receivable turnover for 20Y2 and 20Y1. Round answers to one decimal place.b. Determine the days’ sales
When a note receivable is dishonored, Accounts Receivable is debited for what amount?a. The face value of the noteb. The maturity value of the notec. The maturity value of the note less accrued
Which of the following expenditures incurred in connection with acquiring machinery is a proper charge to the asset account?a. Freightb. Installation costsc. Both (a) and (b)d. Neither (a) nor (b)
McCollum Company, a furniture wholesaler, acquired new equipment at a cost of $150,000 at the beginning of the fiscal year. The equipment has an estimated life of five years and an estimated residual
On the first day of the year, Firefall Company acquired equipment for use in operations at a cost of$340,000. The equipment was expected to have a useful life of four years or 1,000 hours, and a
What is the amount of depreciation, using the double-declining-balance method for the second year of use for equipment costing $9,000, with an estimated residual value of$600 and an estimated life of
On the first day of the year, Firefall Company purchased equipment at a cost of $340,000. The equipment was expected to have a useful life of four years, a residual value of $20,000, and is
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