Flex Budgets and Standards
Responsibility Accounting
Short term business decisions
Capital Investments
Miscellaneous Accounting/USF
100
Alphonse Company manufactures staplers. The budgeted sales price is $14 per stapler, the variable costs are $3 per stapler, and budgeted fixed costs are $12,000.
What is the budgeted operating income for 4,100
staplers?
$33,100
Sales $57,400
VC 12,300
FC 12,000
OI 33,100
100
Which of the following is an advantage of decentralization?
A.Customer response time is generally decreased.
B.Certain costs of activities may be duplicated.
C.Managers' motivation and retention can be increased by empowering segment managers to make decisions.
D.Top management can concentrate on decisions that relate to day-to-day operations of segments.
C
100
Which of following statements is true of short-term decision making?
A.Fixed costs and variable costs must be analyzed separately.
B.All costs behave in the same way.
C.All costs involved in a decision are considered relevant.
D.Unit manufacturing costs are variable costs.
A.
100
Capital budgeting involves ________.
A.evaluating various long-term investments
B.preparing the sales budget for the coming year
C.budgeting for yearly operational expenses
D.analyzing various alternatives of financing available to a company
A
100
What is the name of USF's new President
Steve Currall
200
The flexible budget variance is the difference between the ________.
A. Flexible budget and static budget due to differences in fixed costs
B.actual results and the expected results in the flexible budget for the actual units sold
C.static budget and actual results
D.expected results in the flexible budget for the units expected to be sold and the static budget
B.
200
Which of the following is a key performance indicator of the internal business perspective of the balanced scorecard?
A.number of cross-trained employees
B.number of units produced per hour
C.employee turnover
D.cash flow
B
200
Well-Bread Grain Company is a price-taker and uses target pricing. The company has just done an analysis of its revenues, costs, and desired profits and has calculated its target full product cost. Assume all products produced are sold. Refer to the following information:
Target full product cost $500,000 per year
Actual fixed cost $280,000 per year
Actual variable cost $2 per unit
Production volume 150,000 units per year
Actual costs are currently higher than target full product cost. Assuming that fixed costs cannot be reduced, what is the target variable cost per unit? (Round your answer to the nearest cent.)
$1.47
$500,000 - fixed costs $280,000 = Target variable costs $220,000 /150,000 units = $1.47 per unit
200
The following details are provided by a manufacturing company:
Investment $1,100,000
Useful life 12 years
Estimated cash inflows for first year $400,000
Estimated cash inflow for second year $390,000
Estimated annual net cash inflows for next ten years $380,000
Residual value $70,000
Calculate the payback.
2.82 years
Investment $1,100,000
cash year 1 (400,000)
Balance $700,000
Cash year 2 (390,000)
Balance $310,000
/ cash year 3 380,000
= .82 years
2 years + .82 of year 3 = 2.82 years
200
Name two business clubs at USFSP
Beta Alpha Psi
Delta Sigma Pi
300
Which of the following is an example of a direct materials efficiency standard?
A.$40 per direct labor hour
B.6 direct labor hours per unit
C.$0.95 per square foot
D.50 square feet per unit
D.
300
Marsh, Inc. provides the following information:
Actual Sales Static Budget Flex Budget
Sales $560,000 $535,000 $450,000
Calculate the sales volume variance.
$85,000 unfavorable
300
Karlson Roller Skates has three product
lineslD, E, and F. The following information is available:
D E F
Sales revenue $90,000 $60,000 $30,000
Variable costs (30,000) (15,000) (12,000)
Cont Margin $60,000 $45,000 $18,000
Fixed costs (20,000) (15,000) (23,000)
Oper Income $40,000 $30,000 ($5,000)
The company is deciding whether to drop product line F because it has an operating loss. Assuming fixed costs are unavoidable, if Karlson drops product line F and rents the space formerly used to produce product F for $20,000 per year, total operating income will be ________.
$67,000
Current income = $65,000
Without F, Sales are $150,000
Variable costs (45,000)
CM $105,000
Fixed costs (58,000)
Income before rent $ 47,000
+ new rent 20,000
= New income $67,000
300
Felice Lucas has just won the state lottery and has the following three payout options for after-tax prize money:
1. $170,000 per year at the end of each of the next six years
2. $312,000 (lump sum) now
3. $508,000 (lump sum) six years from now
The annual discount rate is 9%. Compute the present value of the first option. (Round your answer to the nearest whole dollar.)
$762,620 =
$170,000 * 4.486
300
What sport is USFSP known for?
Sailing
400
Allen Boating Company manufactures special metallic materials and decorative fittings for luxury yachts that require highly skilled labor. Allen uses standard costs to prepare its flexible budget. For the first quarter of the year, direct materials and direct labor standards for one of their popular products were as follows:
Direct materials: 11 pounds per unit; $12 per pound
Direct labor: 22 hours per unit; $20 per hour
Allen produced 1,000 units during the quarter. At the end of the quarter, an examination of the direct materials records showed that the company used 6,500 pounds of direct materials and actual total materials costs were $99,300.
What is the direct materials efficiency variance?
$54,000 Favorable
400
Healthcare Products provides the following information for the year.
Net sales $150,000
Operating income $47,000
Average assets $310,000
Target rate of return 13.0%
Calculate the residual income.
$6,700
Actual income $47,000
Average assets $310,000 * 13% = $40,300
Difference = Residual income $6,700
400
Hadlee Corporation produces two products, P and Q. P sells for $9.50 per unit; Q sells for $5.50 per unit. Variable costs for P and Q are $5.00 and $3.00, respectively. There are 3,300 direct labor hours per month available for producing the two products. Product P requires 3.00 direct labor hours per unit, and product Q requires 5.00 direct labor hours per unit. The company can sell up to 900 units of each kind per month. What is the maximum monthly contribution margin that Hadlee can generate under the circumstances? (Round to nearest whole dollar.)
$4,350
400
Which of the following situations suggests the acceptance of an investment proposal?
A.The present value of the net cash inflows exceeds the initial investment.
B.The cash inflows are higher than the initial investment.
C.The investment will have a residual value.
D.The IRR is lower than the hurdle rate.
A.
400
Name the three women pictured on the wall in the lobby of the business building
Kate Tiedemann
Ellen Cotton
Lynn Pippenger
500
Allen Boating Company manufactures special metallic materials and decorative fittings for luxury yachts that require highly skilled labor. Allen uses standard costs to prepare its flexible budget. For the first quarter of the year, direct materials and direct labor standards for one of their popular products were as follows:
Direct materials: 11 pounds per unit; $12 per pound
Direct labor: 22 hours per unit; $20 per hour
Allen produced 1,000 units during the quarter. At the end of the quarter, an examination of the direct materials records showed that the company used 6,500 pounds of direct materials and actual total materials costs were $99,300.
What is the direct materials cost variance?
$21,300 unfavorable
500
Dantone, Inc. provides the following information:
Profit margin ratio 8%
Asset turnover ratio 3 times
Net sales $600,000
Target rate of return 9%
Calculate the return on investment.
24%
Profits/ 600,000 sales = 8%, profits = $48,000
Sales $600,000 / Assets = 3; Assets = $200,000
ROI = Income / Assets
$48,000 / $200,000 = 24%
500
Fastec Automobile Company fabricates automobiles. Each vehicle includes one transfer case, which is currently made in-house. Details of the transfer case fabrication are as follows:
Volume 900 units per month
Variable cost per unit $6 per unit
Fixed costs $16,000 per month
A Korean factory has offered to supply Fastec with ready-made units for a price of $13 per transfer case. Assume that Fastec's fixed costs are unavoidable, but that Fastec could use the vacated production facilities to earn an additional $9,500 of profit per month. If Fastec decides to outsource, monthly operating income will
500
The following details are provided by Iron Foundry Company:
Initial investment $5,000,000
Useful life 4 years
Residual value $1,000,000
Discount rate 15%
Yearly cash inflows
1 $1,264,000
2 $1,352,000
3 $2,404,000
4 $1,170,000
$(57,189)
500
What is the traditional boat building material used at Homecoming at USFSP?
cardboard