Chapters 14-17
A system of accounting in which costs are accumulated and then measured per unit at the end of a period by combining costs per equivalent unit from various departments is a:
A method that estimates cost behavior by using just the highest and lowest volume levels is called the:
High-low method.
The type of department that generates revenues and incurs costs, and its manager is responsible for the investments made in operating assets is called a(n):
Investment center
A company’s predetermined overhead rate is 150% of its direct labor costs. How much overhead is applied to a job that requires total direct labor costs of $30,000?
$45,000
Calculating return on investment for an investment center is defined by the following formula:
Income/Average invested assets.
Manufacturing costs other than direct materials and direct labor, and are not readily traceable to specific units or batches of production are called:
The difference between product cost per unit under absorption costing as compared to that under variable costing is:
Fixed overhead only.
An additional cost incurred only if a company pursues a particular course of action is a(n):
Incremental cost.
A company's sales in Year 1 were $250,000 and in Year 2 were $287,500. Using Year 1 as the base year, the percent change for Year 2 compared to the base year is:
15%.
A firm expects to sell 24,400 units of its product at $10.40 per unit and to incur variable costs per unit of $5.40. Total fixed costs are $64,000. The pretax net income is:
$58,000.
Which of the following costing systems is more accurate for overhead cost allocation and most likely to allow managers the ability to make better pricing decisions?
A plan that shows the expected cash inflows and cash outflows during the budget period, including receipts from loans needed to maintain a minimum cash balance and repayments of such loans, is called
A cash budget.
A company's required rate of return, typically its cost of capital is called the:
Hurdle rate.
A store has the following budgeted sales for the next five months.
May $210,000
June 186,000
July 180,000
August 220,000
September 240,000
Cash sales are 25% of total sales and all credit sales are expected to be collected in the month following the sale. The total amount of cash expected to be received from customers in September is
$225,000.
Compute cost of goods sold using the following information:
Finished goods inventory, beginning $ 500
Cost of goods manufactured 4,000
Finished goods inventory, ending 750
The three major cost components of manufacturing a product are
Direct materials, direct labor, and factory overhead.
The difference between actual quantity of input used and the standard quantity of input used results in a:
Quantity variance.
The comparison of a company's financial condition and performance across time is known as:
Horizontal analysis.
A company uses four hours of direct labor to produce a product unit. The standard direct labor cost is $20 per hour. This period the company produced 20,000 units and used 84,160 hours of direct labor at a total cost of $1,599,040. What is its labor rate variance for the period?
$84,160 F
Calculate 2017 cost of goods manufactured for Barton Company using the following information.
Direct materials $ 190,500
Direct labor 63,150
Factory overhead costs 24,000
Work in process, Dec. 31, 2016 157,600
Work in process, Dec. 31, 2017 142,750
Use the following information to compute the cost of direct materials used for the current year. (Assume no indirect materials.)
January 1 December 31
Inventories
Raw materials inventory $ 6,000 $ 7,500
Work in process inventory 12,000 9,000
Finished goods inventory 8,500 5,500
Activity during current year
Materials purchased $ 123,500
Direct labor 94,000
Factory overhead 39,000
During March, a firm expects its total sales to be $168,000, its total variable costs to be $95,800, and its total fixed costs to be $25,800. The contribution margin for March is:
$72,200.
A company is considering the purchase of a new piece of equipment for $90,000. Predicted annual cash inflows from this investment are $36,000 (year 1), $30,000 (year 2), $18,000 (year 3), $12,000 (year 4) and $6,000 (year 5). The payback period is:
3.50 years.
Champ, Inc., predicts the following sales in units for the coming two months:
May June
Sales in units 180 200
Each month’s ending inventory of finished units should be 60% of the next month’s sales. The April 30 finished goods inventory is 108 units. Compute Champ’s budgeted production (in units) for May.
Grace manufactures and sells miniature digital cameras for $250 each. 1,000 units were sold in May, and management forecasts 4% growth in unit sales each month.
Determine the dollar amount of camera sales for the month of June.