1. A low gross profit percentage means that A. the cost of goods sold was relati

1. A low gross profit percentage means that
A. the cost of goods sold was relatively high.
B. selling expenses are very low.
C. general and administrative expenses are very high.
D. the cost of goods sold was relatively low.
2. Isaiah Sporting Goods uses the perpetual average cost method
of determining inventory costs. Below is
the inventory record for Product C124:
What is the average cost per unit after the receipt of the June 21
inventory?
Date Received Sold Cost/Unit Balance
April 22 534 $6.58 $3,513.72
May 17 433 $6.70 $2,901.10
June 21 389 $6.76 $2,629.64
August 2 436 $6.44 $2,807.84
A. $6.62
B. $6.67
C. $6.72
D. $6.61
3. The balance sheet format that lists assets above liabilities
is the _______ form.
A. report
B. alphabetical
C. account
D. liquidity
4. A drawback to using _______ when inventory costs are rising
is that the company reports lower net
income.
A. LIFO
B. average costing
C. specific-identification costing
D. FIFO
5. Which items may not limit the effectiveness of internal
control systems in an organization?
A. Properly designed controls
B. Collusion
C. Costs not worth benefits
D. Overriding controls
6. The major difference in the statement of retained earnings
between a service business and a
merchandising business is
A. that the retained earnings statement of a service business
includes dividends.
B. that the retained earnings statement of a merchandising business
includes dividends.
C. that the retained earnings statement of a merchandising business
shows the cost of goods sold.
D. nothing. There are no differences between the two.
7. Net sales times the historical gross profit percentage yields
the estimated
A. gross profit.
B. ending inventory.
C. beginning inventory.
D. cost of goods sold.
8. A company’s gross profit percentage decreases from 58% to
51%. What does this mean?
A. This means that net income will be lower.
B. We can’t determine anything definite from the information
given.
C. This means that net income will be higher.
D. This means that there will be a net loss.
9. Under a perpetual inventory system, the account to which
transportation charges on incoming
merchandise is generally entered is
A. FOB destination.
B. FOB shipping.
C. inventory.
D. delivery expense.
10. If current assets decrease and current liabilities increase,
the current ratio
A. remains the same.
B. increases.
C. decreases.
D. will change based on the change in total assets.
11. ABC Corporation pays an invoice for $350 in time to take a
3% discount. The journal entry to record
the payment of this invoice is
A. debit Accounts Payable $350; credit Cash $350.
B. debit Accounts Payable $350; credit Inventory $10.50, credit
Cash $339.50.
C. debit Accounts Payable $340; credit Cash $340.
D. debit Accounts Payable $340; debit Inventory $10; credit Cash
$350.
12. To pay the least income tax possible in periods of rising
inventory costs, the company should use which
inventory costing method?
A. LIFO
B. Specific identification
C. Average cost
D. FIFO
13. Committing a fraud because the employee feels that it will
be easy to do is indicative of which part of
the fraud triangle?
A. Realization
B. Rationalization
C. Perceived opportunity
D. Perceived pressure
14. Under Sarbanes-Oxley, those officers signing off on the
reports must have evaluated the company’s
internal control within the previous
A. 90 days.
B. year.
C. nine months.
D. six months.
15. Committing a fraud because the employee feels “I deserve a
pay raise. The company owes this to me”
is indicative of which part of the fraud triangle?
A. Perceived opportunity
B. Perceived pressure
C. Rationalization
D. Realization
16. Bill’s Bikes had sales for the week of $3,569, of which
$2,900 was on credit and $659 was in cash
sales. The cost of the bikes sold was $1,888. The journal entries
would include a
A. debit to Cash for $3,569; credit to Cost of Goods Sold for
$3,569.
B. debit to Cost of Goods Sold for $1,888; credit to Inventory for
$1,888.
C. debit to Cost of Goods Sold for $1,888; credit to Sales of
$1,888.
D. debit to Cash for $3569; credit to Sales for $3,569.
17. To overstate earnings, a company can
A. understate expenses and understate revenue.
B. overstate receivables and understate payables.
C. overstate expenses and overstate revenue.
D. understate unearned revenue and understate property, plant, and
equipment.
18. Which of the following would probably not cause inventory
shrinkage?
A. Spoilage of items
B. Employee theft
C. Spills of items
D. Correct counting of all inventory
19. When a company repays the seller for shipping costs on an
FOB shipping transaction, which of the
following is true?
A. A purchase discount can still be taken net of the prepaid
shipping charges.
B. A purchase discount can still be taken on the gross amount of
the invoice.
C. A purchase discount cannot be taken when shipping charges are
prepaid.
D. The shipping costs don’t affect the invoice cost.
20. A company’s current ratio increased from 1.23 to 1.45. What
does this mean?

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Assignment 4: Sir Richard Branson, Chairman, Virgin Group, Ltd. Case Study Due W

Assignment 4: Sir Richard Branson, Chairman, Virgin Group,
Ltd. Case Study Due Week 8 and worth 100 points Read the Sir
Richard Branson, Chairman, Virgin Group, Ltd. case study located in
Chapter 11. Write a six to eight (6-8) page paper in which you:
1. Describe Branson’s leadership style in terms of the
leadership models addressed in Chapters 10 and 11 and evaluate the
likely effectiveness of that style in the U.S. today.
2. Recommend a different leadership style (or combination of
styles) that would make Branson an even more effective leader.
3. Determine how Branson would develop and lead a global team
working on a major project (e.g., space tourism).
4. Discuss how you can incorporate some of Branson’s leadership
qualities into you role at work or school.
5. Use at least three (3) quality academic resources in this
assignment. Note: Wikipedia and other Websites do not qualify as
academic resources. Your assignment must follow these formatting
requirements:
• Be typed, double spaced, using Times New Roman font (size 12),
with one-inch margins on all sides; references must follow APA or
school-specific format. Check with your professor for any
additional instructions.
• Include a cover page containing the title of the assignment,
the student’s name, the professor’s name, the course title, and the
date. The cover page and the reference page are not included in the
required page length. The specific course learning outcomes
associated with this assignment are:
• Explain the variety of leadership theories and roles.
• Analyze the formation and dynamics of group behavior and work
teams, including the application of power in groups.
• Use technology and information resources to research issues in
organizational behavior.
• Write clearly and concisely about organizational behavior
using proper writing mechanics. Click here to view the grading
rubric for this assignment.

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Penn Foster 061683RR – Planning, Performance  Questions 1 to 20: Select the best

Penn Foster 061683RR – Planning,
Performance 
Questions 1 to 20: Select the best answer to each question. Note
that a question and its answers may be split across a page break,
so be sure that you have seen the entire question and all the
answers before choosing an answer.
Moorhouse Clinic uses client visits as its measure of activity.
During December, the clinic budgeted for 3,700 client visits, but
its actual level of activity was 3,690 client visits. The clinic
has provided the following data concerning the formulas used in its
budgeting and its actual results for December:
Data used in budgeting:
Fixed element Variable element per month per client-visit
Revenue ____-____ $25.10
Personnel expenses $27,100 $7.10
Medical supplies 1,500 4.50
Occupancy expenses 6,000 1.00
Administrative expenses 3,000 0.10
Total expenses $37,600 $12.70
Actual results for December:
Revenue $96,299
Personnel expenses $51,009
Medical supplies $17,425
Occupancy expenses $9,240
Administrative expenses $3,239
 
1. The spending variance for medical supplies in December would
be closest to
A. $725 U.
B. $725 F.
C. $680 F.
D. $680 U.
 
Cole Laboratories makes and sells a lawn fertilizer called
Fastgro. The company has developed standard costs for one bag of
Fastgro as follows:

                       
Standard Quantity  Standard Cost per bag
Direct material
          
     20 pounds
            
 $8.00
Direct labor    
       0.1 hours
            
 $1.10
Variable overhead        0.1
hours                   
$0.40
The company had no beginning inventories of any kind on January
1. Variable overhead is applied to production on the basis of
standard direct-labor hours. During January, the company recorded
the following activity:
– Production of Fastgro: 4,000 bags
– Direct materials purchased: 85,000 pounds at a cost of
$32,300
– Direct-labor worked: 390 hours at a cost of $4,875
– Variable overhead incurred: $1,475
– Inventory of direct materials on January 31: 3,000 pounds
2. The labor efficiency variance for January is
A. $350 U.
B. $475 F.
C. $110 F.
D. $130 U.
 
Cole Laboratories makes and sells a lawn fertilizer called
Fastgro. The company has developed standard costs for one bag of
Fastgro as follows:

                       
       Standard Quantity 
Standard Cost per bag
Direct material
                      
20 pounds       $8.00
Direct labor
               
0.1 hours         $1.10
Variable
overhead                  
0.1 hours        $0.40
The company had no beginning inventories of any kind on January
1. Variable overhead is applied to production on the basis of
standard direct-labor hours. During January, the company recorded
the following activity:
– Production of Fastgro: 4,000 bags
– Direct materials purchased: 85,000 pounds at a cost of
$32,300
– Direct-labor worked: 390 hours at a cost of $4,875
– Variable overhead incurred: $1,475
– Inventory of direct materials on January 31: 3,000 pounds
3. The materials price variance for January is
A. $1,300 U.
B. $1,640 F.
C. $1,640 U.
D. $1,700 F.
 
Use the following information to answer this question.
The Adams Company, a merchandising firm, has budgeted its
activity for November according to the following information:
– Sales were at $450,000, all for cash.
– Merchandise inventory on October 31 was $200,000.
– The cash balance on November 1 was $18,000.
– Selling and administrative expenses are budgeted at $60,000
for November and are paid for in cash.
– Budgeted depreciation for November is $25,000.
– The planned merchandise inventory on November 30 is
$230,000.
– The cost of goods sold is 70% of the selling price.
– All purchases are paid for in cash.
 
4. The budgeted cash disbursements for November are
A. $530,000.
B. $375,000.
C. $345,000.
D. $405,000.
 
5. Coles Company, Inc. makes and sells a single product, Product
R. Three yards of Material K are needed to make one unit of Product
R. Budgeted production of Product R for the next five months is as
follows:
August         14,000
units
September  14,500 units
October       15,500 units
November   12,600 units
December   11,900 units
The company wants to maintain monthly ending inventories of
Material K equal to 20% of the following month’s production needs.
On July 31, this requirement wasn’t met because only 2,500 yards of
Material K were on hand. The cost of Material K is $0.85 per yard.
The company wants to prepare a Direct Materials Purchase Budget for
the rest of the year.
The total cost of Material K to be purchased in August is
A. $42,300.
B. $48,200.
C. $40,970.
D. $33,840.
 
6. Manufacturing Cycle Efficiency (MCE) is computed as
A. Value-Added Time divided by Throughput Time.
B. Value-Added Time divided by Delivery Cycle Time.
C. Process Time divided by Delivery Cycle Time.
D. Throughput Time divided by Delivery Cycle Time.
 
7. The LFM Company makes and sells a single product, Product T.
Each unit of Product T requires 1.3 hours of direct labor at a rate
of $9.10 per direct-labor hour. LFM Company needs to prepare a
direct-labor budget for the second quarter of next year. The
budgeted direct-labor cost per unit of Product T would be
A. $9.10.
B. $7.00.
C. $11.83.
D. $10.40.
 
Werber Clinic uses client visits as its measure of activity.
During January, the clinic budgeted for 2,700 client visits, but
its actual level of activity was 2,730 client visits. The clinic
has provided the following data concerning the formulas used in its
budgeting and its actual results for January:
Data used in budgeting:
Fixed element Variable element per month per client-visit
Revenue ___-___ $33.60
Personnel expenses $22,100 $8.70
Medical supplies 1,100 6.60
Occupancy expenses 5,600 1.60
Administrative expenses 3,700 0.40
Total expenses $32,500 $17.30
Actual results for January:
Revenue $93,408
Personnel expenses $46,251
Medical supplies $19,348
Occupancy expenses $9,508
Administrative expenses $4,772
 
8. The activity variance for personnel expenses in January would
be closest to
A. $661 F.
B. $261 F.
C. $661 U.
D. $261 U.
 
Werber Clinic uses client visits as its measure of activity.
During January, the clinic budgeted for 2,700 client visits, but
its actual level of activity was 2,730 client visits. The clinic
has provided the following data concerning the formulas used in its
budgeting and its actual results for January:
Data used in budgeting:
Fixed element Variable element per month per client-visit
Revenue ___-___ $33.60
Personnel expenses $22,100 $8.70
Medical supplies 1,100 6.60
Occupancy expenses 5,600 1.60
Administrative expenses 3,700 0.40
Total expenses $32,500 $17.30
Actual results for January:
Revenue $93,408
Personnel expenses $46,251
Medical supplies $19,348
Occupancy expenses $9,508
Administrative expenses $4,772
 
9. The activity variance for administrative expenses in January
would be closest to
A. $8 U.
B. $12 U.
C. $8 F.
D. $12 F.
 
Moorhouse Clinic uses client visits as its measure of activity.
During December, the clinic budgeted for 3,700 client visits, but
its actual level of activity was 3,690 client visits. The clinic
has provided the following data concerning the formulas used in its
budgeting and its actual results for December:
Data used in budgeting:
Fixed element Variable element
per month per client-visit
Revenue ____-____ $25.10
Personnel expenses $27,100 $7.10
Medical supplies 1,500 4.50
Occupancy expenses 6,000 1.00
Administrative expenses 3,000 0.10
Total expenses $37,600 $12.70
Actual results for December:
Revenue $96,299
Personnel expenses $51,009
Medical supplies $17,425
Occupancy expenses $9,240
Administrative expenses $3,239
10. The revenue variance for December would be closest to
A. $3,680 F.
B. $3,429 F.
C. $3,680 U.
D. $3,429 U.
 
Moorhouse Clinic uses client visits as its measure of activity.
During December, the clinic budgeted for 3,700 client visits, but
its actual level of activity was 3,690 client visits. The clinic
has provided the following data concerning the formulas used in its
budgeting and its actual results for December:
Data used in budgeting:
Fixed element Variable element
per month per client-visit
Revenue ____-____ $25.10
Personnel expenses $27,100 $7.10
Medical supplies 1,500 4.50
Occupancy expenses 6,000 1.00
Administrative expenses 3,000 0.10
Total expenses $37,600 $12.70
Actual results for December:
Revenue $96,299
Personnel expenses $51,009
Medical supplies $17,425
Occupancy expenses $9,240
Administrative expenses $3,239
11. The personnel expenses in the planning budget for December
would be closest to
A. $53,370.
B. $51,147.
C. $53,299.
D. $51,009.
 
Cole Laboratories makes and sells a lawn fertilizer called
Fastgro. The company has developed standard costs for one bag of
Fastgro as follows:

           
    Standard Quantity  Standard Cost per
bag
Direct material
           20
pounds       $8.00
Direct labor     0.1 hours
        $1.10
Variable overhead 0.1 hours   $0.40
The company had no beginning inventories of any kind on January
1. Variable overhead is applied to production on the basis of
standard direct-labor hours. During January, the company recorded
the following activity:
– Production of Fastgro: 4,000 bags
– Direct materials purchased: 85,000 pounds at a cost of
$32,300
– Direct-labor worked: 390 hours at a cost of $4,875
– Variable overhead incurred: $1,475
– Inventory of direct materials on January 31: 3,000 pounds
 
12. The total variance (both rate and efficiency) for variable
overhead for January is
A. $85 F.
B. $125 F.
C. $100 U.
D. $40 F.
 
13. Last year, the House of Orange had sales of $826,650, net
operating income of $81,000, and operating assets of $84,000 at the
beginning of the year and $90,000 at the end of the year. What was
the company’s turnover rounded to the nearest tenth?
A. 10.2
B. 9.5
C. 9.8
D. 9.2
 
Moorhouse Clinic uses client visits as its measure of activity.
During December, the clinic budgeted for 3,700 client visits, but
its actual level of activity was 3,690 client visits. The clinic
has provided the following data concerning the formulas used in its
budgeting and its actual results for December:
Data used in budgeting:
Fixed element Variable element
per month per client-visit
Revenue ____-____ $25.10
Personnel expenses $27,100 $7.10
Medical supplies 1,500 4.50
Occupancy expenses 6,000 1.00
Administrative expenses 3,000 0.10
Total expenses $37,600 $12.70
Actual results for December:
Revenue $96,299
Personnel expenses $51,009
Medical supplies $17,425
Occupancy expenses $9,240
Administrative expenses $3,239
14. The activity variance for personnel expenses in December
would be closest to
A. $71 U.
B. $71 F.
C. $2,361 F.
D. $2,361 U.
 
Use the following information to answer this question.
Cole Laboratories makes and sells a lawn fertilizer called
Fastgro. The company has developed standard costs for one bag of
Fastgro as follows:

           
    Standard Quantity  Standard Cost per
bag
Direct material
           20
pounds       $8.00
Direct labor     0.1 hours
        $1.10
Variable overhead 0.1 hours   $0.40
The company had no beginning inventories of any kind on January
1. Variable overhead is applied to production on the basis of
standard direct-labor hours. During January, the company recorded
the following activity:
– Production of Fastgro: 4,000 bags
– Direct materials purchased: 85,000 pounds at a cost of
$32,300
– Direct-labor worked: 390 hours at a cost of $4,875
– Variable overhead incurred: $1,475
– Inventory of direct materials on January 31: 3,000 pounds
15. The materials quantity variance for January is
A. $800 U.
B. $300 F.
C. $750 F.
D. $300 U.
 
16. There are various budgets within the master budget. One of
these budgets is the production budget.  Which of the
following best describes the production budget?
A. It’s calculated based on the sales budget and the desired
ending inventory.
B. It details the required raw materials purchases.
C. It details the required direct-labor hours.
D. It summarizes the costs of producing units for the budget
period.
 
17. Lyons Company consists of two divisions, A and B. Lyons
Company reported a contribution margin of $50,000 for Division A
and had a contribution margin ratio of 30% in Division B, when
sales in Division B were $200,000. Net operating income for the
company was $25,000, and traceable fixed expenses were $40,000.
Lyons Company’s common fixed expenses were
A. $45,000.
B. $85,000.
C. $70,000.
D. $40,000.
 
Werber Clinic uses client visits as its measure of activity.
During January, the clinic budgeted for 2,700 client visits, but
its actual level of activity was 2,730 client visits. The clinic
has provided the following data concerning the formulas used in its
budgeting and its actual results for January:
Data used in budgeting:
Fixed element Variable element per month per client-visit
Revenue ___-___ $33.60
Personnel expenses $22,100 $8.70
Medical supplies 1,100 6.60
Occupancy expenses 5,600 1.60
Administrative expenses 3,700 0.40
Total expenses $32,500 $17.30
Actual results for January:
Revenue $93,408
Personnel expenses $46,251
Medical supplies $19,348
Occupancy expenses $9,508
Administrative expenses $4,772
18. The activity variance for net operating income in January
would be closest to
A. $2,019 F.
B. $489 U.
C. $489 F.
D. $2,019 U.
 
19. Division X of Charter Corporation makes and sells a single
product which is used by manufacturers of fork lift trucks.
Presently it sells 12,000 units per year to outside customers at
$24 per unit. The annual capacity is 20,000 units and the variable
cost to make each unit is $16. Division Y of Charter Corporation
would like to buy 10,000 units a year from Division X to use in its
products. There would be no cost savings from transferring the
units within the company rather than selling them on the outside
market. 
What should be the lowest acceptable transfer price from the
perspective of Division X?
A. $17.60
B. $16.00
C. $24.00
D. $21.40
 
20. Vandall Corporation manufactures and sells a single product.
The company uses units as the measure of activity in its budgets
and performance reports. During April, the company budgeted for
7,300 units, but its actual level of activity was 7,340 units. The
company has provided the following data concerning the formulas
used in its budgeting and its actual results for April:
Data used in budgeting:
Fixed element Variable element per month per unit
Revenue ___-___ $35.40
Direct labor 0 $3.30
Direct materials 0 15.90
Manufacturing overhead 49,200 1.20
Selling and administrative expenses 26,600 0.10
Total expenses $75,800 $20.50
 
Actual results for April:
Revenue $254,146
Direct labor $24,722
Direct materials $116,496
Manufacturing overhead $59,608
Selling and administrative expenses $26,494
The overall revenue and spending variance (i.e., the variance
for net operating income in the revenue and spending variance
column on the flexible budget performance report) for April would
be closest to
A. $6,144 F.
B. $6,144 U.
C. $6,740 F.
D. $6,740 U.

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Penn Foster 061683RR – Planning, Performance  Questions 1 to 20: Select the best

Penn Foster 061683RR – Planning,
Performance 
Questions 1 to 20: Select the best answer to each question. Note
that a question and its answers may be split across a page break,
so be sure that you have seen the entire question and all the
answers before choosing an answer.
Cole Laboratories makes and sells a lawn fertilizer called
Fastgro. The company has developed standard costs for one bag of
Fastgro as follows:

           
Standard Quantity  Standard Cost per bag
Direct material
          
     20 pounds
            
 $8.00
Direct labor    
       0.1 hours
            
 $1.10
Variable overhead        0.1
hours                   
$0.40
The company had no beginning inventories of any kind on January
1. Variable overhead is applied to production on the basis of
standard direct-labor hours. During January, the company recorded
the following activity:
• Production of Fastgro: 4,000 bags
• Direct materials purchased: 85,000 pounds at a cost of
$32,300
• Direct-labor worked: 390 hours at a cost of $4,875
• Variable overhead incurred: $1,475
• Inventory of direct materials on January 31: 3,000 pounds
1. The labor efficiency variance for January is
A. $110 F.
B. $350 U.
C. $130 U.
D. $475 F.
 
2. Which of the following will not result in an increase in
return on investment (ROI), assuming other factors remain the
same?
A. An increase in sales
B. A reduction in expenses
C. An increase in net operating income
D. An increase in operating assets
 
Use the following information to answer this question.
The Adams Company, a merchandising firm, has budgeted its
activity for November according to the following information:
• Sales were at $450,000, all for cash.
• Merchandise inventory on October 31 was $200,000.
• The cash balance on November 1 was $18,000.
• Selling and administrative expenses are budgeted at $60,000
for November and are paid for in cash.
• Budgeted depreciation for November is $25,000.
• The planned merchandise inventory on November 30 is
$230,000.
• The cost of goods sold is 70% of the selling price.
• All purchases are paid for in cash.
3. The budgeted cash disbursements for November are
A. $530,000.
B. $375,000.
C. $405,000.
D. $345,000.
 
The Adams Company, a merchandising firm, has budgeted its
activity for November according to the following information:
• Sales were at $450,000, all for cash.
• Merchandise inventory on October 31 was $200,000.
• The cash balance on November 1 was $18,000.
• Selling and administrative expenses are budgeted at $60,000
for November and are paid for in cash.
• Budgeted depreciation for November is $25,000.
• The planned merchandise inventory on November 30 is
$230,000.
• The cost of goods sold is 70% of the selling price.
• All purchases are paid for in cash.
4. The budgeted net income for November is
A. $135,000.
B. $50,000.
C. $68,000.
D. $75,000.
 
5. Lyons Company consists of two divisions, A and B. Lyons
Company reported a contribution margin of $50,000 for Division A
and had a contribution margin ratio of 30% in Division B, when
sales in Division B were $200,000. Net operating income for the
company was $25,000, and traceable fixed expenses were $40,000.
Lyons Company’s common fixed expenses were
A. $70,000.
B. $85,000.
C. $40,000.
D. $45,000.
 
6. Coles Company, Inc. makes and sells a single product, Product
R. Three yards of Material K are needed to make one unit of Product
R. Budgeted production of Product R for the next five months is as
follows:
August         14,000
units
September   14,500 units
October        15,500
units
November    12,600 units
December    11,900 units
The company wants to maintain monthly ending inventories of
Material K equal to 20% of the following month’s production needs.
On July 31, this requirement wasn’t met because only 2,500 yards of
Material K were on hand. The cost of Material K is $0.85 per yard.
The company wants to prepare a Direct Materials Purchase Budget for
the rest of the year.
The total cost of Material K to be purchased in August is
A. $48,200.
B. $40,970.
C. $33,840.
D. $42,300.
 
7. Vandall Corporation manufactures and sells a single product.
The company uses units as the measure of activity in its budgets
and performance reports. During April, the company budgeted for
7,300 units, but its actual level of activity was 7,340 units. The
company has provided the following data concerning the formulas
used in its budgeting and its actual results for April:
Data used in budgeting:
Fixed element per month Variable element per client-visit
Revenue ___-___ $35.40
Direct labor 0 $3.30
Direct materials 0 15.90
Manufacturing overhead 49,200 1.20
Selling and administrative expenses 26,600 0.10
Total expenses $75,800 $20.50
Actual results for April:
Revenue
                                            
  $254,146
Direct labor
                                       
  $  24,722
Direct materials
                                 
  $116,496
Manufacturing overhead
       
           
  $  59,608
Selling and administrative expenses    $ 
26,494
The overall revenue and spending variance (i.e., the variance
for net operating income in the revenue and spending variance
column on the flexible budget performance report) for April would
be closest to
A. $6,144 U.
B. $6,740 U.
C. $6,144 F.
D. $6,740 F.
8. A company’s average operating assets are $220,000, and its
net operating income is $44,000. The company invested in a new
project, increasing average assets to $250,000 and increasing its
net operating income to $49,550. What is the project’s residual
income if the required rate of return is 20%?
A. ($450)
B. $600
C. $450
D. ($600)
 
Werber Clinic uses client visits as its measure of activity.
During January, the clinic budgeted for 2,700 client visits, but
its actual level of activity was 2,730 client visits. The clinic
has provided the following data concerning the formulas used in its
budgeting and its actual results for January:
Data used in budgeting:
Fixed element per month Variable element per client-visit
Revenue ___-___ $33.60
Personnel expenses $22,100 $8.70
Medical supplies 1,100 6.60
Occupancy expenses 5,600 1.60
Administrative expenses 3,700 0.40
Total expenses $32,500 $17.30
Actual results for January:
Revenue $93,408
Personnel expenses $46,251
Medical supplies $19,348
Occupancy expenses $9,508
Administrative expenses $4,772
9. The activity variance for administrative expenses in January
would be closest to
A. $8 F.
B. $8 U.
C. $12 U.
D. $12 F.
 
Cole Laboratories makes and sells a lawn fertilizer called
Fastgro. The company has developed standard costs for one bag of
Fastgro as follows:

                          
Standard Quantity  Standard Cost per bag
Direct material
          
     20 pounds
            
 $8.00
Direct labor    
       0.1 hours
            
 $1.10
Variable overhead        0.1
hours                   
$0.40
The company had no beginning inventories of any kind on January
1. Variable overhead is applied to production on the basis of
standard direct-labor hours. During January, the company recorded
the following activity:
• Production of Fastgro: 4,000 bags
• Direct materials purchased: 85,000 pounds at a cost of
$32,300
• Direct-labor worked: 390 hours at a cost of $4,875
• Variable overhead incurred: $1,475
• Inventory of direct materials on January 31: 3,000 pounds
10. The total variance (both rate and efficiency) for variable
overhead for January is
A. $100 U.
B. $40 F.
C. $125 F.
D. $85 F.
 
Moorhouse Clinic uses client visits as its measure of activity.
During December, the clinic budgeted for 3,700 client visits, but
its actual level of activity was 3,690 client visits. The clinic
has provided the following data concerning the formulas used in its
budgeting and its actual results for December:
Data used in budgeting:
Fixed element per month Variable element per client-visit
Revenue ____-____ $25.10
Personnel expenses $27,100 $7.10
Medical supplies 1,500 4.50
Occupancy expenses 6,000 1.00
Administrative expenses 3,000 0.10
Total expenses $37,600 $12.70
Actual results for December:
Revenue $96,299
Personnel expenses $51,009
Medical supplies $17,425
Occupancy expenses $9,240
Administrative expenses $3,239
 
11. The personnel expenses in the planning budget for December
would be closest to
A. $53,299.
B. $51,147.
C. $53,370.
D. $51,009.
 
Cole Laboratories makes and sells a lawn fertilizer called
Fastgro. The company has developed standard costs for one bag of
Fastgro as follows:

                  
Standard Quantity  Standard Cost per bag
Direct material
           20
pounds       $8.00
Direct labor     0.1 hours
        $1.10
Variable overhead 0.1 hours   $0.40
The company had no beginning inventories of any kind on January
1. Variable overhead is applied to production on the basis of
standard direct-labor hours. During January, the company recorded
the following activity:
• Production of Fastgro: 4,000 bags
• Direct materials purchased: 85,000 pounds at a cost of
$32,300
• Direct-labor worked: 390 hours at a cost of $4,875
• Variable overhead incurred: $1,475
• Inventory of direct materials on January 31: 3,000 pounds
12. The materials price variance for January is
A. $1,640 F.
B. $1,300 U.
C. $1,700 F.
D. $1,640 U.
 
13. Division X of Charter Corporation makes and sells a single
product which is used by manufacturers of fork lift trucks.
Presently it sells 12,000 units per year to outside customers at
$24 per unit. The annual capacity is 20,000 units and the variable
cost to make each unit is $16. Division Y of Charter Corporation
would like to buy 10,000 units a year from Division X to use in its
products. There would be no cost savings from transferring the
units within the company rather than selling them on the outside
market.   What should be the lowest acceptable transfer
price from the perspective of Division X?
A. $21.40
B. $17.60
C. $24.00
D. $16.00
 
Werber Clinic uses client visits as its measure of activity.
During January, the clinic budgeted for 2,700 client visits, but
its actual level of activity was 2,730 client visits. The clinic
has provided the following data concerning the formulas used in its
budgeting and its actual results for January:
Data used in budgeting:
Fixed element per month Variable element per client-visit
Revenue ___-___ $33.60
Personnel expenses $22,100 $8.70
Medical supplies 1,100 6.60
Occupancy expenses 5,600 1.60
Administrative expenses 3,700 0.40
Total expenses $32,500 $17.30
Actual results for January:
Revenue $93,408
Personnel expenses $46,251
Medical supplies $19,348
Occupancy expenses $9,508
Administrative expenses $4,772
14. The activity variance for net operating income in January
would be closest to
A. $489 F.
B. $2,019 U.
C. $2,019 F.
D. $489 U.
 
15. There are various budgets within the master budget. One of
these budgets is the production budget.  Which of the
following best describes the production budget?
A. It details the required direct-labor hours.
B. It’s calculated based on the sales budget and the desired
ending inventory.
C. It summarizes the costs of producing units for the budget
period.
D. It details the required raw materials purchases.
 
16. The budget or schedule that provides necessary input data
for the direct-labor budget is the
A. schedule of cash collections.
B. raw materials purchases budget.
C. cash budget.
D. production budget.
 
17. Manufacturing Cycle Efficiency (MCE) is computed as
A. Value-Added Time divided by Delivery Cycle Time.
B. Throughput Time divided by Delivery Cycle Time.
C. Process Time divided by Delivery Cycle Time.
D. Value-Added Time divided by Throughput Time.
 
Use the following information to answer this question.
Moorhouse Clinic uses client visits as its measure of activity.
During December, the clinic budgeted for 3,700 client visits, but
its actual level of activity was 3,690 client visits. The clinic
has provided the following data concerning the formulas used in its
budgeting and its actual results for December:
Data used in budgeting:
Fixed element per month Variable element per client-visit
Revenue ____-____ $25.10
Personnel expenses $27,100 $7.10
Medical supplies 1,500 4.50
Occupancy expenses 6,000 1.00
Administrative expenses 3,000 0.10
Total expenses $37,600 $12.70
Actual results for December:
Revenue $96,299
Personnel expenses $51,009
Medical supplies $17,425
Occupancy expenses $9,240
Administrative expenses $3,239
 
18. The medical supplies in the flexible budget for December
would be closest to
A. $18,105.
B. $17,472.
C. $18,150.
D. $17,378.
 
 
LDG Corporation makes and sells a product called Product WZ.
Each unit of Product WZ requires 2.0 hours of direct labor at the
rate of $10.50 per direct labor-hour. Management would like you to
prepare a Direct Labor Budget for June.
 
19.  The company plans to sell 22,000 units of Product WZ
in June. The finished goods inventories on June 1 and June 30 are
budgeted to be 100 and 400 units, respectively. Budgeted direct
labor costs for June would be:
A. $234,150
B. $468,300
C. $462,000
D. $455,700
 
Moorhouse Clinic uses client visits as its measure of activity.
During December, the clinic budgeted for 3,700 client visits, but
its actual level of activity was 3,690 client visits. The clinic
has provided the following data concerning the formulas used in its
budgeting and its actual results for December:
Data used in budgeting:
Fixed element per month Variable element per client-visit
Revenue ____-____ $25.10
Personnel expenses $27,100 $7.10
Medical supplies 1,500 4.50
Occupancy expenses 6,000 1.00
Administrative expenses 3,000 0.10
Total expenses $37,600 $12.70
Actual results for December:
Revenue $96,299
Personnel expenses $51,009
Medical supplies $17,425
Occupancy expenses $9,240
Administrative expenses $3,239
20. The revenue variance for December would be closest to
A. $3,429 U.
B. $3,680 U.
C. $3,680 F.
D. $3,429 F.

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1) Compute conversion costs given the following data: Direct Materials, $452,700

1) Compute conversion costs given the following data: Direct
Materials, $452,700; Direct Labor, $186,300;
Factory Overhead, $175,600, Selling Expense $45,290
a. $639,000
b. $361,900
c. $175,600
d. $816,600

2) If Department H had 500 units, 60% completed, in process at the
beginning of the period, 6,000 units
were completed during the period, and 600 units were 30% completed
at the end of the period, what
was the number of equivalent units of production for the period if
the first-in, first-out method is used
to cost inventories?
a. 7,100
b. 5,880
c. 5,980
d. 6,380

3) Department R had 5,000 units in work in process that were 75%
completed as to labor and overhead at
the beginning of the period, 30,000 units of direct materials were
added during the period, 32,000 units
were completed during the period, and 3,000 units were 40%
completed as to labor and overhead at the
end of the period. All materials are added at the beginning of the
process. The first-in, first-out method
is used to cost inventories. The number of equivalent units of
production for conversion costs for the
period was:
a. 32,450
b. 29,450
c. 26,000
d. 31,950

4) The debits to Work in Process–Assembly Department for April,
together with data concerning
production are as follows:

April 1, work in process.
Materials cost. 3,000 units $8,000
conversion costs, 3,000 units
66.7% Completed $6,000
Materials added during April, 10,000 units $30,000
Conversion costs during April $31,000
Goods finished during .April, 11, 500 Units ——-
April 30 work in process, 1,500 units,
50% completed ——-
All direct materials are placed in process at the beginning of the
process and the first-in, first-out
method is used to cost inventories. The materials cost per
equivalent unit for April is:

a. $2.92
b. $2.31
c. $3.80
d. $3.00

5) Given the following cost and activity observations for Smithson
Company’s utilities, use the high-low method to calculate
Smithson’s fixed costs per month. Round variable cost per unit to
two decimal places in your calculations.

Jan Cost $52,000 Machine hours 20,000
Feb Cost $75,000 Machine Hours 29,000
March Cost $57,000 Machine Hours 22,000
April Cost $64,000 Machine Hours 24,500

a. $50,000
b. $1,630
c. $5,000
d. $12,500

6) If fixed costs are $500,000, the unit selling price is $55, and
the unit variable costs are $30, what is the break-even sales
(units) if fixed costs are increased by $80,000?
a. 19,333 units
b. 23,200 units
c. 10,545 units
d. 25,000 units

7) Mason Corporation had $65,000 in invested assets, sales of
$700,000, income from operations amounting to $99,000, and a
desired minimum rate of return of %15

The residual income for Mason is
a. $0
b. ($6,000)
c. $1,500
d. $84,150

8) Motel Corporation is analyzing a capital expenditure that will
involve a cash outlay of $208,240. Estimated cash flows are
expected to be $40,000 annually for seven years. The present value
factors for an annuity of $1 for 7 years at interest of 6%, 8%,
10%, and 12% are 5.582, 5.206, 4.868, and 4.564, respectively. The
internal rate of return for this investment is:
a. 6%
b. 8%
c. 10%
d. 12%

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1.A disadvantage of using the gross price method to account for cash discounts e

1.A disadvantage of using the gross price method to account for
cash discounts extended by the seller to its customer is that
(Points : 2)
the method reports accounts receivable at the net realizable
value
the method overstates the current sales and the accounts receivable
at the end of the period
the method requires more bookkeeping than the net price method
the method enables sales returns and allowances to be recorded at
gross instead of net amounts
2. Which of the following would not be considered a cash
equivalent? (Points : 2)
certificates of deposit
commercial paper
treasury bills
money market fund securities

3. Nontrade receivables, such as deposits with utility companies or
advances to subsidiary companies, should be (Points : 2)
recorded in separate accounts and reported as noncurrent assets on
the balance sheet
recorded along with trade receivables in one account and included
as part of the total receivables balance on the balance sheet
recorded in separate accounts and separately reported on the
balance sheet
recorded in separate accounts and reported as an offset to retained
earnings on the balance sheet

4. All of the following are necessary components of internal
control over cash except (Points : 2)
a petty cash system
a cash reserve
a bank reconciliation
the daily deposit of all receipts in the company’s bank account

5. Which of the following would not be reported on the financial
statements? (Points : 2)
sales discount taken
trade receivables
trade discounts
sales discounts not taken

6. Most trade receivables are initially recorded at their (Points :
2)
maturity values
discounted values
present values
net cash values

7. Cash planning is important because a company wants to (Points :
2)
ensure that it has adequate cash available to meet maturing
obligations
ensure the safeguarding of its available cash
forecast all available cash surpluses
prepare a cash budget so it can invest all cash

8. Which of the following would be included in cash and cash
equivalents on the balance sheet? (Points : 2)
certificates of deposit
bank overdrafts
commercial paper
postage stamps

9. Theoretically, the amount of estimated future returns and
allowances on credit sales should be recorded during the period of
the sale so as not to overstate sales and ending accounts
receivable. In practice, these estimates are rarely recorded
because (Points : 2)
the amount of such returns and allowances tends to fluctuate too
greatly from period to period
there is too much uncertainty surrounding such estimates
such estimates are not allowed according to generally accepted
accounting principles
the amount of such returns and allowances is usually not
material

10. Which of the following statements concerning compensating
balance agreements is not true? (Points : 2)
They reduce the amount of cash available to the borrower.
They always involve legal restrictions on the cash received.
They increase the effective interest rate to the borrower.
They must be disclosed in the financial statements’ footnotes.

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1.The largest market in the world for a single security is: A) The capital marke

1.The largest market in the world for a single security is:
A) The capital market.
B) The money market.
C) The treasury bill market.
D) The federal funds market.
E) None of the above.
2.The ______ is designed for the making of short-term loans where
individuals and institutions with temporary surpluses of funds meet
borrowers who have temporary cash shortages.
A) Money market.
B) Capital market.
C) Open market.
D) Negotiated market.
E) Primary market.
3.Which type of market is not part of the circular flow?
A) Factor market.
B) Information market.
C) Financial market.
D) Product market.
E) All of the above.
4.The financial system and financial markets are responsible for
providing which of the following services?
A) Credit services.
B) Payment services.
C) Liquidity.
D) Facilitating the flow of savings.
E) All of the above.
5.Net wealth for an economic unit equals:
A) Total assets plus equity capital.
B) Total assets less real (nonfinancial) assets.
C) Total assets minus total liabilities.
D) Total savings plus holding of financial assets.
E) None of the above.

6.The financial system determines:
A) The cost of credit.
B) Amount of credit available.
C) The prices of securities.
D) The quantity of securities issued by borrowers.
E) All of the above.
7.The most significant barriers to 24-hour worldwide trading of
securities include:
A) Lack of adequate prestige or stature by most companies and
governments.
B) Lack of common operating rules and regulations among different
exchanges and nations.
C) Delays in payment for and delivery of securities.
D) Lack of open access to membership on all exchanges.
E) All of the above.
8.According to your text, the basic commodity being traded in all
the financial markets is:
A) Securities.
B) Capital.
C) Forward markets.
D) Credit.
E) None of the above.
9.The largest borrower in the money market is:
A) Businesses.
B) Government.
C) Households.
D) Commercial banks.
E) None of the above.
10.The circular flow of funds includes which of the following:
A) Consumer units.
B) Households.
C) Government.
D) All of the above.
E) None of the above.

11.
Trading in securities previously issued takes place in the:
A) Open market.
B) Secondary market.
C) Primary market.
D) Negotiated market.
E) Capital market.
12.
The ______ is designed to finance long-term investments, making
possible the construction of factories, office buildings, highways,
bridges, schools, homes and apartments.
A) Money market.
B) Capital market.
C) Secondary market.
D) Negotiated market.
E) Primary market.
13.
Cording to your text, a key trend in the financial system is:
A) Increasing competition.
B) Greater risk.
C) Growth of technology.
D) Growth of debt.
E) All of the above are key trends for the financial system.
14.
Providing loanable funds to supplement current income in order to
sustain current living standards represents what financial service
area?
A) Payments services.
B) Thrift services.
C) Agency services.
D) Credit services.
E) None of the above.
15.
The financial markets that provide for the immediate delivery of
securities are known as:
A) Spot markets.
B) Futures markets.
C) Forward markets.
D) Option markets.
E) None of the above.

16.
The markets that serve the financial system may be classified in
several different ways, including:
A) Money markets versus capital markets.
B) Open markets versus negotiated markets.
C) Primary markets versus secondary markets.
D) Spot markets versus futures markets.
E) All of the above.
17.
The financial system provides all the following services
except:
A) Furnish credit.
B) Payment services.
C) Equitably distribute wealth.
D) Provide liquidity.
E) Risk protection.
18.
The market for trading newly issued securities is known as the:
A) Money market.
B) Cash market.
C) Spot market.
D) Primary market.
E) Open market.
19.
According to your text, the nation’s standard of living is
increased through the mechanism of the financial system by:
A) Increasing interest rates.
B) Reducing the volume of spending for goods and services.
C) Lowering inflation.
D) Stabilizing the economy’s rate of growth.
E) Making funds available.
20.
One of the financial markets listed below is not part of the money
market. Which one is not?
A) U.S. Treasury bill market.
B) Market for negotiable CDs of $100,000 or more.
C) Market for federal funds.
D) Market for Eurodollar deposits.
E) Market for consumer installment loans.

21.
The market for delivery of securities usually within one or two
business days is known as:
A) The spot market.
B) The forward market.
C) The futures market.
D) The primary market.
E) None of the above.
22.
According to the text, several different financial assets and
instruments have served as a medium of exchange or means of making
payments in recent years. Which instrument listed below is not
considered a means of making payments or a medium of exchange?
A) Checking accounts.
B) NOW accounts.
C) Negotiable certificates of deposit.
D) Debit cards.
E) Credit cards.
23.
The role of markets in a market-oriented economy like the United
States is to:
A) Allocate resources.
B) Distribute income.
C) Produce needed goods and services.
D) All of the above.
E) None of the above.
24.
Acting as an agent for a customer in managing retirement funds or
other property represents what financial service area?
A) Hedging services.
B) Credit services.
C) Thrift services.
D) Insurance.
E) None of the above.
25.
One of the financial markets listed below is not part of the
nation’s capital market. Which one is not?
A) Mortgage market.
B) Corporate bond market.
C) Municipal bond market.
D) Commercial paper market.
E) Stock market.

26.
A bank certificate of deposit is a ______ market instrument.
Commercial paper is a ______ market instrument.
A) Money, capital.
B) Money, futures.
C) Capital, capital.
D) Futures, capital.
E) Money, money.
27.
The financial service supplied by the money and capital markets in
which financial instruments are created to attract savings for
future financial needs is called:
A) Agency services.
B) Credit services.
C) Payments services.
D) Thrift services.
E) None of the above.
28.
According to the text, speculators perform an important function in
the financial markets. They:
A) Create underpricing of certain securities, generating more
attractive investment opportunities.
B) Cause some securities to be overpriced, which tends to drive out
those securities.
C) Level out the prices of securities.
D) Help to prevent security fraud.
E) None of the above.
29. To gain access to the money market an institution must:
A) Have an excellent credit rating.
B) Be well known.
C) Be large.
D) All of the above.
E) None of the above.
30. An _____ market exists if the market is fully competitive and
the same information is available to all participants.
A) Primary.
B) Secondary.
C) Perfect.
D) Imperfect.
E) Neutral.

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Penn Foster 061683RR – Planning, Performance  Cole Laboratories makes and sells

Penn Foster 061683RR – Planning,
Performance 
Cole Laboratories makes and sells a lawn fertilizer called
Fastgro. The company has developed standard costs for one bag of
Fastgro as follows:

           
Standard Quantity  Standard Cost per bag
Direct material       20 pounds    
         $8.00
Direct labor    
       0.1 hours
            
 $1.10
Variable overhead   0.1 hours        
      $0.40
The company had no beginning inventories of any kind on January
1. Variable overhead is applied to production on the basis of
standard direct-labor hours. During January, the company recorded
the following activity:
•  Production of Fastgro: 4,000 bags
•  Direct materials purchased: 85,000 pounds at a cost of
$32,300
•  Direct-labor worked: 390 hours at a cost of $4,875
•  Variable overhead incurred: $1,475
•  Inventory of direct materials on January 31: 3,000
pounds
1. The labor efficiency variance for January is
2. Super Driveis a computer hard-drive manufacturer. The
company’s balance sheet for the fiscal year ended on November 30
appears below:
Super Drive, Inc.
Statement of Financial Position
For the year ended November 30
Assets:
Cash                
                 
        $    52,000
Accounts receivable            
               150,000
Inventory              
                 
         315,000
Property, plant, and equipment        
1,000,000
Total Assets              
                 
  $1,517,000
Liabilities and stockholders’ equity:
Accounts payable            
               
 $  175,000
Common stock              
                 
    900,000
Retained earnings            
                 
 442,000
Total liabilities and stockholders’ equity $1,517,000
Additional information regardingSuper Drive’s operations appears
below:
•  Sales are budgeted at $520,000 for December and $500,000
for January.
•  Collections are expected to be 60% in the month of sale
and 40% in the month following sale. There are no bad debts.
•  80% of the disk-drive components are purchased in the
month prior to the month of the sale, and 20% are purchased in the
month of the sale. Purchased components comprise 40% of the cost of
goods sold.
•  Payment for components purchased is made in the month
following the purchase.
•  Assume that the cost of goods sold is 80% of sales.
The budgeted cash collections for the upcoming December should
be
Cole Laboratories makes and sells a lawn fertilizer called
Fastgro. The company has developed standard costs for one bag of
Fastgro as follows:
Standard Quantity  Standard Cost per bag
Direct material        20 pounds  
         $8.00
Direct labor    
       0.1 hours
            
 $1.10
Variable overhead    0.1 hours      
       $0.40
The company had no beginning inventories of any kind on January
1. Variable overhead is applied to production on the basis of
standard direct-labor hours. During January, the company recorded
the following activity:
•  Production of Fastgro: 4,000 bags
•  Direct materials purchased: 85,000 pounds at a cost of
$32,300
•  Direct-labor worked: 390 hours at a cost of $4,875
•  Variable overhead incurred: $1,475
•  Inventory of direct materials on January 31: 3,000
pounds
3. The labor rate variance for January is
4. Lyons Company consists of two divisions, A and B. Lyons
Company reported a contribution margin of $50,000 for Division A
and had a contribution margin ratio of 30% in Division B, when
sales in Division B were $200,000. Net operating income for the
company was $25,000, and traceable fixed expenses were $40,000.
Lyons Company’s common fixed expenses were
5. A company’s average operating assets are $220,000, and its
net operating income is $44,000. The company invested in a new
project, increasing average assets to $250,000 and increasing its
net operating income to $49,550. What is the project’s residual
income if the required rate of return is 20%?
Werber Clinic uses client visits as its measure of activity.
During January, the clinic budgeted for 2,700 client visits, but
its actual level of activity was 2,730 client visits. The clinic
has provided the following data concerning the formulas used in its
budgeting and its actual results for January:
Data used in budgeting:
Fixed element per month Variable element per client-visit
Revenue ___-___ $33.60
Personnel expenses $22,100 $8.70
Medical supplies 1,100 6.60
Occupancy expenses 5,600 1.60
Administrative expenses 3,700 0.40
Total expenses $32,500 $17.30
Actual results for January:
Revenue $93,408
Personnel expenses $46,251
Medical supplies $19,348
Occupancy expenses $9,508
Administrative expenses $4,772
6. The activity variance for administrative expenses in January
would be closest to
Cole Laboratories makes and sells a lawn fertilizer called
Fastgro. The company has developed standard costs for one bag of
Fastgro as follows:
Standard Quantity  Standard Cost per bag
Direct material     20 pounds
      $8.00
Direct labor     0.1 hours
        $1.10
Variable overhead 0.1 hours   $0.40
The company had no beginning inventories of any kind on January
1. Variable overhead is applied to production on the basis of
standard direct-labor hours. During January, the company recorded
the following activity:
•     Production of Fastgro: 4,000 bags
•     Direct materials purchased: 85,000 pounds at a
cost of $32,300
•     Direct-labor worked: 390 hours at a cost of
$4,875
•     Variable overhead incurred: $1,475
•     Inventory of direct materials on January 31:
3,000 pounds
7. The materials price variance for January is
8. Which of the following will not result in an increase in
return on investment (ROI), assuming other factors remain the
same?
9. Vandall Corporation manufactures and sells a single product.
The company uses units as the measure of activity in its budgets
and performance reports. During April, the company budgeted for
7,300 units, but its actual level of activity was 7,340 units. The
company has provided the following data concerning the formulas
used in its budgeting and its actual results for April:
Data used in budgeting:
Fixed element per month Variable element per client-visit
Revenue ___-___ $35.40
Direct labor 0 $3.30
Direct materials 0 15.90
Manufacturing overhead 49,200 1.20
Selling and administrative expenses 26,600 0.10
Total expenses $75,800 $20.50
Actual results for April:
Revenue                
                 
     $254,146
Direct labor              
                 
   $  24,722
Direct materials            
                 
$116,496
Manufacturing overhead            
      $  59,608
Selling and administrative expenses    $ 
26,494
The overall revenue and spending variance (i.e., the variance
for net operating income in the revenue and spending variance
column on the flexible budget performance report) for April would
be closest to
 
10. The Charade Company is preparing its Manufacturing Overhead
budget for the fourth quarter of the year. The budgeted variable
factory overhead is $5.00 per direct-labor hour; the budgeted fixed
factory overhead is $75,000 per month, of which $15,000 is factory
depreciation. If the budgeted direct-labor time for December is
8,000 hours, then total budgeted factory overhead per direct-labor
hour (rounded) is
 
Moorhouse Clinic uses client visits as its measure of activity.
During December, the clinic budgeted for 3,700 client visits, but
its actual level of activity was 3,690 client visits. The clinic
has provided the following data concerning the formulas used in its
budgeting and its actual results for December:
Data used in budgeting:
Fixed element per month Variable element per client-visit
Revenue ____-____ $25.10
Personnel expenses $27,100 $7.10
Medical supplies 1,500 4.50
Occupancy expenses 6,000 1.00
Administrative expenses 3,000 0.10
Total expenses $37,600 $12.70
Actual results for December:
Revenue $96,299
Personnel expenses $51,009
Medical supplies $17,425
Occupancy expenses $9,240
Administrative expenses $3,239
11. The spending variance for medical supplies in December would
be closest to
 
Werber Clinic uses client visits as its measure of activity.
During January, the clinic budgeted for 2,700 client visits, but
its actual level of activity was 2,730 client visits. The clinic
has provided the following data concerning the formulas used in its
budgeting and its actual results for January:
Data used in budgeting:
Fixed element per month Variable element per client-visit
Revenue ___-___ $33.60
Personnel expenses $22,100 $8.70
Medical supplies 1,100 6.60
Occupancy expenses 5,600 1.60
Administrative expenses 3,700 0.40
Total expenses $32,500 $17.30
Actual results for January:
Revenue $93,408
Personnel expenses $46,251
Medical supplies $19,348
Occupancy expenses $9,508
Administrative expenses $4,772
12. The activity variance for net operating income in January
would be closest to
 
Werber Clinic uses client visits as its measure of activity.
During January, the clinic budgeted for 2,700 client visits, but
its actual level of activity was 2,730 client visits. The clinic
has provided the following data concerning the formulas used in its
budgeting and its actual results for January:
Data used in budgeting:
Fixed element per month Variable element per client-visit
Revenue ___-___ $33.60
Personnel expenses $22,100 $8.70
Medical supplies 1,100 6.60
Occupancy expenses 5,600 1.60
Administrative expenses 3,700 0.40
Total expenses $32,500 $17.30
Actual results for January:
Revenue $93,408
Personnel expenses $46,251
Medical supplies $19,348
Occupancy expenses $9,508
Administrative expenses $4,772
13. The activity variance for personnel expenses in January
would be closest to
 
The Adams Company, a merchandising firm, has budgeted its
activity for November according to the following information:
•  Sales were at $450,000, all for cash.
•  Merchandise inventory on October 31 was $200,000.
•  The cash balance on November 1 was $18,000.
•  Selling and administrative expenses are budgeted at
$60,000 for November and are paid for in cash.
•  Budgeted depreciation for November is $25,000.
•  The planned merchandise inventory on November 30 is
$230,000.
•  The cost of goods sold is 70% of the selling price.
•  All purchases are paid for in cash.
14. The budgeted cash disbursements for November are
15. Last year, the House of Orange had sales of $826,650, net
operating income of $81,000, and operating assets of $84,000 at the
beginning of the year and $90,000 at the end of the year. What was
the company’s turnover rounded to the nearest tenth?
16. The budget or schedule that provides necessary input data
for the direct-labor budget is the
 
LDG Corporation makes and sells a product called Product WZ.
Each unit of Product WZ requires 2.0 hours of direct labor at the
rate of $10.50 per direct labor-hour. Management would like you to
prepare a Direct Labor Budget for June.
17. The company plans to sell 22,000 units of Product WZ in
June. The finished goods inventories on June 1 and June 30 are
budgeted to be 100 and 400 units, respectively. Budgeted direct
labor costs for June would be:
 
18. Coles Company, Inc. makes and sells a single product,
Product R. Three yards of Material K are needed to make one unit of
Product R. Budgeted production of Product R for the next five
months is as follows:
August       14,000 units
September  14,500 units
October       15,500 units
November    12,600 units
December    11,900 units
The company wants to maintain monthly ending inventories of
Material K equal to 20% of the following month’s production needs.
On July 31, this requirement wasn’t met because only 2,500 yards of
Material K were on hand. The cost of Material K is $0.85 per yard.
The company wants to prepare a Direct Materials Purchase Budget for
the rest of the year.
The total cost of Material K to be purchased in August is
 
Cole Laboratories makes and sells a lawn fertilizer called
Fastgro. The company has developed standard costs for one bag of
Fastgro as follows:

                          
Standard Quantity  Standard Cost per bag
Direct material       20 pounds    
         $8.00
Direct labor    
       0.1 hours
            
 $1.10
Variable overhead  0.1 hours        
       $0.40
The company had no beginning inventories of any kind on January
1. Variable overhead is applied to production on the basis of
standard direct-labor hours. During January, the company recorded
the following activity:
•  Production of Fastgro: 4,000 bags
•  Direct materials purchased: 85,000 pounds at a cost of
$32,300
•  Direct-labor worked: 390 hours at a cost of $4,875
•  Variable overhead incurred: $1,475
•  Inventory of direct materials on January 31: 3,000
pounds
19. The total variance (both rate and efficiency) for variable
overhead for January is
 
20. Division X of Charter Corporation makes and sells a single
product which is used by manufacturers of fork lift trucks.
Presently it sells 12,000 units per year to outside customers at
$24 per unit. The annual capacity is 20,000 units and the variable
cost to make each unit is $16. Division Y of Charter Corporation
would like to buy 10,000 units a year from Division X to use in its
products. There would be no cost savings from transferring the
units within the company rather than selling them on the outside
market. What should be the lowest acceptable transfer price from
the perspective of Division X?

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1. Which pronouncements are not issued by the FASB? (Points : 4)        Statemen

1. Which pronouncements are not issued by the FASB? (Points :
4)
       Statements of Financial
Accounting Concepts
       Technical Bulletins
 Opinions
       Interpretations
2. Critical thinking is most important in which of the following
problem-solving steps? (Points : 4)
recognizing a problem
identifying alternative solutions
evaluating the alternatives
selecting a solution from among the alternatives
3. The Sarbanes-Oxley Act of 2002 established the Public Company
Accounting Oversight Board (PCAOB). The PCAOB was established to
(Points : 4)
bring to justice public companies such as Enron and WorldCom for
committing fraud
oversee the standards promulgated by the SEC related to public
companies
protect the interests of investors by overseeing auditors of public
companies
establish GAAP for use by public companies
4. Which organization has the most legal authority? (Points :
4)
       Financial Accounting Standards
Board
       Accounting Standards Executive
Committee
       Governmental Accounting
Standards Board
Securities and Exchange Commission
5. Which of the following types of information was specifically
identified by the FASB as being useful in assessing the amounts,
timing, and uncertainty of a company’s future cash flows? (Points :
4)
liquidity
return of investment
financial capability
credit standing
6. The IASB and FASB joint boards have identified the primary user
groups of financial information as all of the following except
(Points : 4)
equity investors
labor groups
lenders
other creditors (capital providers)
7. One of the differences between the IASB/FASB joint conceptual
framework and the FASB conceptual framework is that while the FASB
identifies relevance and reliability as the primary
decision-specific qualities, the tentative joint framework
identifies the fundamental qualitative characteristics to be
(Points : 4)
relevance and completeness
reliability and completeness
relevance and faithful representation
reliability and faithful representation
8. The IASB and FASB boards have agreed that the objective of
general purpose financial reporting is to provide (Points : 4)
financial information about a company that is useful to external
users in making decisions in their capacity as capital
providers
mainly cash flow information about a company that is useful to
external users in making decisions in their capacity as capital
providers
financial information about a company that is useful to internal
users in making decisions in their capacity as capital
custodians
financial information about a company that is useful to government
regulators in making decisions in their capacity as capital markets
monitors
9. What relationship exists between the general journal and the
general ledger? (Points : 4)
The general ledger accounts contain the same information as in the
general journal, just in a different format.
       The balances in the general
ledger will always equal those in the general journal.
       After all postings from the
general journal are complete, the debit balances in the general
ledger will rarely equal the credit balances.
       The number of accounts in the
general journal will always be larger than the number of accounts
in the general ledger.
10. Adjusting entries are made (Points : 4)
to match the consumption of prepaid assets against current
revenues
to record accrued expenses
to record estimated items, such as depreciation
for all of these reasons
11. posting is the procedure of transferring information from the
(Points : 4)
journal to the ledger
trial balance to the worksheet
ledger to the journal
worksheet to the financial statements
12. The entire group of accounts for a company is referred to as
the (Points : 4)
general ledger
worksheet
journal
document of original entry
13. Which of the following characteristics must an economic
resource have in order to be classified as an asset? (Points :
4)
acquired as a result of a past transaction
future service potential
under the control of the business entity
all of these
none of these
14. The quantity of goods or services produced in a given period or
the physical capacity of the operating assets used to produce goods
or services are measures of (Points : 4)
financial flexibility
liquidity
operating capability
capital maintenance
15. Which of the following formulas represents working capital?
(Points : 4)
Current Assets – Current Liabilities
       Liquid Assets -Liquid
Liabilities
       Current Assets ÷ Current
Liabilities
       Liquid Assets ÷ Liquid
Liabilities
16. The expected exit value is also referred to as the (Points :
4)
fair value
present value
input value
current market value
17. Which of the following best describes the characteristics that
relate to the income statement? (Points : 4)
       The income statement can
alternatively be referred to as a statement of financial
position.
       The income statement is the
most important financial statement in the annual report.
The income statement serves as a link between the statement of
retained earnings and the balance sheet.
       The income statement
summarizes the results of a company’s cash operations for the
accounting period.
18. Which is least likely to be classified as a sale of a
component? (Points : 4)
sale by a communications company of its radio stations, but none of
its television stations
sale by a food distributor of its wholesale supermarket division
while maintaining its wholesale fast-food restaurants division
sale by an apparel manufacturer of a woolen suit manufacturing
plant in order to concentrate on the manufacture of suits from
synthetic products
sale by a meat-packing company of its (entire) 20% interest in a
professional football team
19. To be recognized as revenue, an item must (Points : 4)
meet the definition of earned revenue
be earned revenue and be realized or realizable
be realized
be earned
20. When an entity reports on a sale of a component of the business
(Points : 4)
any income or loss from operations of the component should be
reported in the income from continuing operations section, but any
gain or loss on the sale of the component should be presented below
the income from continuing operations section
current operating income or loss of the component and any gain or
loss on sale of the component should be presented in a separate
section of the income statement
any gain or loss on the sale should always be presented in the
extraordinary gain or loss section of the income statement
all information related to the sold component should be reported
solely in the footnotes accompanying the financial statements
21. The group that has oversight over the financial reporting
process of a company is called the (Points : 4)
Audit Committee
       Financial Oversight
Committee
       Financial Reporting
Committee
       Financial Accounting Standards
Board
22. Which one of the following statements regarding market
efficiency is false? (Points : 4)
The prices of securities traded in the capital markets fully
reflect all publicly available and privately held information.
       The prices of securities are
adjusted based on new information almost immediately in an unbiased
manner.
       Market prices adjust in an
immediate manner because of the communication system in the
marketplace.
       An individual investor cannot
use published information to earn an “abnormal” return on a
security investment with a given amount of risk.
23. The “scope” paragraph of an unqualified audit opinion states
that the auditor (Points : 4)
examined all of the information used to prepare the financial
statements.
followed GAAP.
established internal control procedures.
used the audit as a basis for the opinion.

24. Information reported or disclosed about the profit or loss of
reportable segments consists of (Points : 4)
a measure of operating profit or loss
segment revenues (separated into sales to external customers and
intersegment sales)
interest revenue and interest expense
all of these choices
25. Which one of the following need not be disclosed for reportable
segments? (Points : 4)
interest revenue and expense
profit or loss
capital expenditures for long-lived assets
seasonal revenues
26. The method of converting a future dollar amount into its
present dollar value by removing the time value of money is called
(Points : 4)
discounting
compounding
amortizing
interpolation
27. The formula for the future value of an ordinary annuity is
(Points : 4)
a.    
b.    
c.    
d.    

Choice A

28. Glenda deposits $4,000 every three months for five years. The
first deposit is made on March 31, 2010, and the last deposit is
made on December 31, 2014. The fund earns 16%, and interest is
compounded quarterly. How much money will Glenda have on December
31, 2014, immediately after her last deposit? Factors for future
value of an annuity of $1 are for Values of n and i
n = 5; i = 16%n = 20;I = 4%
6.877129.7781 (Points : 4)
       $123,876
       $119,112
       $110,034
       $107,508
29. John desires to accumulate $13,603.83 by December 1, 2012. To
accumulate that sum, he will make six equal semiannual deposits of
$2,000, beginning on June 1, 2010, into a fund that earns interest
compounded semiannually. What annual rate of interest must the fund
provide to yield the desired sum? (Points : 4)
       5%
       6%
10%
       12%
30. The future amount of $6,000 deposited today and compounded
semiannually at an 8% annual interest rate for four years would be
(Points : 4)
$8,211
       $8,163
       $8,100
       $7,920
31. Olympia Company sold merchandise on credit with a list price of
$70,000. Terms were 2/10, n/30. Given the indicated sales discounts
methods in the responses, which entry is correct? (Points : 4)
a.    Gross Price Method
Accounts Receivable     63,000
  
Sales                          
63,000
b.    Net Price Method
Accounts Receivable     68,600
  
Sales                          
68,600
c.    Net Price Method
Accounts Receivable     40,000
  
Sales                          
40,000
d.    Gross Price Method
Accounts Receivable     68,600
  
Sales                          
68,600

Choice B
32. Which is not a key element of internal control over cash
receipts? (Points : 4)
daily recording of all cash receipts in the accounting records
daily entry in a voucher register
immediate counting by the person opening the mail or using the cash
register
daily deposit intact
33. When aging of accounts receivable is used, each age group is
multiplied by its own estimated uncollectible percentage to
determine each age group’s estimated uncollectible amount. The sum
of the amounts thus determined (Points : 4)
is the bad debt expense for the year
is the correct balance for the allowance for doubtful accounts at
year-end
is the amount added to the existing credit balance in the allowance
account to determine the bad debt expense for the year
is the amount that should be written off as uncollectible for the
year
34. Most trade receivables are initially recorded at their (Points
: 4)
maturity values
discounted values
present values
net cash values
35. The sales returns and allowances account is reported as a
(Points : 4)
contra-revenue account on the income statement
current liability on the balance sheet
deduction from accounts receivable on the balance sheet
selling expense on the income statement

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1. Selected data for Young Company for 2012 is presented below: Direct labor in

1. Selected data for Young Company for 2012 is presented
below:

Direct labor incurred—————– $30,000
Indirect labor incurred ————– 21,000
Factory depreciation —————— 5,000
Factory utilities ———————— 7,000
Indirect materials used ————— 2,000
Direct materials used —————– 12,000
Property taxes on factory building—- 3,000
Sales commissions——————— 8,000

What is the manufacturing overhead? (Points : 1)
A- $47,000
B- $50,000
C- $38,000
D- $46,000
E- None of these is correct

2. The following information pertains to Bright Toy Company’s
operating activities for 2012. The company sells light box toys and
sold 10,000 units in 2012.

Purchases————————————————————
$ 126,000
Selling and Administrative Expenses——————————
90,000
Merchandise inventory, 1/1/2012———————————-
14,000
Merchandise inventory, 12/31/2012——————————-
10,000
Sales Revenue
—————————————————— 250,000

What is the gross profit for 2012? (Points : 1)
A- $120,000
B- $130,000
C- $140,000
D- $136,000
E- None of these is correct

3. Which of the following describes the cost of goods
manufactured?
A- The cost of the goods that were sold during the period
B- The total cost of all goods that were completed, or partially
completed during the period
C- The cost of those goods which were completed during the
period
D- The total costs in inventory at the end of the period

4. Village Company’s selected cost data for 2012 are shown
below:

Cost of goods manufactured—————————————
$145,200
Work in process inventory, Jan. 1, 2012—————————
18,500
Work in process inventory, Dec. 31, 2012————————-
22,500
Direct materials used
———————————————– 15,800

Assuming manufacturing overhead costs of $83,375, what is the
amount of direct labor incurred by Village Company in 2012? (Points
: 1)
A- $50,025
B- $62,550
C- $41,700
D- $83,400
E- None of these is correct

5. Which of the following statements is INCORRECT? (Points : 1)
A- Managerial accounting is used to determine the cost of products
and services.
B- Managerial accounting is used to plan and control business
operations.
C- Managerial accounting is used to report the company’s financial
position and results of operations to creditors and investors.
D- Managerial accounting is used to prepare budgets.

6. Management accounting is influenced significantly by rules of
GAAP and guidelines of the Securities Exchange Commission. (Points
: 1)
True
False

7. Which of the following companies would NOT use job order
costing?
A- A lawn maintenance company
B- A legal firm
C- An auto repair shop
D- A beverage manufacturer

8. All manufacturing overhead costs incurred are accumulated as
debits to a general ledger account titled Manufacturing overhead.
(Points : 1)
True
False

9. The following information pertains to Bright Toy Company’s
operating activities for 2012. The company sells light box toys and
sold 10,000 units in 2012.

Purchases ——————————————————–
$ 126,000
Selling and Administrative Expenses —————————
90,000
Merchandise inventory, 1/1/2012 ——————————-
14,000
Merchandise inventory, 12/31/2012—————————–
10,000
Sales Revenue —————————————————-
250,000

What is the cost of goods available for sale for 2012? (Points :
1)
A- $140,000
B- $126,000
C- $104,000
D- $130,000
E- None of these is correct

10. The following information pertains to Bright Toy Company’s
operating activities for 2012. The company sells light box toys and
sold 10,000 units in 2012.

Purchases——————————————————– $
126,000
Selling and Administrative Expenses————————–
90,000
Merchandise inventory, 1/1/2012——————————
14,000
Merchandise inventory, 12/31/2012—————————
10,000
Sales Revenue ————————————————–
250,000

What is the cost of goods sold for 2012? (Points : 1)
A- $104,000
B- $124,000
C- $130,000
D- $140,000
E- None of these is correct

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