Principles of Management Accounting - ACCT3050

Published: 1 year ago

Principles of Management Accounting - ACCT3050

6. flexible budgeting and variance analysis I Love My Chocolate Company makes dark chocolate and...

flexible budgeting and variance analysis

I Love My Chocolate Company makes dark chocolate and light chocolate. Both products require cocoa and sugar. The following planning information has been made available:

Standard amount per Case

I Love My Chocolate Company does not expect there to be any beginning or ending inventories of cocoa or sugar. At the end of the budget year, I Love My Chocolate Com- pany had the following actual   results:

instructions

1.     Prepare the following variance analyses for both chocolates and the total, based on the actual results and production levels at the end of the budget year:

a.    Direct materials price, quantity, and total variance.

b.   Direct labor rate, time, and total variance.

2.     Why are the standard amounts in part (1) based on the actual production for the year instead of the planned production for the year?

7 On December 1, LoPrice Electronics has three DVD players left in stock. All are identical

.

On December 1, LoPrice Electronics has three DVD players left in stock. All are identical, all are priced to sell at $85. One of the three DVD players left in stock, with serial #1012, was purchased on June 1 at a cost of $52. Another, with serial #1045, was purchased on November 1 for $48. The last player, serial #1056, was purchased on November 30 for $40.

Instructions

(a) Calculate the cost of goods sold using the FIFO periodic inventory method, assuming that two of the three players were sold by the end of December, LoPrice Electronics" year-end.

(b) If LoPrice Electronics used the specific identification method instead of the FIFO method, how might it alter its earnings by “selectively choosing” which particular players to sell to the two customers? What would LoPrice"s cost of goods sold be if the company wished to minimize earnings? Maximize earnings?

(c) Which inventory method, FIFO or specific identification, do you recommend that LoPrice use? Explain why.

8. 55. Which one of the following below is not an element of internal control? A. risk...

55. Which one of the following below is not an element of internal control? 

A. risk assessment

B. monitoring

C. information and communication

D. behavior analysis

56. Which one of the following below is not a factor that influences a business's control environment? 

A. management's philosophy and operating style

B. organizational structure

C. proofs and security measurers

D. personnel policies

57. When a firm uses internal auditors, it is adhering to which one of the following internal control elements? 

A. risk assessment

B. monitoring

C. proofs and security measures

D. separating responsibilities for related operations

58. The objectives of internal control are to  

A. control the internal organization of the accounting department personnel and equipment

B. provide reasonable assurance that operations are managed to achieve goals, financial reports are accurate, and laws and regulations are complied with

C. prevent fraud, and promote the social interest of the company

D. provide control over "internal-use only" reports and employee internal conduct

59. Which one of the following below reflects a weak internal control system?  

A. all employees are well supervised

B. a single employee is responsible for comparing a receiving report to an invoice

C. all employees must take their vacations

D. a single employee is responsible for collecting and recording of cash

60. Internal control does not consist of policies and procedures that  

A. protect assets from misuse

B. aid management in directing operations toward achieving business goals

C. guarantee the company will not go bankrupt

D. ensure that business information is accurate

61. A firm's internal control environment is not influenced by  

A. management's operating style

B. organizational structure

C. personnel policies

D. monitoring policies

62. An element of internal control is  

A. risk assessment

B. journals

C. subsidiary ledgers

D. controlling accounts

63. A necessary element of internal control is  

A. database

B. systems design

C. systems analysis

D. information and communication

64. In management's internal control report that is now required of all public companies, which of the following does not have a direct effect on a company's internal control system? 

A. internal auditors

B. independent accountants

C. Board of Director's audit committee

D. Board of Trustees

9. 31) Disc Company sells 400 discs per week. Purchase-order lead time is 3 weeks and the...

31) Disc Company sells 400 discs per week. Purchase-order lead time is 3 weeks and the economic-order quantity is 900 units. What is the reorder point?

A) 950 units

B) 1,200 units

C) 3,500 units

D) 4,500 units

E) 5,600 units

32) Owen-King Company sells optical equipment. Lens Company manufactures special glass lens. Owen-King Company orders 5,200 lens per year, 100 per week at $20 per lens. Lens Company covers all shipping costs. Owen-King Company earns 30% on its cash investments. The purchase-order lead time is 2.5 weeks. Owen-King Company sells 125 lens per week. The following data is available:

What is the economic-order quantity for Owen-King Company?

A) 325 lens

B) 297 lens

C) 210 lens

D) 161 lens

E) 92 lens

33) Owen-King Company sells optical equipment. Lens Company manufactures special glass lens. Owen-King Company orders 5,200 lens per year, 100 per week at $20 per lens. Lens Company covers all shipping costs. Owen-King Company earns 30% on its cash investments. The purchase-order lead time is 2.5 weeks. Owen-King Company sells 125 lens per week. The following data is available:

What is the reorder point?

A) 220.5 lens

B) 312.5 lens

C) 397.5 lens

D) 415.5 lens

E) 561.9 lens

34) The following information has been gathered for Product A:

What are the annual carrying costs if the company orders at the EOQ amount?

A) $80

B) $400

C) $1,520

D) $12,800

E) $16,000

35) The following information has been gathered for Product A:

What is the economic order quantity?

A) 9 units

B) 10 units

C) 20 units

D) 40 units

E) 46 units

36) The following information has been gathered for Product A:

What is the reorder point?

A) 38

B) 25

C) 30

D) 80

E) 100

37) The inventory that is held to offset unexpected increases in demand or lead time and unexpected unavailability of stock from suppliers is primarily known as

A) inventory stock.

B) over-supply stock.

C) safety stock.

D) surplus stock.

E) obsolete stock.

38) Which of the following statements is true?

A) The reorder point is the point at which the amount of inventory on hand equals the amount needed to cover sales during the lead time.

B) The reorder point is the minimum level of inventory allowed during a particular period.

C) The safety stock is the amount of stock that must be on hand to cover sales during lead time.

D) The safety stock is the minimum level of inventory that must remain on hand.

E) The safety stock is the minimum level of inventory that must remain at the customers.

39) What are the major relevant costs in maintaining safety stock?

A) carrying costs and purchasing costs

B) ordering costs and purchasing costs

C) ordering costs and stockout costs

D) stockout costs and carrying costs

E) stockout costs and purchasing costs

40) The total annual relevant cost equation, TRC, includes all of the following inputs EXCEPT

A) ordering costs per purchase order.

B) demand in units.

C) reorder point.

D) carrying cost per unit.

E) EOQ.

10. Denzel Brooks open a web consulting business called Venture Consultants and completes the followi...

Denzel Brooks open a web consulting business called Venture Consultants and completes the following transactions in March. Using the following transactions, record journal entries, create financial statements, and asses the impact of each transaction on the financial statements.



I attached pictures of the problem with the information given. Need help with Income Statement, Statement of Retained Earnings, Balance Sheet, and Impact on Equity. Show transcribed image text Denzel Brooks opens a web consulting business called Venture Consultants and completes the following transactions in March. Using the following transactions, record journal entries, create financial statements, and assess the impact of each transaction on the financial statements Mar. 1 Brooks invested $150,000 cash along with $22,000 in office equipment in the company in exchange for common stock Mar. 2 The company prepaid $6,000 cash for six months rent for an office. The company's policy is to record prepaid expenses in balance sheet accounts. Mar. 3 The company made credit purchases of office equipment for $3,000 and office supplies for $1,200 Payment is due within 10 days. Mar. 6 The company completed services for a client and immediately received $4,000 cash Mar. 9 The company completed a $7,500 project for a client, who must pay within 30 days Mar. 12 The Company paid $4,200 cash to settle the account payable created on March 3 Mar. 19 The company paid $5,000 cash for the premium on a 12-month insurance policy. The company's policy is to record prepaid expenses in balance sheet accounts. Mar. 22 The company received $3,500 cash as partial payment for the work completed on March 9 Mar. 25 The company completed work for another client for $3,820 on credit. Mar. 29 The company paid $5,100 cash in dividends. Mar. 30 The company purchased $600 of additional office supplies on credit Mar. 31 The company paid $500 cash for this month's utility bill General Trial Balance Requirement General Income Balance Impact on Journal Ledger Earnings Sheet Statement

11. identify which principle or assumption has been violated

The following situations involve accounting principles and assumptions.

1. Piang Company owns buildings that are worth substantially more than they originally cost. In an effort to provide more relevant information, Piang reports the buildings at fair value in its accounting reports.

2. Delta Company includes in its accounting records only transaction data that can be expressed in terms of money.

3. Luke Witte, owner of Luke"s Photography, records his personal living costs as expenses of the business.

Instructions

For each of the three situations, say if the accounting method used is correct or incorrect. If correct, identify which principle or assumption supports the method used. If incorrect, identify which principle or assumption has been violated.

12. Which of the following items represents a deferral? A. Prepaid insurance B. Wages payable C. Fees...

Which of the following items represents a deferral?

A. Prepaid insurance

B. Wages payable

C. Fees earned

D. Accumulated depreciation

13. What is the underlying concept that supports the immediate recognition of a contingent loss?

What is the underlying concept that supports the immediate recognition of a contingent loss?

1. Substance over form.


2. Consistency.


3. Matching.


4. Conservatism.

14. Which of the following has steps of the accounting cycle in proper sequence (some steps may be mi...

which of the following has steps of the account. Which of the following has steps of the accounting cycle in proper sequence (some steps may be missing)? Prepare financial statements, journalize closing entries and post to the ledger, analyze and record transactions, post transactions to the ledger, prepare a trial balance, analyze adjustment data, prepare adjusting entries analyze and record transactions, post transactions to the ledger, prepare a trial balance, prepare financial statements, journalize closing entries, analyze adjustment data and prepare adjusting entries Prepare a trial balance, analyze adjustment data, prepare adjusting entries, prepare financial statements, journalize closing entries and post to the ledger, analyze and record transactions, post transactions to the ledger analyze and record transactions, post transactions to the ledger, prepare a trial balance, analyze adjustment data, prepare adjusting entries, prepare financial statements, journalize closing entries and post to the ledger, and prepare a post closing trial balance

15. Cash budget—Advanced The actual sales and purchases for Xenocore, Inc., for September and October...

Cash budget—Advanced The actual sales and purchases for Xenocore, Inc., for September and October 2003, along with its forecast sales and purchases for the period November 2003 through April 2004, follow.

The firm makes 20% of all sales for cash and collects on 40% of its sales in each of the 2 months following the sale. Other cash inflows are expected to be $12,000 in September and April, $15,000 in January and March, and $27,000 in February. The firm pays cash for 10% of its purchases. It pays for 50% of its purchases in the following month and for 40% of its purchases 2 months later. Wages and salaries amount to 20% of the preceding month’s sales. Rent of $20,000 per month must be paid. Interest payments of $10,000 are due in January and April. A principal payment of $30,000 is also due in April. The firm expects to pay cash dividends of $20,000 in January and April. Taxes of $80,000 are due in April. The firm also intends to make a $25,000 cash purchase of fixed assets in December. a. Assuming that the firm has a cash balance of $22,000 at the beginning of November, determine the end-of-month cash balances for each month, November through April. b. Assuming that the firm wishes to maintain a $15,000 minimum cash balance, determine the required total financing or excess cash balance for each month, November through April. c. If the firm were requesting a line of credit to cover needed financing for the period November to April, how large would this line have to be? Explain your answer.

16. Break Even Sales Under Present and Proposed Conditions Howard Industries Inc, operating at full c...

Break Even Sales Under Present and Proposed Conditions Howard Industries Inc, operating at full capacity, sold 64,000 units at a price of $45 per unit during 2014. Its income statement for 2014 is as follows: Sales $2,880,000 Cost of goods sold 1,400,000 $1A80,000 Gross profit...... Expenses Selling expenses $400,000 Administrative expenses. 387,500 Total expenses 787,500 Income from operations 692,500 The division of costs between variable and fixed is as follows: Fixed Variable Cost of goods sold 75% 25% Selling expenses Administrative expenses Management is considering a plant expansion program that will permit an increase of $900,000 in yearly sales. The expansion will increase fixed costs by $212,500, but will not affect the relationship between sales and variable costs.

17. Comprehensive Problem 1 Part 9: The following is a comprehensive problem which encompasses all of...

Comprehensive Problem 1

Part 9:

The following is a comprehensive problem which encompasses all of the elements learned in previous chapters. You can refer to the objectives for each chapter covered as a review of the concepts.

Note: You must complete parts 1, 2, 3, 4, 6, 7 and 8 before completing part 9. Part 5 is optional.

Part 9: Prepare the closing entries below. Then, using the attached spreadsheet from part 2, post the entries to your general ledger. (Income Summary is account #33 in the chart of accounts.) If an amount box does not require an entry, leave it blank or enter "0".

Date Account Name Post. Ref. Debit Credit

2014

May 31

May 31

May 31

May 31

18. Describe how the following business transactions affect the thre

Describe how the following business transactions affect the three elements of the accounting equation.

a. Received cash for services performed.

b. Paid for utilities used in the business.

c. Borrowed cash at local bank.

d. Issued capital stock for cash.

e. Purchased land for cash.