Assignment Aid: Unlock Your Potential in Accounting Modules
17. Classify each of the following as being usually fixed (F), variable (V), semi-fixed (SF) or...
Classify each of the following as being usually fixed (F), variable (V), semi-fixed (SF) or semi-variable (SV):
(a) direct labour;
(b) depreciation on machinery;
(c) factory rental;
(d) supplies and other indirect materials;
(e) advertising;
(f) maintenance of machinery;
(g) factory manager's salary;
(h) supervisory personnel;
(i) royalty payments.
Rice Inc. manufactures lawn mowers and garden tractors. Lawn mowers are relatively simple to produce and are made in large quantities. Garden tractors are customized to individual wholesale customer specifications. The company sells 300,000 lawn mowers and 30,000 garden tractors annually. Revenues and costs incurred for each product are as follows:
Law Mower Garden Tractors Rev $19,500,000 $17,850,000 DM 4,000,000 2,700,000 DL ($20/Hr) 2,800,000 6,000,000 Overhead ? ?
Manufacturing overhead totals $3,960,000, and administrative expenses equal $7,400,000.
a. Calculate the profit (loss) in total and per unit for each product if overhead is assigned to product using a per-unit basis.
b. Calculate the profit (loss) in total and per unit for each product if overhead is assigned to products using a direct labor hour basis.
c. Assume that manufacturing overhead can be divided into two cost pools as follows: $1,320,000, which has a cost driver of direct labor hours, and $2,640,000, which has a cost driver of machine hours (totaling 150,000). Lawn mower production uses 25,000 machine hours; garden tractor production uses 125,000 machine hours. Calculate the profit (loss) in total and per unit for each product if overhead is assigned to products using these two overhead bases.
d. Does your answer in (a), (b), or (c) provide the best representation of the profit contributed by each product?Explain.
19. Hitzu Co sold a copter costing $6, 500 with a two year parts warranty to a customer on August 16,...
Hitzu Co sold a copter costing $6, 500 with a two year parts warranty to a customer on August 16, 2015, for $13,000 cash Hitzu uses the perpetual inventory system On November 22, 2016, the copier requires on site repairs that are completed the same day The repairs cost $111 for materials taken from the Repair Parts Inventory. These are the only repairs required in 2016 for this copier Based on experience, Hitzu expects to incur warranty costs equal to 4% of dollar sales It records warranty expense with an adjusting entry at the end of each year How much warranty expense does the company report in 2015 for this copier? Warranty expense How much is the estimated warranty liability for this copier as of December 31, 2015? Estimated warranty liability How much warranty expense does the company report in 2016 for this copier? Warranty expense
20. Chillco Corporation produces Containers of frozen food. During April, Chillco produced 775 cases ...
Chillco Corporation produces Containers of frozen food. During April, Chillco produced 775 cases of food and incurred the following actual costs. Variable overhead 6,700 Fixed overhead. 10,300 Actual labor cost (3,000 direct labor hours) 46,200 Actual material cost (16,500 pounds purchased and used) 31, 350 Overhead is budgeted and applied using direct-labor hours in a standard costing system. Standard cost and annual budget information are as follows: Standard costs per Case Direct labor 3 hours at $15 per hour) 45.00 pound) material 20 pounds at $1.60 per Direct 32.00 Variable overhead (3 direct-labor hours at 7.20 $2.40 per hour) Fixed overhead (3 direct-labor hours at $4 12.00 per hour) 96.20 Total Annual Budget Information variable overhead 72,000 $120,000 Fixed overhead Planned activity for year 30,000 direct-labor hours
21. 21. The distinction between direct and indirect costs depends on whether a cost a. is controllable..
21. The distinction between direct and indirect costs depends on whether a cost
a. is controllable or non-controllable.
b. is variable or fixed.
c. can be conveniently and physically traced to a cost object under consideration.
d. will increase with changes in levels of activity.
22. Broussard Company is a construction company that builds houses on special request. What is the proper classification of the carpenters' wages?
Product Period Direct
a. yes yes no
b. yes no yes
c. no no no
d. no yes yes
23. Broussard Company is a construction company that builds houses on special request. What is the proper classification of the cost of the cement building slab used?
Direct Fixed
a. no no
b. no yes
c. yes yes
d. yes no
24. Broussard Company is a construction company that builds houses on special request. What is the proper classification of indirect material used?
Prime Conversion Variable
a. no no no
b. no yes yes
c. yes yes yes
d. yes no no
25. Which of the following costs would be considered overhead in the production of chocolate chip cookies?
a. flour
b. chocolate chips
c. sugar
d. oven electricity
26. All costs related to the manufacturing function in a company are
a. prime costs.
b. direct costs.
c. product costs.
d. conversion costs.
27. Prime cost consists of
direct material direct labor overhead
a. no yes no
b. yes yes no
c. yes no yes
d. no yes yes
28. Plastic used to manufacture dolls is a
prime cost product cost direct cost fixed cost
a. no yes yes yes
b. yes no yes no
c. yes yes no yes
d. yes yes yes no
29. The term "prime cost" refers to
a. all manufacturing costs incurred to produce units of output.
b. all manufacturing costs other than direct labor and raw material costs.
c. raw material purchased and direct labor costs.
d. the raw material used and direct labor costs.
30. Conversion of inputs to outputs is recorded in the
a. Work in Process Inventory account.
b. Finished Goods Inventory account.
c. Raw Material Inventory account.
d. both a and b.
22. 1 Which of the following best describes a possible result of treasury stock transactions by a corpor
1 Which of
the following best describes a possible result of treasury stock transactions
by a corporation?
a May
increase but not decrease retained earnings
b May
increase net income if the cost method is used
c May
decrease but not increase retained earnings
d May
decrease but not increase net income
2 Which of
the following are temporary differences that are normally classified as
expenses or losses that are deductible after they are recognized in financial
income?
a Advance
rental receipts
b Product
warranty liabilities
c Depreciable
property
d Fines and
expenses resulting from a violation of law
3 Which of
the following disclosures is required for a change from LIFO to FIFO?
a The
cumulative effect on prior years, net of tax, in the current retained earnings
statement
b The
justification for the change
c Restated
prior year income statements
d All of
these are required
37 In a
defined-benefit plan, a formula is used that
a requires
that the benefit of gain or the risk of loss from the assets contributed to the
pension plan be borne by the employee
b defines
the benefits that the employee will receive at the time of retirement
c requires
that pension expense and the cash funding amount be the same
d defines
the contribution the employer is to make; no promise is made concerning the
ultimate benefits to be paid out to the employees
38 In January
2007, Castro Corporation, a newly formed company, issued 10,000 shares of its
$10 par common stock for $15 per share On July 1, 2007, Castro Corporation
reacquired 1,000 shares of its outstanding stock for $12 per share The
acquisition of these treasury shares
a decreased
total stockholders’ equity
b increased
total stockholders’ equity
c did not
change total stockholders’ equity
d decreased
the number of issued shares
41 An
unrealized holding loss on a company’s available-for-sale securities should be
reflected in the current financial statementsas
a an
extraordinary item shown as a direct reduction from retained earnings
b a current
loss resulting from holding securities
c a note
or parenthetical disclosure only
d other
comprehensive income and deducted in the equity section of the balance sheet
42 Which of
the following best describes a possible result of treasury stock transactions
by a corporation?
a May
increase but not decrease retained earnings
b May
increase net income if the cost method is used
c May
decrease but not increase retained earnings
d May
decrease but not increase net income
43 In a
defined-contribution plan, a formula is used that
a defines
the benefits that the employee will receive at the time of retirement
b ensures
that pension expense and the cash funding amount will be different
c requires
an employer to contribute a certain sum each period based on the formula
d ensures
that employers are at risk to make sure funds are available at retirement
44 Tanner,
Inc incurred a financial and taxable loss for 2007 Tanner therefore decided
to use the carryback provisions as it had been profitable up to this year How
should the amounts related to the carryback be reported in the 2007 financial
statements?
a The
reduction of the loss should be reported as a prior period adjustment
b The
refund claimed should be reported as a deferred charge and amortized over five
years
c The
refund claimed should be reported as revenue in the current year
d The
refund claimed should be shown as a reduction of the loss in 2007
48 Which of
the following is a temporary difference classified as a revenue or gain that is
taxable after it is recognized in financial income?
a Subscriptions
received in advance
b Prepaid
royalty received in advance
c An
installment sale accounted for on the accrual basis for financial reporting
purposes and on the installment (cash) basis for tax purposes
d Interest
received on a municipal obligation
50 An
unrealized holding gain on a company’s available-for-sale securities should be
reflected in the current financial statements as
a an
extraordinary item shown as a direct increase to retained earnings
b a current
gain resulting from holding securities
c a note
or parenthetical disclosure only
d other
comprehensive income and included in the equity section of the balance sheet
23. Superior Manufacturing Company has the following cost and expense data for the year ending Decemb...
Superior Manufacturing Company has the following cost and expense data for the year ending December 31, 2012. Instructions Prepare a cost of goods manufactured schedule for Superior Company for 2012. Prepare an income statement for Superior Company for 2012. Assume that Superior Company's ledgers show the balances of the following current asset accounts: Cash $17, 000, Accounts Receivable (net) $120, 000. Prepaid Expenses $13, 000, and Short-term Investments $26, 000. Prepare the current assets section of the balance sheet for Superior Company as of December 31, 2012. action plan Start with beginning work in process as the first item in the cost of gods manufactured schedule. Sum direct materials used, direct labor, and total manufacturing overhead to determine total manufacturing costs. Sum beginning work in process and total manufacturing costs to determine total cost of work in process. Cost of goods manufactured is the total cost of work in process less ending work in process. In the cost of goods sold section of the income statement, show beginning and ending finished goods inventory and cost of goods manufactured. In the balance sheet, list Factory manufacturing inventories in order of their expected realization in cash, with finished goods first.
24. Serial Bond Debt Service Fund Journal Entries and Financial Stat
Serial Bond Debt Service Fund Journal Entries and Financial Statements. As of December 31, 2010, New Town had $9,500,000 in 4.5 percent serial bonds outstanding. Cash of $509,000 is the debt service fund’s only asset as of December 31, 2010, and there are no liabilities. The serial bonds pay interest semiannually on January 1 and July 1, with $500,000 in bonds being retired on each interest payment date. Resources for payment of interest are transferred from the General Fund and the debt service fund levies property taxes in an amount sufficient to cover principal payments.
Required
a. Prepare debt service fund and government-wide entries in general journal form to reflect, as necessary, the following information and transactions for FY 2011.
(1) The operating budget for FY 2011 consists of estimated revenues of $1,020,000 and estimated other financing sources equal to the amount of interest to be paid in FY 2011. Appropriations must be provided for interest payments and bond redemptions on January 1 and July 1.
(2) Cash was received from the General Fund and checks were written and mailed for the January 1 principal and interest payments.
(3) Property taxes in the amount of $1,020,000 were levied (no estimate for uncollectible accounts has been made).
(4) Property taxes in the amount of $1,019,000 were collected.
(5) Cash was received from the General Fund and checks were written and mailed for the July 1 principal and interest payments.
(6) Adjusting entries were made and uncollected taxes receivable were reclassified as delinquent. At the hind level, entries were also made to close budgetary and operating statement accounts. (Ignore closing entries in the government activities journal.)
b. Prepare a statement of revenues, expenditures, and changes in fund balances for the debt service fund for the year ended December 31, 2011.
c. Prepare a balance sheet for the debt service fund as of December 31, 2011.
25. Which mission statement best represents the Chester company? Select: 1 Lasting innovation is our ...
Which mission statement best represents the Chester company? Select: 1 Lasting innovation is our motivation. We build premium products that are elegantly designed to meet the needs of a variety of market segments. Consistency and affordability are our goals. Our central mission is to offer dependable, low-price products that our customers can count on. Innovation meets revolution. We create value for our customers through breakthrough designs that lead to unique high-performance products. Providing value to our customers is why we get up in the morning. We accomplish this by offering products at a low price our customers can afford across a wide variety of market segments.
26. Ken (age 31) and Amy (age 28) Booth have brought you the following information regarding thei...
Ken (age 31) and Amy (age 28) Booth have brought you the following information regarding thei income, expenses, and withholding for the year. They are unsure which of these items must be used to calculate taxable income. Income: Ken's salary- $27,200 Amy's wages- 18,200 Insurance reimbursement for repairs from and auto accident- 500 Gift from uncle George- 2000 Interest income from Lodge state bank- 640 Federal income taxes withheld: from ken's salary- 1200 from amy's wage- 650 Amy owns and operates a computer bookstore named "The Disk Drive" The store is located at 2000 park ave, Bellview, ME 04104. During 2012, Amy had the following income and expenses: sales of books- $320,400 Expenses: Store rental- 15000 office expense- 6000 advertising- 14000 city business license 1000 payroll 89000 payroll taxes- 9100 utilities- 8000 other- 3000 Inventory: Jan. 1- 250,000 Dec. 31- 235,000 purchases during the year- 165,000 last years amy's first year of operating the booksotre. amy and ken elected to carry forward a $5000 net operating loss from the first year of business into 2012. This year amy loaned a friend $20,000 so that he could make an investment. instead of making the investment the friend lost all of the money in gambling and left for parts unknown. amy has no hope of ever collecting on this bad debt. Ken won $25,000 at a casino birthday party for a friend. this amount should be reported on the other income line. The booths support kens parents Rod (social security # 124809050) and Mary (social security # 489376676) Booth who live in their own home. ken and amy live at 2345 park ave. bellview ME 04104 and their social security numbers are ken 343753456 and amy 123457890 Complete the federal tax return for 2012. use form 1040, schedule c, schedule d, and form 8949.
27. Overapplied overhead will always result when a predetermined overhead rate is employed and ______...
Overapplied overhead will always result when a predetermined overhead rate is employed and _______
A.) | production is less than ideal capacity. |
B.) actual overhead costs are less than expected. |
C.) actual overhead costs are more than expected. |
D.) overhead incurred is less than overhead applied. |
E.) | None of the above |
28. Stefani German, a 40-year-old woman, plans to retire at age 65, and she wants to accumulate...
Stefani German, a 40-year-old woman, plans to retire at age 65, and she wants to accumulate $500,000 over the next 25 years to supplement the retirement programs that are being funded by the federal government and her employer. She expects to earn an average annual return of about 5% by investing in a low-risk portfolio containing about 20% short-term securities, 30% common stock, and 50% bonds. Stefani currently has $44,300 that at a 5% annual rate of return will grow to about $150,000 by her 65th birthday (the $150,000 figure is found using time value of money techniques, Chapter 4 appendix). Stefani consults a financial advisor to determine how much money she should save each year to meet her retirement savings objective. The advisor tells Stefani that if she saves about $20.95 each year, she will accumulate $1,000 by age 65. Saving 5 times that amount each year, $104.75, allows Stefani to accumulate roughly $5,000 by age 65.
a. How much additional money does Stefani need to accumulate over time to reach her goal of $500,000?
b. How much must Stefani save to accumulate the sum calculated in part a over the next 25 years?
29. Tice Company is a medium-sized manufacturer of lamps. During the year a new line called “Horolin”...
Tice Company is a medium-sized manufacturer of lamps. During the year a new line called “Horolin” was made available to Tice"s customers. The break-even point for] sales of Horolin is $200,000 with a contribution margin of 40%. Assuming that the profit for the Horolin line during the year amounted to $100,000, total sales during the year would have amounted to:
A) $300,000
B) $420,000
C) $450,000
D) $475,000
30. Managerial accounting: A) is more future oriented than financial accounting. B) tends to...
Managerial accounting:
A) is more future oriented than financial accounting.
B) tends to summarize information more than financial accounting
C) is primarily concerned with providing information to external users.
D) is more concerned with precision than timeliness.