Cost Management Assignment: Winter Module for Students

Published: 10 months ago

Cost Management Assignment: Winter Module for Students

1. 1.Lomax Enterprises purchased a depreciable asset for $22,000 on March 1, 20007. The asset will be depreciated on the straight-line method over its four-year useful life. Assuming the asset's value is $2,000, what will be the amount of accumulated depreciation on this asset on December 31, 2010

1.Lomax Enterprises purchased a depreciable asset for $22,000 on March 1, 20007. The asset will be depreciated on the straight-line method over its four-year useful life. Assuming the asset's value is $2,000, what will be the amount of accumulated depreciation on this asset on December 31, 2010

A)$5,000.00

B)$4,166.67

C)$16,666.68

D)$20,000.00

E)$19,166.67

2.The straight-line method depreciation method and the double-declining-balance depreciation method:

A)Produce the same total depreciation over an asset's useful life.

B)Produce the same depreciation expense each year.

C)Produce the same book value each year.

D)Are acceptable for tax purposes only.

E)Are the only acceptable methods of depreciation for financial reporting.

3.A method that allocates an equal portion of the total depreciable cost for a plant asset to each unit produced is called:

A)Accelerated depreciation.

B)Declining-Balance depreciation.

C)Straight-line depreciation.

D)Units-of-production depreciation.

E)Modified accelerated cost recovery system (MACRS) depreciation.

4.A depreciation method that necessarily produces larger depreciation expense during the early years of an asset's life and smaller expense in the later years is a (an):

A)Double-declining balance method.

B)Book value depreciation method.

C)Straight-line depreciation method.

D)Units-of-production depreciation method.

E)Unrealized depreciation method.

2. Luzadis company makes furniture using the best...assume that the company allocates any overapplied

Luzadis company makes furniture using the best...assume that the company allocates any overapplied Luzadis Company makes furniture using the latest automated technology. The company uses apb order costing system and applies manufacturing overhead cost to products on the basis of machine-hours. The folowing estimates were used in preparing the predetermined overhead rate at the beginning of the year: Machine-hours 81,000 Fixed manufacturing overhead cost 1,273,000 Variable manufacturing overhead per computer-hour 340 During the year, a glut of furniture on the market resulted in autting back production and a buildup of furniture in the companys warehouse. The companys cost records revealed the following actual cost and operating data for the year. 40,000 Machine-hours Manufacturing overhead cost 818,000 Inventories at year-end 420.000 Raw materials Work in process (includes overhead applied of 61,184) 180,000 1.040.000 Finished goods (includes overhead appled of 214,144) 2,800,000 Cost of goods soid (includes overhead applied of 489,472) Required 1 Compute the company's predetermined overhead rate for the year (Round your answer to 2 decimal places) 5.72 per hour Predetermined overhead rate

3. The legal requirements for forming a partnership can be quite burdensome.

Mark Rensing has prepared the following list of statements about partnerships.

1. A partnership is an association of three or more persons to carry on as co-owners of a business for profit.


2. The legal requirements for forming a partnership can be quite burdensome.


3. A partnership is not an entity for financial reporting purposes.


4. The net income of a partnership is taxed as a separate entity.


5. The act of any partner is binding on all other partners, even when partners perform business acts beyond the scope of their authority.


6. Each partner is personally and individually liable for all partnership liabilities.


7. When a partnership is dissolved, the assets legally revert to the original contributor.


8. In a limited partnership, one or more partners have unlimited liability and one or more partners have limited liability for the debts of the firm.


9. Mutual agency is a major advantage of the partnership form of business.

Instructions

Identify each statement as true or false. If false, indicate how to correct the statement.

4. Question 1 The Information for Preparing the Trial Balance on a Worksheet is obtained from:

Question 1 The Information for Preparing the Trial Balance on a Worksheet is obtained from:

Answer

A.General Ledger Accounts.

B.Owner's Equity Statement.

C.Financial Statements.

D.Income Statement.

Question 2 Which of the following is NOT one of the Sets of Debit & Credit Columns on a Worksheet?

Answer

A.Adjusted Trial Balance.

B.Income Statement.

C.Owner's Equity Statement.

D.Balance Sheet.

Question 3 Expenses which have Been Incurred (Used or Consumed) But Not Yet Paid in Cash or Recorded as Payable are Referred to as:

Answer

A.Prepaid Expenses.

B.Deferred Expenses.

C.None of the Above.

D.Accrued Expenses.

Question 4 Expenses like Insurance & Rent which have been Paid For in Advance of their Use are Referred to as:

Answer

A.Deferred Expenses.

B.None of the Above.

C.Accrued Expenses.

D.Future Expenses.

Question 5 Every Adjusting Entry Transaction Affects:

Answer

A.Two Income Statement Accounts.

B.Any two accounts.

C.A Balance Sheet Account & an Income Statement Account.

D.Two Balance Sheet Accounts.

Question 6 The Accrual Basis of Accounting Recognizies (Records) Revenue When It is _ _ _ & Recognizes (Records) Expenses When They are _ _ _.

Answer

A.Received ..... Paid.

B.Earned ........ Paid.

C.Received ..... Incurred

D.Earned ........ Incurred.

Question 7 If the Adjusting Entry for Suppliles Used Up (Consumed) was NOT Recorded Before the Company's Financial Statements were Prepared, then:

Answer

A.Assets would be Overstated & Expenses would be Understated.

B.Liabilities would be Understated & Expenses would be Overstated.

C.Liabilities would be Understated & Expenses would be Overstated.

D.Liabilities would be Overstated & Expenses would be Understated.

Question 8 The Purpose of Making Closing Entries is to:

Answer

A.Close All lthe Permanent (Real) Accounts & Set Them to Zero (0) Balances.

B.Close All lthe Temporary (Nominal) Accounts & Set Them to Zero (0) Balances.

C.Update the General Ledger Accounts Before Preparing Financial Statements.

D.Close All lthe Ledger Accounts & Set Them to Zero (0) Balances.

Question 9 A Company's Net Income is Recorded on the Worksheet in the Income Statement _ _ _ Column & the Balance Sheet _ _ _ Column.

Answer

A.Debit ..... Credit.

B.Credit .... Credit.

C.Debit ..... Debit.

D.Credit .... Debit.

Question 10 The Correct Sequence of Recording the Closing Entries is:

Answer

A.1st Expenses, 2nd Revenues, 3rd Income Summary, 4th Owner's Drawing.

B.1st Revenues, 2nd Expenses, 3rd Income Summary, 4th Owner's Drawing.

C.1st Income Summary, 2nd Owner's Drawing, 3rd Expenses, 4th Revenues.

D.1st Income Summary, 2nd Owner's Drawing, 3rd Revenues, 4th Expenses.

Question 11 A Post Closing Trial Balance includes Only Accounts for:

Answer

A.Assets, Liabilities, & Owner's Capital.

B.Assets, Liabilities, & Owner's Drawing.

C.Revenues & Expenses.

D.Revenues, Expenses, & Owner's Capital.

Question 12 Which of the following is NOT a Current Asset Account?

Answer

A.Cash.

B.Accounts Receivable.

C.Prepaid Insurance.

D.Office Equipment.

Question 13 Employees Earning $250 a Day Worked Monday (the 30th) & Tuesday (the 31st) of the Current Month, but they were Not Due to be Paid Until Friday (the 3rd) of the Coming Month. The Correct General Journal to Record the Accrued Salaries on the 31st of the Current Month is:

Answer

A.Salaries Expense .......... 750

Salaries Payable ................ 750

B.Salaries Payable. .......... 750

Salaries Expense ................ 750

C.Salaries Expense .......... 500

Salaries Payable ................ 500

D.Salaries Payable. .......... 750

Salaries Expense ................ 750

Question 14 $400 of Fees Previously Received in Advance were Earned During the Current Month. The Correct Journal Entry to Record this Transaction is

Answer

A.Fees Earned ............ 400

Unearned Fees ........... 400

B.Unearned Fees ......... 400

Fees Earned ................ 400

C.Cash ......................... 400

Fees Earned ................ 400

D.Accounts Receivable .. 400

Fees Earned ................. 400

Question 15 Al Green's Emporium had a Net Income of $6,000 for it's Fiscal Year. The Correct General Journal Entry for the 3rd Closing Entry to Close the Income Summary Account is:

Answer

A.Income Summary .......... 6,000

Green, Capital ....................... 6,000

B.Green, Capital .............. 6,000

Income Summary ................... 6,000

C.Green, Drawing ............. 6,000

Green, Capital ....................... 6,000

D.None of the above.

Question 16 $200 in Cash was Collected From a Customer on their Charge Account, but it was Erroneously Recorded as Service Revenue. the General Journal to Correct this Error is:

Answer

A.Accounts Receivable ....... 200

Cash .................................... 200

B.Cash ................................ 200

Accounts Receivable ............ 200

C.Service Revenue ............. 200

Accounts Receivable ............ 200

D.Accounts Receivable ....... 200

Service Revenue ............... 200

Question 17

A form used to summarize the adjusting entries & their effects on account balances and to facilitate the preparation of financial statements. It has five (5) sets of Debit & Credit columns including: Trial Balance, Adjustments, Adjusted Trial Balance, Income Statement, & Balance Sheet.

Includes long term assets such as patents on inventions, trademarks on symbols, & copyrights on printed works. While they have no physical substance, they do have monetary value based on the rights of ownership and can be bought & sold.

Internal transactions made at the end of the fiscal period to set all revenue & expense accounts to a zero (0) balance and to transfer the company s net income or loss into the owner s capital account.

An accounting system which recognizes (records) revenues when they are earned & expenses when they are incurred (regardless of whether cash has been received or paid out). It is preferred by accountants since its net income is a truer measure of a firm s financial performance.

Revenue that has been both earned & not yet recorded or received in cash or receivables. An adjusting entry is made at the end of the accounting period to get the unrecorded revenue on the books.

The systematic allocation of the cost of a long term fixed asset (like equipment or a truck) over its useful life. This allocated cost represents the expense of using the asset in each accounting period. This decline in the value of an asset is due to physical wear & technological tear and obsolesce.

Occasional journal entries made rectify mistakes in recording previous transactions. The amount of the error is transferred out of the wrong account & into the right account so both accounts will have their correct balances.

Internal transactions which reflect events that have occured but which have not yet been recorded. They are made at the fiscal year to bring all account balances up to date before financial statements are prepared.

An accounting system which recognizes (records) revenue when cash is received & expenses when cash is paid out. It is frowned upon by accountants since it does not measure a firm s True Net Income & can be easily manipulated to increase net income.

Assets including cash, accounts receivable, supplies, & merchandise inventory. They are expected to be converted in cash, sold, or consumed within one year or the firm s normal operating cycle, whichever is longer.

Any twelve (12) month period used to measure a company s annual profitability. It need not correspond the calendar year (Jan. 1 Dec. 31) & often ends during a firm s slow or off season.

Money which has been received from clients/customers in advance of earning it is initially recorded as a liability (Unearned Fees). An adjusting entry is made at the end of the accounting period to record that portion advance funds that has been earned and is now correctly classified as revenue.

Answer

A.Adjusting Entries

B.Deferred Revenue

C.Cash Basis Accounting

D.Current Assets

E.Fiscal Year

F.Depreciation

G.Intangible Asset

H.Accrued Revenues

I.Closing Entries

J.Worksheet

K.Accrual Basis Accounting

L.Correcting Entries

Question 18 Jefferson Company s Classified Balance Sheet contained the following Asset Accounts.

$2,000 Supplies

$5,000 Short Term Investments

$9,000 Equipment

($1,000) Accumulated Depreciation Equipment

$3,000 Accounts Receivable

$4,000 Prepaid Insurance

$8,000 Land

$6,000 Inventory

$7,000 Copyrights

What was the Total of the Current Assets of Jefferson Company?_ _ _ ($ Amount)

Question 19 What is the Total of the Plant, Property, & Equipment Assets in the Previous Question? _ _ _ ($ Amount)

Question 20 Xavier Inc. Worksheet Totals appeared as below:

Income Statement....Balance Sheet

..Debit.....Credit.........Debit....Credit

58,000.....50,000.......34,000...42,000

Did Xavier Inc. have a Profit or Loss for the year? _ _ _

Question 21 How Many Closing Entries are made in the General Journal at the end of the fiscal year? _ _ _ (Number)

Question 22 The Office Supplies Account had a Balance of $850 at the Beginning of the Month. A Physical Count of Office Supplies at the End of the Month Revealed that there was only $325 Left. What is the $ Amount of the Adjusting Entry for the Office Supplies Used During the Month

Question 23 One Month of 8 Month s Worth of Prepaid Insurance Costing $1,200 Expired. What would be the Adjusting Entry for the Prepaid Insurance Used Up During the Month? _ _ _ ($ Amount)

5. How are the control and feedback phases of retail strategy planning interrelated? Give an example.

How are the control and feedback phases of retail strategy planning interrelated? Give an example.

6. Lon Timur is an accounting major

Lon Timur is an accounting major at a Midwestern state university located approximately 60 miles from a major city. Many of the students attending the university are from the metropolitan area and visit their homes regularly on the weekends. Lon, an entrepreneur at heart, realizes that few good commitive alternatives are available for students doing weekend travel. He believes that a weekend commuting service could be organized and run profitably from several suburban and downtown shopping mall locations. Lon has gathered the following investment information.1. 5 used vans would cost a total of $75,000 to purchase and would have a 3-year useful life with negligible salvage value. Lon plans to use straight-line depreciation,2. Ten drivers would have to be employed at a total payroll expense of $48,000.3. Other annual out-of-pocket expenses associated with running the computer service would include gasoline $16,000, maintenance $3,300, repairs $4,000, insurance $4,200, advertising $2,500.4. Lon has visited several financial institutions to discuss funding. The best interest rate he has been able to negotiate is 15%. Use this rate for cost of capital.5. Lon expects each van to make ten round trios weekly and carry an average of six students each trip. The service is expected to operate 30 weeks each year, and each student will be charged $12.00 for a round-trip ticket. 'Inst-s:a) determine the annual (1) net income and (2) net annual cash flows for the commuter service.b) compute (1) the cash payback period and (2) the annual rate of return (round to two decimals).c) compute the net present value of the commuter service (round to the nearest dollar).d) what should Lon conclude from these computations?

7. Brislin Company has four operating divisions. During the first quarter of 2017, the company repor...

Brislin Company has four operating divisions. During the first quarter of 2017, the company reported aggregate income from operations of $211,600 and the following divisional result Division IV $245,000 $197,000 $504,000 $450,000 Sales 200,000 Cost of goods sold 191,000 301,000 249,000 Selling and administrative expenses 72,400 63,000 58,000 50,000 Income (loss) from operations (27,400) S (57,000) $145,000 $151,000 Analysis reveals the following percentages of variable costs in each division II IV Cost of goods sold 73 91 82 75 Selling and administrative expenses 39 59 50 61 Discontinuance of any division would save 50% of the fixed costs and expenses for that division Top management is very concerned about the unprofitable divisions (I and II). Consensus is that one or both of the divisions should be discontinued Your answer s correct. Compute the contribution margin for Divisions I and II. (Enter negative amounts using either a negative sign preceding the number e g. -45 or parentheses e.g. (45).) Division I Division II Contribution margin 0764 3980 M Your answe s correct. Prepare an incremental analysis concerning the possible discontinuance of Division I, (Round answers to 0 decimal places, e.g. 1525. Enter negative amounts using either a negative sign preceding the number e g. -45 or parentheses e,g, (45).) Continue Eliminate Increase (Decrease) Contribution margin 076 7076 Fixed costs Cost of goods sold 400 7000 700 Selling and administrative 20B Total fixed expenses Income (loss) from operations 2740 49082 2168 Your answer is correct. Prepare an incremental analysis concerning the possible discontinuance of Division II. (Round answers to o decimal places, e.g. 1525. Enter negative amounts using either a negative sign preceding the number e -45 or parentheses e.g. (45).) Contribution margin 1398 398 Fixed costs Cost of goods sold 595 59 Selling and administrative Total fixed expense ncome (loss) from operations 21510 5700 $3549 MYour answer is correct. What course of action do you recommend for each division? Division ntinued

8. 5.4 In the carnival game Under-or-Over-Seven, a pair of fair dice is rolled once, and the resulting.

5.4 In the carnival game Under-or-Over-Seven, a pair of fair dice is rolled once, and the resulting sum determines whether the player wins or loses his or her bet. For example, the player can bet $1 that the sum will be under 7—that is, 2, 3, 4, 5, or 6. For this bet, the player wins $1 if the result is under 7 and loses $1 if the outcome equals or is greater than 7. Similarly, the player can bet $1 that the sum will be over 7—that is, 8, 9, 10, 11, or 12. Here, the player wins $1 if the result is over 7 but loses $1 if the result is 7 or under. A third method of play is to bet $1 on the outcome 7. For this bet, the player wins $4 if the result of the roll is 7 and loses $1 otherwise. a. Construct the probability distribution representing the different outcomes that are possible for a $1 bet on under 7. b. Construct the probability distribution representing the different outcomes that are possible for a $1 bet on over 7. c. Construct the probability distribution representing the different outcomes that are possible for a $1 bet on 7. d. Show that the expected long-run profit (or loss) to the player is the same, no matter which method of play is used

9. A ______ pricing strategy for an offering begins with an assessment of customer needs and percept...

A ______ pricing strategy for an offering begins with an assessment of customer needs and perceptions. Then a target price is set based on customer perceptions of worth. A) cost-based B) target costing C) value-added D) value-added E) competition-based When establishing prices, it's important for a manager to understand that "good value" is not the same as ______. A) "low price" B) "high price" C) "bargain basement" D) "perceived value" E) "everyday value" Retailers like Walmart and Target carry less-expensive versions of established brand name products or new lower-price lines. They have adopted a ______ pricing strategy. A) high-low B) target return C) cost-plus D) good-value E) market-skimming Providing extra amenities to differentiate and support high-priced products is referred to as ______ pricing. A) high-low B) value-added C) target return D) everyday low E) cost-plus _____ pricing involves setting prices based on the expenses involved in producing distributing, and selling a product plus a fair rate of return for a company's effort and risk. A) Competition-based B) Value-added C) Cost-based D) Good-value E) Demand-based

10. On January 1, 2014, Geffrey Corporation had the following stockholders' equity accounts.

 

During the year, the following transactions occurred.