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Accounting Question

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Here is the link to the quiz

.mheducation.com/connect/login/index.htm?logout=true&navclick=true&node=connect_app_17_202″>http://connect.mheducation.com/connect/login/index.htm?logout=true&navclick=true&node=connect_app_17_202

The instruction are as follow. The quiz for this week is chapter 12 & 18 only. In each question there is a tab on the bottom of the page that say CHECK MY WORK. It tells you if its wrong or right the answer. The grade that will count is the first one you submit even it tells you, you can take it more than onces. Please make sure to not hit submit if you are not ready because that will be the one graded.

This is due before midnight Sunday 15 of November.

Let me know if you have any question,

Best regards.

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accounting question

accounting question

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accounting question

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e

QUESTION 1

1. The ABC Company has a cost of equity of 24.5 percent, a pre-tax
cost of debt of 6.1percent, and a tax rate
of 30 percent. What is the firm’s weighted average cost of capital if
the proportion of debt is 27.9%?

Note: Enter your answer rounded
off to two decimal points. Do not enter % in the answer box. For example,
if your answer is 0.12345 then enter as 12.35 in the answer box.

1 points

QUESTION 2

1. The before-tax cost
of debt is 12.3 percent. What is the after-tax cost of debt if the tax rate is
41 percent?

Note: Enter your answer rounded
off to two decimal points. Do not enter % in the answer box. For example,
if your answer is 0.12345 then enter as 12.35 in the answer box.

1 points

QUESTION 3

1. ABC Industries will pay a dividend of $3 next year on their
common stock. The company predicts that the dividend will increase
by 6 percent each year indefinitely. What is the firm’s cost of
equity if the stock is selling for $25 a share?

Enter your answer in
percentages rounded off to two decimal points. DO not enter % in the answer
box.

1 points

QUESTION 4

1.

The 8 percent annual coupon
bonds of the ABC Co. are selling for $1,080.69. The bonds mature in 10
years. The bonds have a par value of $1,000. What is the before-tax cost
of debt?

Enter your answer in
percentages rounded off to two decimal points. Do not enter % in the answer
box.

1 points

QUESTION 5

1. If the market value
of debt is $193,514, market value of preferred stock is $90,882, and market
value of common equity is 436,192, what is the weight of preferred stock?

Enter your answer in
percentages rounded off to two decimal points. Do not enter % in the answer
box.

1 points

QUESTION 6

1. You were hired as a consultant
to ABC Company, whose target capital structure is 35% debt, 15% preferred, and
50% common equity. The
before-tax cost of debt is 6.50%, the yield on the preferred is 6.00%, the cost
of common stock is 11.25%, and the tax rate is 40%.What is the WACC?

Note: Enter your answer rounded
off to two decimal points. Do not enter % in the answer box. For example,
if your answer is 0.12345 then enter as 12.35 in the answer box.

1 points

QUESTION 7

1. The 7 percent annual coupon bonds of the ABC Co. are selling for
$950.41. The bonds mature in 8 years. The bonds have a par value of $1,000
and payments are made semi-annually. If the tax rate is 35%, what is the
after-tax cost of debt?

Enter your answer in
percentages rounded off to two decimal points. Do not enter % in the answer
box.

1 points

QUESTION 8

1. Several years ago, the ABC
Company sold a $1,000 par value bond that now has 20 years to maturity and a
7.00% annual coupon that is paid semiannually. The bond currently sells
for $925 and thecompany’s tax rate is 40%. What is the after-tax
cost of debt?

1 points

QUESTION 9

1. ABC Industries will pay a dividend of $1 next year on their
common stock. The company predicts that the dividend will increase
by 7 percent each year indefinitely. What is the dividend yield if
the stock is selling for $35 a share?

Enter your answer in
percentages rounded off to two decimal points. DO not enter % in the answer
box.

1 points

QUESTION 10

1. The 8 percent annual coupon bonds of the ABC Co. are selling for
$880.76. The bonds mature in 10 years. The bonds have a par value of
$1,000 and payments are made semi-annually? What is the before-tax cost of
debt?

Enter your answer in
percentages rounded off to two decimal points. Do not enter % in the answer
box.

1 points

QUESTION 11

1. ABC, Inc., has 820 shares of common stock outstanding at a price
of $14 a share. They also have 671 shares of preferred stock outstanding
at a price of $80 a share. There are 81, 8 percent bonds outstanding that
are priced at $41. The bonds mature in 16 years and pay interest semiannually.
What is the capital structure weight of the preferred stock?

Enter your answer as a
percentage rounded off to two decimal points. Do not enter % in the answer box.

1 points

QUESTION 12

1. ABC Inc.’s perpetual
preferred stock sells for $72.4 per share, and it pays an $9.1 annualdividend. If the company were to sell a new preferred issue, it would
incur a flotation cost of $4 per share. What is the company’s cost of preferred stock for use in
calculating the WACC?

Note: Enter your answer rounded
off to two decimal points. Do not enter % in the answer box. For example,
if your answer is 0.12345 then enter as 12.35 in the answer box.

1 points

QUESTION 13

1. The 8.5 percent annual coupon bonds of the ABC Co. are selling for
$1,179. The bonds mature in 12 years. The bonds have a par value of
$1,000. If the tax rate is 30%, what is the after-tax cost of debt?

Enter your answer in
percentages rounded off to two decimal points. Do not enter % in the answer
box.

1 points

QUESTION 14

1. If the market value
of debt is $114,756, market value of preferred stock is $103,266, and market
value of common equity is 175,648, what is the weight of common equity?

Enter your answer in
percentages rounded off to two decimal points. Do not enter % in the answer
box.

1 points

QUESTION 15

1. The common stock of Wetmore
Industries is valued at $25.6 a share. The company increases their dividend
by 4.7 percent annually and expects their next dividend to be $3.8. What
is the required rate of return on this stock?

Note:
Enter your answer rounded off to two decimal points. Do not enter % in the
answer box. For example, if your answer is 0.12345 then enter as 12.35 in
the answer box.

1 points

QUESTION 16

1. ABC Company’s last
dividend was $4.9. The dividend growth rate is expected to be constant at 25%
for 2 years, after which dividends are expected to grow at a rate of 5%
forever. The firm’s required
return (rs) is 17%. What is its current stock price (i.e.
solve for Po)?

Note: Enter your answer rounded
off to two decimal points. Do not enter $ or comma in the answer box. For
example, if your answer is $12.345 then enter as 12.35 in the answer box.

1 points

QUESTION 17

1. A stock’s next dividend is
expected to be $1. The required rate of return on stock is 14.8%, and the
expected constant growth rate is 5.6%. What is the stock’s
current price?

Note: Enter your answer rounded
off to two decimal points. Do not enter $ or comma in the answer box. For example,
if your answer is $12.345 then enter as 12.35 in the answer box.

1 points

QUESTION 18

1. ABC Inc., is expected to
pay an annual dividend of $2 per share next year. The required return
is 14.9 percent and the growth rate is 5.5 percent. What is the
expected value of this stock five years from now?

Note: Enter your answer rounded
off to two decimal points. Do not enter $ or comma in the answer box. For
example, if your answer is $12.345 then enter as 12.35 in the answer box.

1 points

QUESTION 19

1. ABC’s stock has a required rate
of return of 18.4%, and it sells for $69 per share. The dividend is expected
to grow at a constant rate of 6.2% per year. What is the expected
year-end dividend, D1?

Note: Enter your answer rounded
off to two decimal points. Do not enter $ or comma in the answer box. For
example, if your answer is $12.345 then enter as 12.35 in the answer box.

1 points

QUESTION 20

1. ABC Enterprises’ stock is
currently selling for $54 per share. The dividend is projected
to increase at a constant rate of 3.1% per year. The required rate of
return on thestock is 12%. What is the stock’s
expected price 5 years from today (i.e. solve for P5)?

Note: Enter your answer rounded
off to two decimal points. Do not enter $ or comma in the answer box. For
example, if your answer is $12.345 then enter as 12.35 in the answer box.

1 points

QUESTION 21

1. ABC Enterprises’ stock is
expected to pay a dividend of $1.6 per share. The dividend is projected
to increase at a constant rate of 6.7% per year. The required rate of
return on thestock is 12.5%. What is the stock’s
expected price 3 years from today (i.e. solve for P3)?

Note: Enter your answer rounded
off to two decimal points. Do not enter $ or comma in the answer box. For
example, if your answer is $12.345 then enter as 12.35 in the answer box.

1 points

QUESTION 22

1. If D1 = $7.4, g (which isconstant) = 8.9%, and P0 = $76.8, what is the
stock’s expected total return for the coming year?

Note: Enter your answer rounded
off to two decimal points. Do not enter % in the answer box. For example,
if your answer is 0.12345 then enter as 12.35 in the answer box.

1 points

QUESTION 23

1. If D1 = $3.13, g (which
isconstant) = 2%, and P0 = $39.98, what is the
stock’s expected dividend yield for the coming year?

Note: Enter your answer rounded
off to two decimal points. Do not enter % in the answer box. For example,
if your answer is 0.12345 then enter as 12.35 in the answer box.

1 points

QUESTION 24

1. A stock just paid a dividend of
$3.2. The required rate of
return is 19.6%, and the constant growth rate is 3.9%. What is the current stock
price?

Note: Enter your answer rounded
off to two decimal points. Do not enter $ or comma in the answer box. For
example, if your answer is $12.345 then enter as 12.35 in the answer box.

1 points

QUESTION 25

1. The common stock of Connor, Inc.,
is selling for $40 a share and has a dividend yield of 2 percent. What is
the dividend amount?

Note: Enter your answer rounded
off to two decimal points. Do not enter $ or comma in the answer box. For
example, if your answer is $12.345 then enter as 12.35 in the answer box.

1 points

QUESTION 26

1. A stock just paid a dividend of
D0 = $2.4. The required rate of
return is rs = 9%, and the constant growth rate is g = 6.3%. What is the current stock
price?

Note: Enter your answer rounded
off to two decimal points. Do not enter $ or comma in the answer box. For
example, if your answer is $12.345 then enter as 12.35 in the answer box.

1 points

QUESTION 27

1. ABC is expected to pay a
dividend of $4 per share at the end of the year. Thestock sells for $158 per share,
and its required rate of return is 14.7%. The dividend is expected
to grow at some constant rate, g, forever. What is the growth rate
(i.e. solve for g)?

Note: Enter your answer rounded
off to two decimal points. Do not enter % in the answer box. For example,
if your answer is 0.12345 then enter as 12.35 in the answer box.

1 points

QUESTION 28

1. If last dividend =
$3.1, g = 3.4%, and P0 = $67.7, what is the
stock’s expected total return for the coming year?

Note: Enter your answer rounded
off to two decimal points. Do not enter % in the answer box. For example,
if your answer is 0.12345 then enter as 12.35 in the answer box.

1 points

QUESTION 29

1. ABC’s last dividend was $0.3. The dividend growth rate
is expected to be constant at 34% for 3 years, after which dividends are
expected to grow at a rate of 7% forever. If the firm’s required
return (rs) is 16%, what is its current
stock price (i.e. solve for Po)?

Note: Enter your answer rounded
off to two decimal points. Do not enter $ or comma in the answer box. For
example, if your answer is $12.345 then enter as 12.35 in the answer box.

1 points

QUESTION 30

1. A stock isexpected to pay a dividend of $1.8
at the end of the year. The required rate of return is rs = 11.7%, and the expected constant growth rate is g = 6.9%. What is the stock’s current price?

Note: Enter your answer rounded
off to two decimal points. Do not enter $ or comma in the answer box. For
example, if your answer is $12.345 then enter as 12.35 in the answer box.

1 points

QUESTION 31

1. ABC just paid a dividend
of D0 = $3.1. Analysts expect the
company’s dividend to grow by 33% this year, by 25% in Year 2, and at a
constant rate of 5% in Year 3 and thereafter. The required return on
this stock is 17%. What is the best estimate of the stock’s current market
value?

Note: Enter your answer rounded
off to two decimal points. Do not enter $ or comma in the answer box. For
example, if your answer is $12.345 then enter as 12.35 in the answer box.

1 points

QUESTION 32

1. ABC’s last dividend paid was
$1.1, its required return is 12.4%, its growth rate is 3.6%, and
its growth rate is expected to be constant in the future. What is Sorenson’s expected stock price in 7 years, i.e.,
what is P7?

Note: Enter your answer rounded
off to two decimal points. Do not enter $ or comma in the answer box. For
example, if your answer is $12.345 then enter as 12.35 in the answer box.

1 points

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Accounting Question

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Exercise 17-1

Wilkins Inc. has two types of handbags: standard and custom. The controller has decided to use a plantwide overhead rate based on direct labor costs. The president has heard of activity-based costing and wants to see how the results would differ if this system were used. Two activity cost pools were developed: machining and machine setup. Presented below is information related to the company’s operations.

Standard Custom
Direct labor costs $58,600 $107,000
Machine hours 1,480 1,130
Setup hours 110 430

Total estimated overhead costs are $301,600. Overhead cost allocated to the machining activity cost pool is $199,100, and $102,500 is allocated to the machine setup activity cost pool.

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(a)

Compute the overhead rate using the traditional (plantwide) approach. (Round answers to 2 decimal places, e.g. 12.25%.)

Predetermined overhead rate .wiley.com/edugen/art2/common/pixel.gif”> % of direct labor cost

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Accounting Question

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.wiley.com/edugen/art2/common/pixel.gif”>

Exercise 16-3

The ledger of Custer Company has the following work in process account.

Work in Process—Painting
5/1 Balance 3,960 5/31 Transferred out ?
5/31 Materials 6,110
5/31 Labor 4,530
5/31 Overhead 2,260
5/31 Balance ?

Production records show that there were 540 units in the beginning inventory, 30% complete, 1,540 units started, and 1,460 units transferred out. The beginning work in process had materials cost of $2,260 and conversion costs of $1,700. The units in ending inventory were 40% complete. Materials are entered at the beginning of the painting process.

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(a), (b) and (c)

(a) How many units are in process at May 31?

Work in process, May 31 .wiley.com/edugen/art2/common/pixel.gif”> units

(b) What is the unit materials cost for May? (Round unit costs to 2 decimal places, e.g. 2.25.)

The unit materials cost for May $.wiley.com/edugen/art2/common/pixel.gif”>

(c) What is the unit conversion cost for May? (Round unit costs to 2 decimal places, e.g. 2.25.)

The unit conversion cost for May $.wiley.com/edugen/art2/common/pixel.gif”>

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Accounting Question

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1 Rebecca has developed a financial retirement
strategy. Her strategy is to invest in
somewhat risky stocks for 15 years and then move everything to low risk bonds
for the retirement years as described below.
She presently has $250,000 in a retirement account that will be
invested in a stock fund that has historically earned 12% annually (EAR) with
no dividends. The plan is to add an
additional $25,000 to the fund at the beginning of each of the upcoming 15
years.
When she retires, she will reinvest the stock fund in a tax-free
municipal bonds and live on the coupons only that have a coupon rate of 2.5%
paid semi-annually. (the bonds will
be donated to charity upon her death).
How much will She receive semi-annually during retirement?
2 Belinda is starting
a company with an investment of
$500,000. She expects sales to grow
arithmetically by $100,000 a year for five years, with sales in year 1 being
$100,000, year 2 $200,000, etc.. Then for years 6-10 sales are forecast to
grow geometrically at a rate of 30% per year (year 6 sales grow 30% over year
5, year 7 30% over year 6, etc.)
At the end of each year, for years 1-10, Kay expects profits to
be al least 10% of the sales each year
and she will invest 10% of profits in a fund that earns 6% APR compounded
monthly.
a What will be the value
of the invested funds in year 10?
b Did the 10 years of
profits cover her initial investment?
3 Jim won $250,000 in a lottery that he wantsg to
invest. He narrowed
his search to three funds that each have different stated rates. How much will Jim accumulate in 30 years
for each of the three investment alternatives?
a 6.15% APR with monthly
compounding
b 0.50% monthly PIR
c 6.25% EAR

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accounting question!!!!

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Instructions:

Answer both Q1 and Q2

Question 1

Toni had worked as an apprentice baker in a large bakery that supplied different types of bread – from the standard white loaf to the speciality bread such as rye, gluten-free and organic. At the end of her training, she decided to start a small business specialising in producing cakes – in particular, cakes with ornate decorations made from icing sugar – and Danish pastries because she did not want to compete with the large bakeries for the “bread market”. As she was close to office buildings, she decided to try and increase her daily cash-flow by selling “fresh-cut” sandwiches.

Having spent most of her savings on purchasing equipment and supplies, renovating shop premises, and employing two shop assistants, she did not want to spend

money for an accountant to set up an accounting system. She wondered whether she should base her cost-management system on the system adopted in the large bakery.

As an apprentice, she had not been involved in the management aspects of operating a bakery, and she did not know what sort of information she would need to ensure that she did not lose her investment in her business. She was certain that there was a ready and reasonably large market for her bakery products. She felt

that all she needed was a cash-statement each week to show her what her receipts and payments were, and an annual set of accounts to make sure that she was operating at a profit. To ensure that she recovered her costs, she intended to follow the product costing strategy used by the large bakery that she was an apprentice in.

The large bakery produced a variety of bread using highly automated processes. In ascertaining the cost of its different types of bread, the large bakery treated flour as a direct cost. All other costs were treated as indirect costs, and were allocated. It was a simple system that Toni thought she could emulate. However, the large bakery did not produce cakes and pastries. Cakes and pastries require highly specialised

labour skills because the processes may not be easily standardised and automated.

Required:

Toni is relying on weekly cash flow and annual financial accounts to ensure that she remains in business in the long-term. She is also attempting to ensure that her pricing and cost-management strategies are appropriate by adopting the cost management system used in the large bakery. Do you agree with Toni’s approach? Support your opinion by addressing the following issues:

a) How does one ensure that a cost-management system provides relevant and useful information?

(5 marks).

b) Toni is relying on financial feedback, and the product costing method adopted by the large bakery. What are the strengths and weaknesses of these approaches?

(10 marks).

c) Outline any changes you would recommend that would help Toni to manage her business. Explain how your changes would address the weaknesses that you have identified in Toni’s proposed system.

(5 marks).

When answering Question 1, please maintain the 3 parts (a to c above). The word length: the answer to each part should address the question for the marks awarded to each part.

[Total: 20 marks]

Question 2

Zubick Corporation produces and supplies 2 types of component parts to industrial equipment manufacturers. These parts are known as X123 and R907.

There are 2 departments in the factory: the machining and assembly departments. The machining department has highly automated operations, while assembly has labour-intensive operations.

Table 1: Annual production data by product

Product X123

Product R907

Units produced

1,000

2,000

Total directlabour hours

(DLH) consumedper unit

5DLH

15DLH

Totalmachinehours(MH)

consumedper unit

15MH

5MH

The overhead cost incurred in the Machining department was $1,300,000, while the overhead cost in the Assembly department was $350,000.

Table 2: Annual overhead costs and production activity by department

Machining dept

Assemblydept

Total

Overheadcost

$1,300,000

$350,000

$1,650,000

Directlabourhours

(DLH) consumed per dept

5,000DLH

30,000DLH

35,000DLH

Machinehours

(MH) consumed per dept

23,000MH

2,000MH

25,000MH

The manager, Rex, decided to allocate costs to the 2 products in the following manner: he divided the total overhead costs of $1,650,000 by the total number of labour hours utilised in the factory (ie (1000 x5) plus (2000 x 15) = 35,000 DLH).

Therefore his overhead rate was $1,650,000/35,000 = $47.14 per DLH.

The overhead allocated to each product using Rex’s rate was as follows:

Product X123 = 5 DLH x$47.14 = $235.70

Product R907 = 15 DLH x $47.14 = $707.10

But Rex was losing sales of product R907 to his competitor who was able to sell a similar product at a lower price, and recover all costs of production.

Additional information:

Tables 3 and 4 show how much direct labour and machine time is consumed by each product in each production department.

Table 3: Machine hours (MH) consumed by each product in production departments.

Machining dept

Assemblydept

Totalperunit of

product

Per unit of product

X123

14.5 MH

0.5MH

15MH perunit of

X123

Per unit of product

R907

4.25 MH

0.75 MH

5MH per unitof

R907

Table 4: Direct labour hours (DLH) consumed by each product in production departments.

Machining dept

Assemblydept

Totalperunit of product

Per unit of product

X123

2DLH

3DLH

5DLH per unit of

productX123

Per unit of product

R907

1.5DLH

13.5DLH

15DLHper unitof

productR907

Required:

i) Do you agree or disagree with Rex’s overhead allocation method? Explain. You should draw on information provided in Tables 1 to 4 to help explain and support your answer.

(5 marks).

ii) How would you improve it? Calculate alternative rates that you would use and explain why you think it would help Rex. You should draw on information provided in Tables 1 to 4 to support your recommendation.

(15 marks). [Total: 20 marks]

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Accounting question

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Looking forward to next year, if Chester’s current cash balance is $19,378 (000) and cash flows from operations next period are unchanged from this period and Chester takes ONLY the following actions relating to cash flows from investing and financing activities:

Issues 100 (000) shares of stock at the current stock price
Issues $200 (000) of long-term debt
Pays $40 (000) in dividends

Which of the following activities will expose Chester to the most risk of needing an emergency loan?
Select: 1
Purchases assets at a cost of $15,000 (000)
Sells $5,000 (000) of their Long-term assets
Retires $20,000 (000) in long-term debt
Liquidates the entire inventory
A productivity index of 110% means that a company’s labor costs would have been 10% higher if it had not made production improvements. Assume that Digby had a productivity index of 112% and that Baldwin had a productivity index of 103%. Now refer to the Income Statements in the Annual Report for Digby and Baldwin. Using the labor costs shown in the Income Statements, how much more did Digby save in direct labor costs compared to Baldwin by having a higher productivity index?
Select: 1
$3,499
$2,863
$3,340
$3,181
Investing $2,000,000 in TQM’s Channel Support Systems initiative will at a minimum increase demand for your products 3.0% in this and in all future rounds. (Refer to the TQM Initiative worksheet in the CompXM Decisions menu.) Looking at the Round 0 Inquirer for Andrews, last year’s sales were $163,290,917. Assuming similar sales next year, the 3.0% increase in demand will provide $4,898,727 of additional revenue. With the overall contribution margin of 34.1%, after direct costs this revenue will add $1,670,466 to the bottom line. For simplicity, assume that the demand increase and margins will remain at last year’s levels. How long will it take to achieve payback on the initial $2,000,000 TQM investment, rounded to the nearest month?
Select: 1
14 months
TQM investment will not have a significant financial impact
5 months
10 months
From a marginal analysis perspective, what is the inventory carry cost for Andrews if the company carries one additional unit of Ate in inventory at the end?
Select: 1
$3.17
$13.57
$6.34
$1.63
In three years, assuming the competitive environment remains unchanged, how many units of Bam will Baldwin be selling in the Nano market segment?
Select: 1
464
687
603
764
Assuming no direct factory overhead costs (i.e., inventory carry costs) and $3 million dollars in combined promotion and sales budget, the Bell product manager wishes to achieve a product contribution margin of 35%. Given their product currently is priced at $35.00, what would they need to limit the material and labor costs to?
Select: 1
$22.75
$21.00
$24.50
$23.00
Which description best fits Chester in your industry? For clarity:

– A differentiator competes through good designs, high awareness, and easy accessibility.
– A cost leader competes on price by reducing costs and passing the savings to customers.
– A broad player competes in all parts of the market.
– A niche player competes in selected parts of the market.

Which of these four statements best describes this competitor?
Select: 1
Chester is a broad cost leader
Chester is a niche cost leader
Chester is a niche differentiator
Chester is a broad differentiator
Chester’s Elite product Creak has an awareness of 72%. Chester’s Creak product manager for the Elite segment is determined to have more awareness for Creak than Andrews’ Elite product Attic. She knows that the first $1M in promotion generates 22% new awareness, the second million adds 23% more and the third million adds another 5%. She also knows one-third of Creak’s existing awareness is lost every year. Assuming that Attic’s awareness stays the same next year (77%), out of the promotion budgets below, what is the minimum Chester’s Elite product manager should spend in promotion to earn more awareness than Andrews’ Attic product?
Select: 1
2M
Nothing
1M
3M
Select all of the following statements that are true four years from now, in the year 2016.
Select: 2
The Nano segment will demand 5,405 thousand units
The Thrift segment will demand 7,744 thousand units
The Core segment will demand 9,774 thousand units
The Elite segment will demand 5,871 thousand units

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Accounting Question

$5.00

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Description

Attached is the question. Please provide a detailed answer.

The customer
service department of Grand Lakes Technologies asked the publications
department to prepare a brochure for its training program. The publications
department delivered the brochures and charged the customer service department
a rate that was 25% higher than could be obtained from an outside printing
company. The policy of the company
required the customer service department to use the internal publications group
for brochures. The publications department claimed that it had a drop in demand
for its services during the fiscal year, so it had to charge higher prices in
order to recover its pay-roll and fixed costs.

Should the cost of
the brochure be transferred to the customer service department in order to hold
the department head accountable for the cost of the brochure? What changes in
policy would you recommend?

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Accounting question

$11.00

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Description

Question
2

Trapp Co. was organized
on August 1 of the current year. Projected sales for the next three months are
as follows:

August

$100,000

September

185,000

October

225,000

The company expects to sell 40% of its merchandise for cash. Of the sales on
account, one third are expected to be collected in the month of the sale and
the remainder in the following month.

Prepare a schedule indicating cash
collections of accounts receivable for August, September, and October.

Question
4

The Finishing Department of Paragon
Manufacturing Co. prepared the following factory overhead cost budget for
October of the current year, during which it expected to operate at a 100%
capacity of 10,000 machine hours:

Variable cost:

Indirect factory wages

$18,000

Power and light

12,000

Indirect materials

4,000

Total variable cost

$34,000

Fixed cost:

Supervisory salaries

$12,000

Depreciation of plant and

equipment

8,800

Insurance and property taxes

3,200

Total fixed cost

24,000

Total factory overhead

$58,000

During October, the plant was operated for 9,000 machine hours and the factory
overhead costs incurred were as follows: indirect factory wages, $16,400; power
and light, $10,000; indirect materials, $3,000; supervisory salaries, $12,000;
depreciation of plant and equipment, $8,800; insurance and property taxes,
$3,200.

Prepare a factory overhead cost
variance report for October. (The budgeted amounts for actual amount produced
should be based on 9,000 machine hours.)

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Accounting question

$19.00

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Description

1. A low gross profit percentage means that
A. general and administrative expenses are very high.

B. selling expenses are very low.

C. the cost of goods sold was relatively low.

D. the cost of goods sold was relatively high.

2. Casey Company’s beginning inventory and purchases during the fiscal year ended December 31, 2012, were as follows: (Note: The company uses a perpetual system of inventory.)
Units Unit Price Total Cost
January 1—Beginning Inventory 20 $12 $240
March 8—Sold 14
April 2—Purchase 30 $13 $390
June 5—Sold 25
Aug 6—Purchase 25 $14 $350
Total Cost of Inventory $980
Ending inventory is 14 units.

What is the cost of goods sold for Casey Company for 2012 using LIFO?
A. $264

B. $801

C. $308

D. $784

3. Isaiah Sporting Goods uses the perpetual average cost method of determining inventory costs. Below is the inventory record for Product C124:
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

What is the average cost per unit after the receipt of the May 17 inventory (rounded to the nearest cent)?
A. $6.55

B. $7.40

C. $6.00

D. $6.63

4. Goods available for sale are $350,000; beginning inventory is $24,000; ending inventory is $32,000; and cost of goods sold is $275,000. The inventory turnover is
A. 9.82.

B. 8.59.

C. 11.46.

D. 12.50.

5. Isaiah Sporting Goods uses the perpetual average cost method of determining inventory costs. Below is the inventory record for Product C124:
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

What is the average cost per unit after the receipt of the June 21 inventory?
A. $6.61

B. $6.62

C. $6.67

D. $6.72

6. Which of the following is an incorrect statement if ending inventory is overstated?
A. Incometax is overstated.

B. Net income is overstated.

C. Cost of goods sold is overstated.
D. Gross profit is overstated.

7. Casey Company’s beginning inventory and purchases during the fiscal year ended December 31, 2012, were as follows: (Note: The company uses a perpetual system of inventory.)
Units Unit Price Total Cost
January 1—Beginning Inventory 20 $12 $240
March 8—Sold 14
April 2—Purchase 30 $13 $390
June 5—Sold 25
Aug 6—Purchase 25 $14 $350
Total Cost of Inventory $980
Ending inventory is 14 units.

What is the ending inventory of Casey Company for 2012 using FIFO?
A. $175

B. $196

C. $182

D. $168

8. New technology, like the latest cell phones and HDTV, would probably be costed using the
A. moving-average method of inventory costing.

B. FIFO method of inventory costing.

C. LIFO method of inventory costing.

D. specific-identification method of inventory costing
.

9. Which of the following may not limit the effectiveness of internal control systems in an organization?
A. Duties not segregated

B. Poorly designed controls

C. Costs not worth benefits

D. Understanding of policies and procedures

10. A company’s gross profit percentage decreases from 58% to 51%. What does this mean?
A. We can’t determine anything definite from the information given.
B. This means that net income will be lower.

C. This means that there will be a net loss.

D. This means that net income will be higher
.

11. Goods available for sale are $118,000; beginning inventory is $37,000; ending inventory is $42,000; and cost of goods sold is $77,000. The inventory turnover is
A. 2.99.

B. 1.95.

C. 1.83.

D. 1.53
.

12. In a balance sheet prepared in report form, liabilities must be listed after
A. assets with long-term liabilities listed first.
B. assets with current liabilities listed first.

C. stockholders’ equity.

D. assets in alphabetical order.

13. Physical inventory counts must be done
A. regardless of method inventory.

B. when using bar-code scan technology.

C. when using the periodic method of inventory.

D. when using the perpetual method of inventory.

14. Nick Company reports the following inventory information:
Inventory Number Inventory Quantity Unit Cost Unit Market Value
APD 4837 440 $51.29 $51.48
CPZ 2837 290 $76.59 $77.02
IXL 9291 310 $42.34 $42.47
EOD 1717 200 $22.19 $21.75
DKS 3088 180 $31.22 $31.17

What is the total value of the merchandise under LCM (lower-of-cost or market)?
A. $67,864.70

B. $68,210.30

C. $67,961.70

D. $68,113.30

15. 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.

16. When a company repays the seller for shipping costs on an FOB shipping transaction, which of the following is true?

A. The shipping costs don’t affect the invoice cost.

B. A purchase discount can still be taken net of the prepaid shipping charges.
C. A purchase discount can still be taken on the gross amount of the invoice.
D. A purchase discount cannot be taken when shipping charges are prepaid.

17. Besides using an overstatement of earnings to inflate a company’s stock price, overstating earnings may also be used to
A. avoid paying dividends to stockholders.

B. ensure larger bonuses to upper management at year-end.

C. avoid paying raises to employees.

D. deflate the amount of taxes the corporation pays
.

18. A company’s current ratio increased from 1.23 to 1.45. What does this mean?
A. This means that current assets increased and current liabilities increased.

B. This means that current assets decreased and current liabilities decreased.

C. This means that current assets increased and current liabilities decreased.

D. There isn’t enough information to explain the increase.

9. Which of the following is an incorrect statement if ending inventory is understated?
A. Gross profit is overstated.

B. Cost of goods sold is overstated.
C. Net income is understated.

D. Income tax is understated.

20. Meranda Corporation purchases $3,500 of inventory on account from Ashley Corporation. The journal entry to record this purchase for Meranda under a perpetual inventory system is
A. debit Inventory; credit Accounts Payable—Meranda.
B. debit Accounts Payable—Ashley; credit Inventory.

C. debit Inventory; credit Accounts Payable—Ashley.

D. debit Inventory; credit Cash.

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accounting question

$16.00

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Description

Vitalite, Inc., produces a number of products, including a body-wrap kit. Standard variable costs relating to a single kit are given below:
Standard Quantity
or Hours Standard Price
or Rate Standard
Cost
Direct materials ? $6 per yard $ ?
Direct labor ? ? ?
Variable manufacturing overhead ? $2 per direct
labor-hour ?

Total standard cost per kit $42

During August, 500 kits were manufactured and sold. Selected information relating to the month’s production is given below:

Materials Used Direct Labor Variable
Manufacturing
Overhead
Total standard cost* ? $8,000 $1,600
Actual costs incurred $10,000 ? $1,620
Materials price variance ?
Materials quantity variance $ 600 U
Labor rate variance ?
Labor efficiency variance ?
Variable overhead rate variance ?
Variable overhead efficiency variance ?
*For the month’s production.

The following additional information is available for August’s production of kits:

Actual direct labor-hours 900
Difference between standard and actual cost per kit produced during August $.14 U
Required:
1.

What was the total standard cost of the materials used during August? (Omit the “$” sign in your response.)

Standard cost $
2.

How many yards of material are required at standard per kit? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)

Number of yards yards per kit
3.

What was the materials price variance for August if there were no beginning or ending inventories of materials? (Input all amounts as positive values. Do not round intermediate calculations. Leave no cells blank – be certain to enter “0” wherever required. Indicate the effect of each variance by selecting “F” for favorable, “U” for unfavorable, and “None” for no effect (i.e., zero variance). Omit the “$” sign in your response.)

Material price variance $
4.

What is the standard direct labor rate per hour? (Omit the “$” sign in your response.)

Standard direct labor rate $ per DLH

5.

What was the labor rate variance for August? The labor efficiency variance? (Input all amounts as positive values. Do not round intermediate calculations. Leave no cells blank – be certain to enter “0” wherever required. Indicate the effect of each variance by selecting “F” for favorable, “U” for unfavorable, and “None” for no effect (i.e., zero variance). Omit the “$” sign in your response.)

Labor rate variance $
Labor efficiency variance $

6.

What was the variable overhead rate variance for August? The variable overhead efficiency variance? (Input all amounts as positive values. Do not round intermediate calculations. Leave no cells blank – be certain to enter “0” wherever required. Indicate the effect of each variance by selecting “F” for favorable, “U” for unfavorable, and “None” for no effect (i.e., zero variance). Omit the “$” sign in your response.)

Variable overhead rate variance $
Variable overhead efficiency variance $

7.

Complete the standard cost card for one kit shown at the beginning of the problem. (Do not round intermediate calculations. Round your answers to 2 decimal places. Omit the “$” sign in your response.)

Standard Quantity
or Hours Standard Price or Rate Standard Cost
Direct materials yards $6 per yard $
Direct labor hours $ per hour
Variable manufacturing overhead hours $2 per direct labor-hour

Total standard cost per kit $42

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accounting question

$11.00

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Description

A camera company produces and sells cameras, film, and other imaging products. A condensed 2000 income statement (in millions) includes the following:

Sales
20,991

Cost of goods sold
12,028

Gross margin
8,963

Other operating expenses
5,641

Operating income
$3,322

Assume that $3.6 million of the cost of goods sold is a fixed cost representing depreciation and other production costs that do not change with the volume of production. In addition, $5 million of the other operating expenses are fixed.
Compute the total contribution margin for 2010 and the contribution margin percentage. Explain why the contribution margin differs from the gross margin.
Suppose that sales for the camera company were predicted to increase by 10% in 2011 and that the cost behavior was expected to continue in 2011 as it did in 2010. Compute the predicted operating income for 2011. By what percentage did this predicted 2011 operating income exceed the 2010 operating income?
What assumptions were necessary to compute the predicted 2011 operating income in question 2?

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accounting question

$7.00

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Description

Use
the following to answer questions 7 – 10:

Shown below is
information relating to the stockholders’ equity of Surf Corporation as of
December 31, 2001:

8% cumulative
preferred stock, $100 par,

Callable at $106 $
200,000

Common stock, $10 par,
500,000 shares

Authorized, 80,000
shares issued and outstanding 800,000

Additional paid-in
capital: common stock 300,000

Retained earnings
(Deficit) (20,000)

Dividends in arrears
16,000

7. Refer to the above
data. How many shares of preferred stock are issued and outstanding?

Answer

A) 1,851 shares

B) 2,000 shares.

C) 20,000 shares.

D) Some other amount.

Question 8

8. Refer to the above
data. What was the original issue price per share of common stock?

Answer

A) $10.00 per share.

B) $12.50 per share.

C) $13.75 per share.

D) Some other amount.

Question 9

9. Refer to the above
data. Compute total paid-in capital.

Answer

A) $1,320,000.

B) $1,280,000.

C) $1,300,000.

D) Some other amount.

Question 10

10. Refer to the above
data. Total stockholders’ equity is:

Answer

A) $1,300,000.

B) $1,320,000.

C) $1,280,000.

D) Some other amount.

Question 11

11. Which of the
following individuals has the most power to influence corporate policy on a
long-term basis?
Answer

A) A shareholder
owning 60% of the outstanding common stock.

B) A shareholder
owning 80% of the outstanding preferred stock.

C) The treasurer of
the corporation.

D) The controller of
the corporation.

Question 12

12. The overall effect
of declaring and distributing a cash dividend includes each of the following
except:
Answer

A) Reducing total
assets.

B) Reducing
stockholders’ equity

C) Reducing the
balance of the Retained Earnings account

D) Reducing net income
for the period.

Question 13

13. The financial
statements of a corporation that failed during the current year to pay any
dividends on its cumulative preferred stock should:
Answer

A) Include the amount
of the omitted dividends among its current liabilities

B) Include a footnote
disclosing the amount of the dividends in arrears.

C) Show the amount of
the omitted dividends as a deduction from retained earnings.

D) List the omitted
dividends as a long-term liability.

Question 14

14. Which of the
following best describes the book value of a share of stock?
Answer

A) Net assets divided
by the number of shares outstanding.

B) The amount at which
the stock would sell on the market if sold by a willing and informed seller to
a willing and informed buyer.

C) Total assets of the
company, as reported in the accounting records, divided by the number of shares
of stock outstanding.

D) Total stockholders’
equity divided by the number of shares authorized

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Accounting question

$21.00

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Description

Emmet case question attached

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accounting question

$6.00

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Description

1. On January 3, 2011, Open, Inc. acquired land from Closed Company in a noncash transaction. Open, Inc. gave Closed Company 107,500 shares of its $1 par value common stock which currently trades on an organized exchange for $2.50 per share. The appraised value of the land is $245,000, and the land is recorded on Closed Company’s books at $197,500. Open, Inc. should record the land on its books at

Answer a. $268,750
b. $197,500
c. $107,500
d. $245,000

2. Vision, Inc. acquires a piece of land and a building by paying a lump sum. The controller of Vision, Inc. wants to “fudge” a little by allocating a disproportionately higher share of the purchase price to land. Which of the following is not among the reasons the controller would be suggesting this incorrect allocation of the purchase price?

Answer a. Higher income than if a correct allocation is made.
b. Reduced depreciation expense than if a correct allocation is made
c. Lower income taxes than if a correct allocation is made
d. Increased profit-sharing bonus than if a correct allocation is made.

3. RLM Corporation has a building it purchased in 2009 for $500,000. RLM depreciates this building straight-line over its estimated useful life of 10 years with no residual value. In late December 2011, the controller for RLM revised the building’s estimated useful life to a total of 18 years and estimated a $20,000 residual value at that time. How much depreciation should RLM record for the year ended December 31, 2011? (Round your intermediate calculations and final answer to the nearest dollar amount.)

a. $21,111
b. $25,000
c. $23,750
d. $50,000

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accounting question

$14.00

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Description

Sycamore Candy Company offers a CD single as a premium for every 5 candy bar wrappers presented by customers together with $2.70. The candy bars are sold by the company to distributors for 30 cents each. The purchase price of each CD to the company is $2.45; in addition, it costs 50 cents to mail each CD. The results of the premium plan for the years 2012 and 2013 are as follows. (All purchases and sales are for cash.)
2012 2013
CDs purchased 270,000 356,400
Candy bars sold 2,909,600 2,752,200
Wrappers redeemed 1,296,000 1,620,000
2012 wrappers expected to be redeemed in 2013 313,200
2013 wrappers expected to be redeemed in 2014 378,000

(a) Prepare the journal entries that should be made in 2012 and 2013 to record the transactions related to the premium plan of the Sycamore Candy Company. (If no entry is required, select “No Entry” for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
No. Account Titles and Explanation Debit Credit
2012
1.

(To record the pemium inventory.)
2.

(To record the sales.)
3.

(To record the expense associated with the sale.)
4.

(To record the premium liability.)
2013
5.

(To record the pemium inventory.)
6.

(To record the sales.)
7
(To record the expense associated with the sale.)
8.

(To record the premium liability.)

(b) Indicate the amounts for each accounts, and classifications of the items related to the premium plan that would appear on the balance sheet and the income statement at the end of 2012 and 2013.
Amount
Account 2012 2013 Classification
Inventory of Premiums $
$

Premiums Liability

Premium Expense

Presented below are three independent situations. Answer the question at the end of each situation.

1. During 2012, Maverick Inc. became involved in a tax dispute with the IRS. Maverick’s attorneys have indicated that they believe it is probable that Maverick will lose this dispute. They also believe that Maverick will have to pay the IRS between $800,000 and $1,400,000. After the 2012 financial statements were issued, the case was settled with the IRS for $1,200,000. What amount, if any, should be reported as a liability for this contingency as of December 31, 2012?

2. On October 1, 2012, Holmgren Chemical was identified as a potentially responsible party by the Environmental Protection Agency. Holmgren’s management along with its counsel have concluded that it is probable that Holmgren will be responsible for damages, and a reasonable estimate of these damages is $6,000,000. Holmgren’s insurance policy of $9,000,000 has a deductible clause of $500,000. How should Holmgren Chemical report this information in its financial statements at December 31, 2012?

3. Shinobi Inc. had a manufacturing plant in Darfur, which was destroyed in the civil war. It is not certain who will compensate Shinobi for this destruction, but Shinobi has been assured by governmental officials that it will receive a definite amount for this plant. The amount of the compensation will be less than the fair value of the plant but more than its book value. How should the contingency be reported in the financial statements of Shinobi Inc.?

On December 31, 2012, the American Bank enters into a debt restructuring agreement with Barkley Company, which is now experiencing financial trouble. The bank agrees to restructure a 13%, issued at par, $3,216,000 note receivable by the following modifications:
1. Reducing the principal obligation from $3,216,000 to $2,572,800.
2. Extending the maturity date from December 31, 2012, to January 1, 2016.
3. Reducing the interest rate from 13% to 10%.

Barkley pays interest at the end of each year. On January 1, 2016, Barkley Company pays $2,572,800 in cash to Firstar Bank.

(a) Will the gain recorded by Barkley be equal to the loss recorded by American Bank under the debt restructuring?
(b) Can Barkley Company record a gain under the term modification mentioned above?

(c) Assuming that the interest rate Barkley should use to compute interest expense in future periods is 1.4276%, prepare the interest payment schedule of the note for Barkley Company after the debt restructuring. (Round answers to 0 decimal places, e.g. $38,548.)
BARKLEY COMPANY
Interest Payment Schedule After Debt Restructuring
Effective-Interest Rate

Date
Cash
Paid
Interest
Expense Reduction
of Carrying
Amount Carrying
Amount of
Note
12/31/12 $
$
$
$

12/31/13

12/31/14

12/31/15

*
Total $
$
$

* Difference due to rounding

(d) Prepare the interest payment entry for Barkley Company on December 31, 2014. (Round answers to 0 decimal

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Accounting Question

$11.00

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Description

Question
1. Prepare a budget for this year for the Administrative Department
at Tom’s Toyota Company based on the following information:
Last Year Forecasting Assumption Budget for this Year

Salaries $60,000 2% increase ___________
Stationary $ 900 1% decrease ___________

Telephone $ 2,500 3% increase ___________
Electricity $ 1,200 2.5% increase ___________
Office Rent $10,000 2% increase ___________
Depreciation $ 4,000 no change ___________

Total: $78,600 ___________

Question 2. Define a “Static Budget.”

Question 3. Define a “Flexible Budget.”

Question 4. Define the term “Zero-based Budgeting.”

Question 5. Define “Period Budgets.”

Question 6. Define “Rolling Budgets.”

Question 7. Big Bob’s Discount Appliances expects sales of $5,000,
$5,000, and $10,000 during April, May, and June (big sale in
June). To build business, Big Bob lets all customers buy on credit,
and all do so. In the past, 50% of Big Bob’s sales have been
collected during the month of sale, 40% are collected the following month, and
10% the month after that. If this trend continues, what will be Big
Bob’s total cash collections in the month of June?

Question 8. Little Louie’s expects to have $100 in cash on hand at
the beginning of June, and the company’s target cash balance is
$100. Net cash flow for June is minus $300. Assuming that
Little Louie’s borrows to meet shortterm cash needs and pays back as soon as
surplus cash is available, what will be the company’s ending cash balance after
financing at the end of June?

Question 9. Ma & Pa Kettle’s Chili Company has begun selling a
new chili recipe and they want you to help them with next year’s budgeted
financial statements. Using the worksheet below, complete Ma &
Pa’s forecast and answer the questions which follow.
Assumptions:

To begin with, Ma & Pa are sure sales will grow 50% next
year. Assume that is true. Then assume that COGS, Current
Assets, and Current Liabilities all vary directly with Sales (that means if
sales grows a certain percentage, then the account in question will grow by
that same percentage). Assume that fixed expenses will remain
unchanged and that $1,000 worth of new Fixed Assets will be obtained next
year. Lastly, the current dividend policy will be continued next
year.

Ma & Pa Kettle Chili Company, Inc.

Financial Forecast

Estimated
This year for next year

Sales $10,000 ________
COGS 4,000 ________
Gross Profit 6,000 ________
Fixed Expenses 3,000 ________
BeforeTax Profit 3,000 ________
Tax @ 33.3333% 1,000 ________
Net Profit $2,000 ________

Dividends $0 ________

Current Assets $25,000 ________
Net Fixed Assets 15,000 ________
Total Assets $40,000 ________

Current Liabilities $17,000 ________

Longterm debt 3,000 ________
Common Stock 7,000 ________
Retained Earnings 13,000 ________
Total Liabs & Eq $40,000
________

Amount need to balance the balance sheet ________
(Projected total assets minus projected
total liabilities & equity *)

* If this number is positive it means Ma & Pa need additional external
funding to finance their projected asset growth. If this number is
negative it means Ma & Pa have programmed too much financing for the amount

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accounting question

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Description

Much of managerial accounting information is based on:
A. a cost-benefit theme.
B. profit
maximization.
C. cost minimization.
D. the
generation of external information.
E. effectiveness
but not efficiency.

2.
Managerial accounting has changed in recent years because of:
A. a
growing service economy in the United States.
B. the
growing popularity of cross-functional teams.
C. an
increase in global competition.
D. time-based
competition.
E. All of these factors.

3. The value chain of a manufacturer would tend to
include activities related to:
A. manufacturing.
B. research
and development.
C. product
design.
D. marketing.
E. All of these.

4. The accounting
records of Bronco Company revealed the following information:

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Bronco’s cost of goods manufactured is:
A. $519,000.
B. $522,000.
C. $568,000.
D. $571,000.
E. some
other amount.

5. Carolina
Plating Company reported a cost of goods manufactured of $520,000, with the
firm’s year-end balance sheet revealing work in process and finished goods of
$70,000 and $134,000, respectively. If supplemental information disclosed raw
materials used in production of $80,000, direct labor of $140,000, and
manufacturing overhead of $240,000, the company’s beginning work in process
must have been:
A. $130,000.
B. $10,000.
C. $66,000.
D. $390,000.
E. some
other amount.

6.
When 5,000 units are produced variable costs are $35 per unit and total costs
are $200,000. What are the total costs when 8,000 units are produced?
A. $200,000.
B. $305,000.
C. $240,000.
D. Some
other amount.
E. Total
costs cannot be calculated based on the information presented.

Wee Care is a nursery
school for pre-kindergarten children. The school has determined that the
following biweekly revenues and costs occur at different levels of enrollment:

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7.
The marginal cost when the twenty-first student enrolls in the school is:
A. $55.
B. $155.
C. $300.
D. $3,045.
E. $3,255.

8.
Throughout the accounting period, the credit side of the Manufacturing Overhead
account is used to accumulate:
A. actual
manufacturing overhead costs.
B. overhead applied to
Work-in-Process Inventory.
C. overapplied
overhead.
D. underapplied
overhead.
E. predetermined
overhead.

9. Strong
Company applies overhead based on machine hours. At the beginning of 20×1, the
company estimated that manufacturing overhead would be $500,000, and machine
hours would total 20,000. By 20×1 year-end, actual overhead totaled $525,000,
and actual machine hours were 25,000. On the basis of this information, the
20×1 predetermined overhead rate was:
A. $0.04
per machine hour.
B. $0.05
per machine hour.
C. $20
per machine hour.
D. $21
per machine hour.
E. $25 per machine hour

10. Armada Company
applies manufacturing overhead by using a predetermined rate of 150% of direct
labor cost. The data that follow pertain to job no. 831:

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If Armada adds a 30% markup on total cost to generate a profit, which of the
following choices depicts a portion of the accounting needed to record the
credit sale of job no. 831?

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A. Choice
A
B. Choice B
C. Choice
C
D. Choice
D
E. Choice
E

11. Which
of the following is the proper sequence of events in an activity-based costing
system?
A. Identification
of cost drivers, identification of cost pools, calculation of pool rates,
assignment of cost to products.
B. Identification of cost
pools, identification of cost drivers, calculation of pool rates, assignment of
cost to products.
C. Assignment
of cost to products, identification of cost pools, identification of cost
drivers, calculation of pool rates.
D. Calculation
of pool rates, identification of cost drivers, identification of cost pools,
assignment of cost to products.
E. Some
other sequence of the four activities listed above.

12. Which of the following choices correctly depicts
the proper classification of direct materials used and management salaries?

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A. Choice
A
B. Choice
B
C. Choice
C
D. Choice D
E. Choice
E

St. James, Inc.,
currently uses traditional costing procedures, applying $800,000 of overhead to
products Beta and Zeta on the basis of direct labor hours. The company is
considering a shift to activity-based costing and the creation of individual
cost pools that will use direct labor hours (DLH), production setups (SU), and
number of parts components (PC) as cost drivers. Data on the cost pools and
respective driver volumes follow.

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13. The overhead cost allocated to Beta by using
traditional costing procedures would be:
A. $240,000.
B. $356,000.
C. $444,000.
D. $560,000.
E. some
other amount.

14. The overhead cost allocated to Zeta by using
traditional costing procedures would be:
A. $240,000.
B. $356,000.
C. $444,000.
D. $560,000.
E. some
other amount

15. The overhead cost allocated to Beta by using
activity-based costing procedures would be:
A. $240,000.
B. $356,000.
C. $444,000.
D. $560,000.
E. some
other amount.

16. The
overhead cost allocated to Zeta by using activity-based costing procedures
would be:
A. $240,000.
B. $356,000.
C. $444,000.
D. $560,000.
E. some
other amount.

17. A
company observed a decrease in the cost per unit. All other things being equal,
which of the following is probably true?
A. The
company is studying a variable cost, and total volume has increased.
B. The
company is studying a variable cost, and total volume has decreased.
C. The company is studying
a fixed cost, and total volume has increased.
D. The
company is studying a fixed cost, and total volume has decreased.
E. The
company is studying a fixed cost, and total volume has remained constant.

Swanson and
Associates presently leases a copy machine under an agreement that calls for a
fixed fee each month and a charge for each copy made. Swanson made 7,000 copies
and paid a total of $360 in March; in May, the firm paid $280 for 5,000 copies.
The company uses the high-low method to analyze costs.

18. Swanson’s
variable cost per copy is:
A. $0.040.
B. $0.051.
C. $0.053.
D. $0.056.
E. an amount
other than those given above.

19. Swanson’s
monthly fixed fee is:
A. $80.
B. $102.
C. $106.
D. $112.
E. an
amount other than those given above.

20. Grime-X
is studying the profitability of a change in operation and has gathered the
following information:

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Should
Grime-X make the change?
A. Yes,
the company will be better off by $6,000.
B. No,
because sales will drop by 3,000 units.
C. No, because the company
will be worse off by $4,000.
D. No,
because the company will be worse off by $22,000.
E. It is
impossible to judge because additional information is needed.

21. Yellow
Dot, Inc. sells a single product for $10. Variable costs are $4 per unit and
fixed costs total $120,000 at a volume level of 10,000 units. What dollar sales
level would Yellow Dot have to achieve to earn a target profit of
$240,000?
A. $400,000.
B. $500,000.
C. $600,000.
D. $750,000.
E. $900,000.

22. Brooklyn
sells a single product to wholesalers. The company’s budget for the upcoming
year revealed anticipated unit sales of 31,600, a selling price of $20,
variable cost per unit of $8, and total fixed costs of $360,000. If Brooklyn’s
unit sales are 200 units less than anticipated, its breakeven point will:
A. increase
by $12 per unit sold.
B. decrease
by $12 per unit sold.
C. increase
by $8 per unit sold.
D. decrease
by $8 per unit sold.
E. not change.

23. S’Round
Sound, Inc. reported the following results from the sale of 24,000 units of
IT-54:

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Rhythm Company has offered to purchase 3,000 IT-54s at $16 each. Sound has available
capacity, and the president is in favor of accepting the order. She feels it
would be profitable because no variable selling costs will be incurred. The
plant manager is opposed because the “full cost” of production is
$17. Which of the following correctly notes the change in income if the special
order is accepted?
A. $3,000
decrease.
B. $3,000
increase.
C. $12,000
decrease.
D. $12,000 increase.
E. None
of these.

24. Song,
a division of Carolina Enterprises, currently makes 100,000 units of a product
that has created a number of manufacturing problems. Song’s costs follow.

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If Song were to discontinue production, fixed manufacturing costs would be
reduced by 70%. The relevant cost of deciding whether the division should
purchase the product from an outside supplier is:
A. $540,000.
B. $594,000.
C. $666,000.
D. $720,000.
E. $726,000.

25. When
deciding whether to sell a product at the split-off point or process it
further, joint costs are not usually relevant because:
A. such
amounts do not help to increase sales revenue.
B. such
amounts only slightly increase a company’s sales margin.
C. such amounts are sunk
and do not change with the decision.
D. the
sales revenue does not decrease to the extent that it should, if compared with
separable processing.
E. such
amounts reflect opportunity costs.

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accounting question

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Category: Tags: , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,

Description

Dale Company, which applies overhead at the rate of 190% of direct labor cost, began work on job no. 101 during June. The job was completed in July and sold during August, having accumulated direct material and labor charges of $27,000 and $15,000, respectively. On the basis of this information, the total overhead applied to job no. 101 amounted to: Ch3 Q23

a. $70,500.

b. $51,300.

c. $79,800.

d. $28,500.

e. $0.

Question 3
3 points Save

Maher, Inc., applies manufacturing overhead at the rate of $60 per machine hour. Budgeted machine hours for the current period were anticipated to be 80,000; however, a lengthy strike resulted in actual machine hours being worked of only 65,000. Budgeted and actual manufacturing overhead figures for the year were $4,800,000 and $4,180,000, respectively. On the basis of this information, the company’s year-end overhead was:

a. underapplied by $900,000.

b. underapplied by $620,000.

c. underapplied by $280,000.

d. overapplied by $280,000.

e. overapplied by $620,000.

Question 4 3 points (Extra credit) Save

Copley uses a weighted-average process-costing system. All materials are added at the beginning of the process; conversion costs are incurred evenly throughout production. The company finished 40,000 units during the period and had 15,000 units in progress at year-end, the latter at the 40% stage of completion. Total material costs amounted to $220,000; conversion costs were $414,000.

The cost of the ending work in process is:

a. $54,000.

b. $78,000.

c. $114,000.

d. $195,000.

e. some other amount.

3 points Save

Ohio, Inc., which uses a process-cost accounting system, began operations on January 1 of the current year. The company incurs conversion cost evenly throughout manufacturing. If Ohio started work on 3,000 units during the period and these units were 70% of the way through manufacturing, it would be correct to say that the company has:

a. 900 equivalent units of production.

b. 900 in-process units.

c. 2,100 completed units.

d. 3,000 physical units in production.

e. 3,000 equivalent units of production.

3 points Save

Barney Company applies manufacturing overhead by using a predetermined rate of 200% of direct labor cost. The data that follow pertain to job no. 764:

Direct Material Cost= $55,000
Direct Labor Cost= 40,000

If Barney adds a 40% markup on total cost to generate a profit, which of the following choices depicts a portion of the accounting needed to record the sale of job no. 764?

Account Debited Amount
A) Cost of Goods Sold 175,000
B) Cost of Goods Sold 245,000
C) Finished Goods Inventory 175,000
D) Finished Goods Inventory 245,000
E) Sales Revenue 245,000

a. Choice A

b. Choice B

c. Choice C

d. Choice D

e. Choice E

3 points Save

The accounting records of Brownwood Company revealed the following information:

Work-in-process inventory, Jan 1 58,000
Work-in-process inventory, Dec 31 49,000
Finished Goods inventory Jan 1 125,000
Finished Goods inventory Dec 31 158,000
Cost of Goods Manufactured 754,000

Brownwood’s cost of goods sold is:

a. $721,000.

b. $730,000.

c. $778,000.

d. $787,000.

e. some other amount.

3 points Save

Job no. C12 was completed in November at a cost of $18,500, subdivided as follows: direct material, $3,500; direct labor, $6,000; and manufacturing overhead, $9,000. The journal entry to record this information is:

a. Cost of Goods Sold 18,500
Finished Goods Inventory 18,500

b. Finished Goods Inventory 18,500
Cost of Goods Sold 18,500

c. Work-in-process Inventory 18,500
Raw-Material Inventory 3,500
Wages Payable 6,000
Manufacturing Overhead 9,000

d. Work-in-process 18,500
Finished Goods Inventory 18,500

e.

3 points Save

Chen Corporation, a new company, adds material at the beginning of its production process; conversion cost, in contrast, is incurred evenly throughout manufacturing. During May, the firm completed 15,000 units and had ending work in process of 2,000 units, 60% complete. Equivalent-unit costs were: materials, $15; conversion, $22.

The cost of Chen’s completed production is:

a. $225,000.

b. $330,000.

c. $333,000.

d. $555,000.

e. some other amount.

3 points Save

Oregon Manufacturing incurred $106,000 of direct labor and $11,000 of indirect labor. The proper journal entry to record these events would include a debit to Work in Process for:

a. $0 because Work in Process is not affected.

b. $0 because Work in Process should be credited.

c. $11,000.

d. $106,000.

e. $117,000.

3 points Save

Hampton Textile Co., manufactures a variety of fabrics. All materials are introduced at the beginning of production; conversion cost is incurred evenly through manufacturing. The Weaving Department had 2,000 units of work in process on April 1 that were 30% complete as to conversion costs. During April, 9,000 units were completed and on April 30, 4,000 units remained in production, 40% complete with respect to conversion costs.

The equivalent units of direct materials for April total:

a. 15,000.

b. 9,000.

c. 13,600.

d. 13,000.

e. 14,400.

3 points Save

Lexton Corporation had 8,200 units of work in process on November 1. During November, 26,800 units were started and as of November 30, 7,900 units remained in production. How many units were completed during November?

a. 16,100.

b. 26,500.

c. 27,100.

d. 42,800.

e. None of these.

3 points Save

An employee accidentally overstated the year’s advertising expense by $50,000. Which of the following correctly depicts the effect of this error?

a. Cost of goods manufactured will be overstated by $50,000.

b. Cost of goods sold will be overstated by $50,000.

c. Both cost of goods manufactured and cost of goods sold will be overstated by $50,000.

d. Cost of goods sold will be overstated by $50,000, and cost of goods manufactured will be understated by $50,000.

e. None of these.

3 points Save

Norwood Appliance produces washers and dryers in an assembly-line process. Labor costs incurred during a recent period were: corporate executives, $100,000; assembly-line workers, $90,000; security guards, $18,000; and plant supervisor, $30,000. The total of Norwood’s direct labor cost was:

a. $90,000.

b. $80,000.

c. $120,000.

d. $138,000.

e. $238,000.

3 points Save

The accounting records of Hill Corporation revealed the following selected costs: Sales commissions, $50,000; plant supervision, $94,000; and administrative expenses, $185,000. Hill’s period costs total:

a. $50,000.

b. $329,000.

c. $235,000.

d. $225,000.

e. $94,000.

3 points Save

Tulsa Corporation, which adds materials at the beginning of production, uses a weighted-average process-costing system. Consider the data that follow.

# of Unites Cost of Materials
Beginning Work in Process 40,000 $80,600
Started in June 60,000 $124,400
Production Completed 75,000
Ending Work in Process 25,000

The company’s cost per equivalent unit for materials is:

a. $1.24.

b. $1.66.

c. $1.67.

d. $2.05.

e. some other amount.

3 points Save

Strom Company applies overhead based on machine hours. At the beginning of 20×1, the company estimated that manufacturing overhead would be $500,000, and machine hours would total 20,000. By 20×1 year-end, actual overhead totaled $525,000, and actual machine hours were 25,000. On the basis of this information, the 20×1 predetermined overhead rate was:

a. $0.05 per machine hour.

b. $21 per machine hour.

c. $20 per machine hour.

d. $0.04 per machine hour.

e. $25 per machine hour.

3 points Save

Summit Corporation recently used $75,000 of direct materials and $9,000 of indirect materials in production activities. The journal entries reflecting these transactions would include:

a. a debit to Manufacturing Overhead for $9,000.

b. a debit to Manufacturing Overhead for $84,000.

c. a credit to Manufacturing Overhead for $9,000.

d. a debit to Raw-Material Inventory for $75,000.

e. a debit to Work-in-Process Inventory for $84,000.

3 points Save

The accounting records of Diego Company revealed the following costs, among others:

Factory Insurance $32,000
Raw Material Used $256,000
Customer Entertainment $15,000
Indirect Labor $45,000
Depreciation on Saleperson’s cars $22,000
Production Rental equipment costs $72,000

Costs that would be considered in the calculation of manufacturing overhead total:

a. $149,000.

b. $171,000.

c. $186,000.

d. $442,000.

e. some other amount.

3 points Save

Gilbert adds materials at the beginning of production and incurs conversion cost uniformly throughout manufacturing. Consider the data that follow.

Units
Beginning work in process 20,000
Started In August 60,000
Production completed 55,000
Ending work in process, 40% complete 25,000

Conversion cost in the beginning work-in-process inventory totaled $120,000, and August conversion cost totaled $270,000. Assuming use of the weighted-average method, which of the following choices correctly depicts the number of equivalent units for materials and the conversion cost per equivalent unit?

Equivalent Units Conversion Cost
Materials Per Equivalent Unit

A) 55,000 $4.91
B) 65,000 $4.88
C) 65,000 $6.00
D) 80,000 $4.88
E) 80,000 $6.00

a. Choice A

b. Choice B

c. Choice C

d. Choice D

e. Choice E

3 points Save

The accounting records of Tacoma Company revealed the following costs: direct materials used, $160,000; direct labor, $350,000; manufacturing overhead, $400,000; and selling and administrative expenses, $220,000. Tacoma’s product costs total:

a. $510,000.

b. $750,000.

c. $920,000.

d. $1,130,000.

e. $910,000

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accounting question

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Description

QUESTION:

Organizations typically
have a number of contractual arrangements with debtholders, with many covenants
written to incorporate accounting numbers.

(a) Why would an
organisation agree to enter into such agreements with debtholders?

(b) On average, do
debtholders gain from the existence of such agreements?

QUESTION:

What is a ‘heuristic’
and why could it be beneficial for a group of financial statement users to be
informed that they are applying a particular heuristic?

QUESTION:

How ‘generalisable’ are
the results derived from behavioral accounting research?

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Description

Q8-13 Balance sheet Analysis
Complete the balance sheet and sales information in the table that follows for Hoffmeister Industries using the following financial data:
Debt ratio: 50% Quick ratio: 0.80 Total assets turnover: 1.5
Days sales outstanding 36.5 days Gross profit margin on sales:(Sales- Cost of goods sold)/ Sales= 25% Inventory turnover ratio: 5.0
(The balance sheet has exhibited on the photo)

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