15. If costs are not responsive to changes in activity level, then these costs can be best described as a. mixed. b. flexible. c. variable. d. fixed. 16. A static budget is appropriate for a. variable overhead costs.b. direct materials costs. c. fixed overhead costs.d. None of these. 17. What is the primary difference between a staticbudget and a flexible budget? a. The static budget contains only fixed costs,while the flexible budget contains only variable costs. b. The static budget is prepared for a single levelof activity, while a flexible budget is adjusted for different activity levels. c. The static budget is constructed using input fromonly upper level management, while a flexible budget obtains input from all levels of management. d. The static budget is prepared only for unitsproduced, while a flexible budget reflects the number of units sold. 18. A standard which represents an efficient level ofperformance that is attainable under expected operating conditions is calleda(n)a. ideal standard.b. loose standard.c. tight standard.d. normal standard. 19.Theperspectives included in the balanced scorecard approach include all of thefollowing except thea. internal process perspective. b. capacity utilization perspective. c. learning and growth perspective. d. customer perspective. 20. The customer perspective of the balancedscorecard approacha. is the most traditional view of the company.b. evaluates the internal operating processescritical to the success of the organization.c. evaluates how well the company develops andretains its employees.d. evaluates the company from the viewpoint of thosepeople who buy its products or service 21. Dirt Cleaners, Inc. has followingproduction data for January: Transferred out 50,000 units Ending work inprocess 6,000 units The units in ending work in process are 100%complete for materials and 60% complete for conversion costs. There is nobeginning work in process. Materials cost is $6 per unit and conversion costsare $11 per unit. Instructions Determine the costs to be assigned to the unitstransferred out and the units in ending work in process. 22. Rhode Company provides architectural servicesfor mall development companies. The following data are available for 2013 Expected Use of Activity Cost Pool Estimated Overhead Cost Driver per Activity Secretarialsupport $ 220,000 27,500 professional hours Direct laborfringe benefits 200,000 $500,000 direct labor cost Printing andcopying 30,000 20,000 pages Computer support 250,000 62,500 minutes Liabilityinsurance 140,000 $2,800,000 billed revenue Instructions Compute the activity-based overhead rates. 23. Telemark Production’s manufacturing costs forJuly when production was 2,000 units appears below: Direct materials $10 per unit Factorydepreciation $16,000 Variable overhead 10,000 Direct labor 4,000 Factorysupervisory salaries 11,600 Other fixedfactory costs 3,000 Instructions How much is the flexible budget manufacturingcost amount for a month when 2,200 units are produced? 24. Qwik Service has over 200 auto-maintenanceservice outlets nationwide. It provides primarily two lines of service: oilchanges and brake repair. Oil change-related services represent 75% of itssales and provide a contribution margin ratio of 20%. Brake repair represents25% of its sales and provides a 60% contribution margin ratio. The company’sfixed costs are $12,000,000 (that is, $60,000 per service outlet). Instructions (a) Calculate the dollar amount of each type ofservice that the company must provide in order to break even. (b) The company has a desired net income of $45,000per service outlet. What is the dollar amount of each type of service that mustbe provided by each service outlet to meet its target net income per outlet? 24. Jent Company reported the following informationfor 2013: October November December Budgeted sales $320,000 $340,000 $360,000 Budgetedpurchases $120,000 $128,000 $144,000 ·Customeramounts on account are collected 40% in the month of sale and 60% in thefollowing month. Instructions Compute the amount of cash Jent will receiveduring November. 25. Seacoast Company provided the followinginformation about its standard costing system for 2013: Standard Data Actual Data Materials 10 lbs. @ $4 per lbs. Produced 4,000 units Labor 3 hrs. @ $21 per hr. Materials purchased 50,000 lbs. for $215,000 Budgeted production 3,500 units Materials used 41,000 lbs. Labor worked 11,000 hrs. costing $220,000 InstructionsCalculate the labor price variance and the laborquantity variance. 26. Selected data from the Florida Fruit Companyare presented below: Total assets $1,500,000 Average totalassets 1,850,000 Net income 175,000 Net sales 1,300,000 Average commonstockholders’ equity 1,000,000 Net cash providedby operating activities 275,000 Instructions no dividends were declared or paid during period, calculate the followingprofitability ratios from the above information: 1. Profit margin 2. Asset turnover 3. Return on assets4. Return on common stockholder equity
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
15. If costs are not responsive to changes in activity level, then these costs can be best described as
a. mixed.
b. flexible.
c. variable.
d. fixed.
16. A static budget is appropriate for
a. variable
b. direct materials costs.
c. fixed overhead costs.
d. None of these.
17. What is the primary difference between a static
budget and a flexible budget?
a. The static budget contains only fixed costs,
while the flexible budget contains only variable costs.
b. The static budget is prepared for a single level
of activity, while a flexible budget is adjusted for different activity levels.
c. The static budget is constructed using input from
only upper level management, while a flexible budget obtains input from all levels of management.
d. The static budget is prepared only for units
produced, while a flexible budget reflects the number of units sold.
18. A standard which represents an efficient level of
performance that is attainable under expected operating conditions is called
a(n)
a. ideal standard.
b. loose standard.
c. tight standard.
d. normal standard.
19.
The
perspectives included in the balanced scorecard approach include all of the
following except the
a. internal process perspective.
b. capacity utilization perspective.
c. learning and growth perspective.
d. customer perspective.
20. The customer perspective of the balanced
scorecard approach
a. is the most traditional view of the company.
b. evaluates the internal operating processes
critical to the success of the organization.
c. evaluates how well the company develops and
retains its employees.
d. evaluates the company from the viewpoint of those
people who buy its products or service
21. Dirt Cleaners, Inc. has following
production data for January:
Transferred out
50,000 units
Ending work in
process
6,000 units
The units in ending work in process are 100%
complete for materials and 60% complete for conversion costs. There is no
beginning work in process. Materials cost is $6 per unit and conversion costs
are $11 per unit.
Instructions
Determine the costs to be assigned to the units
transferred out and the units in ending work in process.
22. Rhode Company provides architectural services
for mall development companies. The following data are available for 2013
Expected Use of
Activity Cost Pool
Estimated Overhead
Cost Driver per Activity
Secretarial
support
$ 220,000
27,500 professional hours
Direct labor
fringe benefits
200,000
$500,000 direct labor cost
Printing and
copying
30,000
20,000 pages
Computer support
250,000
62,500 minutes
Liability
insurance
140,000
$2,800,000 billed revenue
Instructions
Compute the activity-based overhead rates.
23. Telemark Production’s
July when production was 2,000 units appears below:
Direct materials
$10 per unit
Factory
depreciation
$16,000
Variable overhead
10,000
Direct labor
4,000
Factory
supervisory salaries
11,600
Other fixed
factory costs
3,000
Instructions
How much is the flexible budget manufacturing
cost amount for a month when 2,200 units are produced?
24. Qwik Service has over 200 auto-maintenance
service outlets nationwide. It provides primarily two lines of service: oil
changes and brake repair. Oil change-related services represent 75% of its
sales and provide a contribution margin ratio of 20%. Brake repair represents
25% of its sales and provides a 60% contribution margin ratio. The company’s
fixed costs are $12,000,000 (that is, $60,000 per service outlet).
Instructions
(a) Calculate the dollar amount of each type of
service that the company must provide in order to break even.
(b) The company has a desired net income of $45,000
per service outlet. What is the dollar amount of each type of service that must
be provided by each service outlet to meet its target net income per outlet?
24. Jent Company reported the following information
for 2013:
October
November
December
Budgeted sales
$320,000
$340,000
$360,000
Budgeted
purchases
$120,000
$128,000
$144,000
·
Customer
amounts on account are collected 40% in the month of sale and 60% in the
following month.
Instructions
Compute the amount of cash Jent will receive
during November.
25. Seacoast Company provided the following
information about its
Standard Data
Actual Data
Materials
10 lbs. @ $4 per lbs.
Produced
4,000 units
Labor
3 hrs. @ $21 per hr.
Materials purchased
50,000 lbs. for $215,000
Budgeted production
3,500 units
Materials used
41,000 lbs.
Labor worked
11,000 hrs. costing
$220,000
Instructions
Calculate the labor price variance and the labor
quantity variance.
26. Selected data from the Florida Fruit Company
are presented below:
Total assets
$1,500,000
Average total
assets
1,850,000
Net income
175,000
Net sales
1,300,000
Average common
stockholders’ equity
1,000,000
Net cash provided
by operating activities
275,000
Instructions
no dividends were declared or paid during period, calculate the following
profitability ratios from the above information:
1. Profit margin
2. Asset turnover
3. Return on assets
4. Return on common
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