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financial and managerial accounting
Questions and Answers of
Financial And Managerial Accounting
Match the descriptions that follow with the corresponding terms. Descriptions: 1. All activities associated with providing a product or service. 2. A method of allocating overhead based on each
Superior Company has the following cost and expense data for the year ending December 31, 2014.Instructions (a) Prepare a cost of goods manufactured schedule for Superior Company for 2014.(b) Prepare
Managerial accounting:(a) is governed by generally accepted accounting principles.(b) places emphasis on special-purpose information.(c) pertains to the entity as a whole and is highly aggregated.(d)
The management of an organization performs several broad functions. They are:(a) planning, directing, and selling.(b) planning, directing, and controlling.(c) planning, manufacturing, and
After passage of the Sarbanes-Oxley Act:(a) reports prepared by managerial accountants must by audited by CPAs.(b) CEOs and CFOs must certify that financial statements give a fair presentation of the
Direct materials are a: Product Cost (a) Yes (b) Yes (c) Yes (d) No Manufacturing Overhead Yes No Yes No Period Cost No No Yes No
Which of the following costs would a computer manufacturer include in manufacturing overhead?(a) The cost of the disk drives.(b) The wages earned by computer assemblers.(c) The cost of the memory
Which of the following is not an element of manufacturing overhead?(a) Sales manager’s salary.(b) Plant manager’s salary.(c) Factory repairman’s wages.(d) Product inspector’s salary.
Indirect labor is a:(a) nonmanufacturing cost.(b) raw material cost.(c) product cost.(d) period cost.
Which of the following costs are classified as a period cost?(a) Wages paid to a factory custodian.(b) Wages paid to a production department super visor.(c) Wages paid to a cost accounting department
For the year, Redder Company has cost of goods manufactured of $600,000, beginning finished goods inventory of $200,000, and ending finished goods inventory of $250,000. The cost of goods sold is:(a)
Cost of goods available for sale is a step in the calculation of cost of goods sold of:(a) a merchandising company but not a manufacturing company.(b) a manufacturing company but not a merchandising
A cost of goods manufactured schedule shows beginning and ending inventories for:(a) raw materials and work in process only.(b) work in process only.(c) raw materials only.(d) raw materials, work in
A manufacturer may report three inventories on its balance sheet: (1) raw materials, (2) work in process, and (3) finished goods. Indicate in what sequence these inventories generally appear on a
Which of the following managerial accounting techniques attempts to allocate manufacturing overhead in a more meaningful fashion?(a) Just-in-time inventory.(b) Total quality management.(c) Balanced
Corporate social responsibility refers to:(a) the practice by management of reviewing all business processes in an effort to increase productivity and eliminate waste.(b) an approach used to allocate
During the current month, Ringling Company incurs the following manufacturing costs:(a) Raw material purchases of $4,200 on account.(b) Incurs factory labor of $18,000. Of that amount, $15,000
Danielle Company is working on two job orders. The job cost sheets show the following:Direct materials—Job 120 $6,000; Job 121 $3,600 Direct labor—Job 120 $4,000; Job 121 $2,000 Manufacturing
During the current month, Onyx Corporation completed Job 109 and Job 112. Job 109 cost $19,000 and Job 112 cost $27,000. Job 112 was sold on account for $42,000. Journalize the entries for the
For Karr Company, the predetermined overhead rate is 140% of direct labor cost. During the month, Karr incurred $90,000 of factory labor costs, of which $80,000 is direct labor and $10,000 is
Cardella Company applies overhead on the basis of direct labor costs. The company estimates annual overhead costs will be $760,000, and annual direct labor costs will be $950,000.During February,
A company is more likely to use a job order cost system if:(a) it manufactures a large volume of similar products.(b) its production is continuous.(c) it manufactures products with unique
When incurred, factory labor costs are debited to:(a) Work in Process.(b) Factory Wages Expense.(c) Factory Labor.(d) Factory Wages Payable.
The source documents for assigning costs to job cost sheets are:(a) invoices, time tickets, and the predetermined overhead rate.(b) materials requisition slips, time tickets, and the actual overhead
In recording the issuance of raw materials in a job order cost system, it would be incorrect to:(a) debit Work in Process Inventory.(b) debit Finished Goods Inventory.(c) debit Manufacturing
The entry when direct factory labor is assigned to jobs is a debit to:(a) Work in Process Inventory and a credit to Factory Labor.(b) Manufacturing Overhead and a credit to Factory Labor.(c) Factory
Mynex Company completes Job No. 26 at a cost of $4,500 and later sells it for $7,000 cash. A correct entry is:(a) debit Finished Goods Inventory $7,000 and credit Work in Process Inventory $7,000.(b)
Indicate whether each of the following statements is true or false.1. A law firm is likely to use process costing for major lawsuits.2. A manufacturer of paintballs is likely to use process
Ruth Company manufactures ZEBO through two processes: blending and bottling. InJune, raw materials used were Blending $18,000 and Bottling $4,000. Factory labor costswere Blending $12,000 and
The fabricating department has the following production and cost data for the current month.Materials are entered at the beginning of the process. The ending work in process unitsare 30% complete as
In March, Rodayo Manufacturing had the following unit production costs: materials $6and conversion costs $9. On March 1, it had zero work in process. During March, Rodayotransferred out 12,000 units.
Karlene Industries produces plastic ice cube trays in two processes: heating and stamping.All materials are added at the beginning of the Heating Department process. Karlene usesthe weighted-average
Which of the following items is not characteristic of a process cost system?(a) Once production begins, it continues until the fi nished product emerges.(b) The products produced are heterogeneous in
Indicate which of the following statements is not correct.(a) Both a job order and a process cost system track the same three manufacturing cost elements—direct materials, direct labor, and
In a process cost system, the flow of costs is:(a) work in process, cost of goods sold, finished goods.(b) finished goods, work in process, cost of goods sold.(c) finished goods, cost of goods sold,
In making journal entries to assign raw materials costs, a company using process costing:(a) debits Finished Goods Inventory.(b) often debits two or more work in process accounts.(c) generally
In a process cost system, manufacturing overhead:(a) is assigned to finished goods at the end of each accounting period.(b) is assigned to a work in process account for each job as the job is
Conversion costs are the sum of:(a) fixed and variable overhead costs.(b) labor costs and overhead costs.(c) direct material costs and overhead costs.(d) direct labor and indirect labor costs.
The Mixing Department’s output during the period consists of 20,000 units completed and transferred out, and 5,000 units in ending work in process 60% complete as to materials and conversion costs.
In RYZ Company, there are zero units in beginning work in process, 7,000 units started into production, and 500 units in ending work in process 20% completed. The physical units to be accounted for
Mora Company has 2,000 units in beginning work in process, 20% complete as to conversion costs, 23,000 units transferred out to finished goods, and 3,000 units in ending work in process 331 3%
Fortner Company has no beginning work in process; 9,000 units are transferred out and 3,000 units in ending work in process are one-third finished as to conversion costs and fully complete as to
Largo Company has unit costs of $10 for materials and $30 for conversion costs. If there are 2,500 units in ending work in process, 40% complete as to conversion costs, and fully complete as to
A production cost report:(a) is an external report.(b) shows both the production quantity and cost data related to a department.(c) shows equivalent units of production but not physical units.(d)
Hollins Company uses the FIFO method to compute equivalent units. It has 2,000 units in beginning work in process, 20% complete as to conversion costs, 25,000 units started and completed, and 3,000
KLM Company uses the FIFO method to compute equivalent units. It has no beginning work in process; 9,000 units are started and completed and 3,000 units in ending work in process are one-third
Toney Company uses the FIFO method to compute equivalent units. It has unit costs of $10 for materials and $30 for conversion costs. If there are 2,500 units in ending work in process, 100% complete
Activity-based costing (ABC):(a) can be used only in a process cost system.(b) focuses on units of production.(c) focuses on activities performed to produce a product.(d) uses only a single basis of
Activity-based costing:(a) is the initial phase of converting to a just-in-time operating environment.(b) can be used only in a job order costing system.(c) is a two-stage overhead cost allocation
Any activity that causes resources to be consumed is called a:(a) just-in-time activity.(b) facility-level activity.(c) cost driver.(d) non–value-added activity.
The first step in the development of an activity-based costing system is:(a) identify and classify activities and allocate overhead to cost pools.(b) assign overhead costs to products.(c) identify
Which of the following would be the best cost driver for the assembling cost pool?(a) Number of product lines.(b) Number of parts.(c) Number of orders.(d) Amount of square footage.
The overhead rate for Machine Setups is $100 per setup. Products A and B have 80 and 60 setups, respectively.The overhead assigned to each product is:(a) Product A $8,000, Product B $8,000.(b)
Donna Crawford Co. has identified an activity cost pool to which it has allocated estimated overhead of $1,920,000. It has determined the expected use of cost drivers for that activity to be 160,000
A frequently cited limitation of activity-based costing is:(a) ABC results in more cost pools being used to assign overhead costs to products.(b) certain overhead costs remain to be allocated by
A company should consider using ABC if:(a) overhead costs constitute a small portion of total product costs.(b) it has only a few product lines that require similar degrees of support services.(c)
An activity that adds costs to the product but does not increase its perceived market value is a:(a) value-added activity.(b) cost driver.(c) cost/benefit activity.(d) non–value-added activity.
The following activity is value-added:(a) Storage of raw materials.(b) Moving parts from machine to machine.(c) Shaping a piece of metal on a lathe.(d) All of the above.
A relevant facility-level cost driver for heating costs is:(a) machine hours. (c) floor space.(b) direct material. (d) direct labor cost.
Under just-in-time processing:(a) raw materials are received just in time for use in production.(b) subassembly parts are completed just in time for use in assembling finished goods.(c) finished
The primary objective of just-in-time processing is to:(a) accumulate overhead in activity cost pools.(b) eliminate or reduce all manufacturing inventories.(c) identify relevant activity cost
Indicate whether the following statements are true or false.1. A traditional costing system allocates overhead by means of multiple overhead rates.2. Activity-based costing allocates overhead costs
Casey Company has five activity cost pools and two products. It expects to produce 200,000 units of its automobile scissors jack and 80,000 units of its truck hydraulic jack. Having identified its
Classify each of the following activities within a water-ski manufacturer as value-added (VA)or non–value-added (NVA).1. Inspecting completed skis.2. Storing raw materials.3. Machine setups.4.
Morgan Toy Company manufactures six primary product lines of toys in its Morganville plant. As a result of an activity analysis, the accounting department has identifi ed eight activity cost pools.
Spreadwell Paint Company manufactures two high-quality base paints: an oil-based paint and a latex paint. Both are housepaints and are manufactured in neutral white color only.Spreadwell sells the
Byrnes Company accumulates the following data concerning a mixed cost, using units produced as the activity level.(a) Compute the variable- and fixed-cost elements using the high-low method.(b)
Lombardi Company has a unit selling price of $400, variable costs per unit of $240, and fixed costs of $180,000. Compute the break-even point in units using (a) a mathematical equation and (b)
Mabo Company makes calculators that sell for $20 each. For the coming year, management expects fixed costs to total $220,000 and variable costs to be $9 per unit.Instructions (a) Compute break-even
Variable costs are costs that:(a) vary in total directly and proportionately with changes in the activity level.(b) remain the same per unit at every activity level.(c) Neither of the above.(d) Both
The relevant range is:(a) the range of activity in which variable costs will be curvilinear.(b) the range of activity in which fixed costs will be curvilinear.(c) the range over which the company
Mixed costs consist of a:(a) variable-cost element and a fixed-cost element.(b) fixed-cost element and a controllable-cost element.(c) relevant-cost element and a controllable-cost element.(d)
Your phone service provider offers a plan that is classified as a mixed cost. The cost per month for 1,000 minutes is $50. If you use 2,000 minutes this month, your cost will
Kendra Corporation’s total utility costs during the past year were $1,200 during its highest month and $600 during its lowest month. These costs corresponded with 10,000 units of production during
Which of the following is not involved in CVP analysis?(a) Sales mix.(b) Unit selling prices.(c) Fixed costs per unit.(d) Volume or level of activity.
When comparing a traditional income statement to a CVP income statement:(a) net income will always be greater on the traditional statement.(b) net income will always be less on the traditional
Contribution margin:(a) is revenue remaining after deducting variable costs.(b) may be expressed as contribution margin per unit.(c) is selling price less cost of goods sold.(d) Both (a) and (b)
Cournot Company sells 100,000 wrenches for $12 a unit. Fixed costs are $300,000, and net income is $200,000. What should be reported as variable expenses in the CVP income
Gossen Company is planning to sell 200,000 pliers for $4 per unit. The contribution margin ratio is 25%. If Gossen will break even at this level of sales, what are the fixed
Brownstone Company’s contribution margin ratio is 30%. If Brownstone’s sales revenue is $100 greater than its break-even sales in dollars, its net income:(a) will be $100.(b) will be $70.(c) will
The mathematical equation for computing required sales to obtain target net income is: Required sales =(a) Variable costs + Target net income.(b) Variable costs + Fixed costs + Target net income.(c)
Margin of safety is computed as:(a) Actual sales − Break-even sales.(b) Contribution margin − Fixed costs.(c) Break-even sales − Variable costs.(d) Actual sales − Contribution margin.
Marshall Company had actual sales of $600,000 when break-even sales were $420,000. What is the margin of safety ratio?(a) 25%. (b) 30%. (c) 331⁄3%.(d) 45%.
International Company has land that cost $450,000 but now has a fair value of $600,000. International Company decides to use the revaluation method specified in IFRS to account for the land. Which of
Francisco Corporation is constructing a new building at a total initial cost of $10,000,000. The building is expected to have a useful live of 50 years with no residual value. The building’s
Under IFRS, value-in-use is defined as:(a) net realizable value.(b) fair value.(c) future cash flows discounted to present value.(d) total future undiscounted cash flows.
DuPage Company purchases a factory machine at a cost of $18,000 on January 1, 2014.DuPage expects the machine to have a salvage value of $2,000 at the end of its 4-year useful life.During its useful
You and several classmates are studying for the next accounting examination. They ask you to answer the following questions.1. If cash is borrowed on a $50,000, 6-month, 12% note on September 1, how
State whether each of the following statements is true or false. 1. Mortgage bonds and sinking fund bonds are both examples of secured bonds. 2. Unsecured bonds are also known as debenture bonds. 3.
Giant Corporation issues $200,000 of bonds for $189,000. (a) Prepare the journal entry to record the issuance of the bonds, and (b) show how the bonds would be reported on the balance sheet at the
R & B Inc. issued $500,000, 10-year bonds at a premium. Prior to maturity, when the carrying value of the bonds is $508,000, the company retires the bonds at 102. Prepare the entry to record the
Cole Research issues a $250,000, 8%, 20-year mortgage note to obtain needed financing for a new lab. The terms call for semiannual payments of $12,631 each. Prepare the entries to record the mortgage
Snyder Software Inc. has successfully developed a new spreadsheet program. To produce and market the program, the company needed $2 million of additional financing. On January 1, 2014, Snyder
Gardner Corporation issues $1,750,000, 10-year, 12% bonds on January 1, 2014, at $1,968,090, to yield 10%. The bonds pay semiannual interest July 1 and January 1. Gardner uses the effective-interest
Glenda Corporation issues $1,750,000, 10-year, 12% bonds on January 1, 2014, for $1,968,090 to yield 10%. The bonds pay semiannual interest July 1 and January 1. Glenda uses the straight-line method
The time period for classifying a liability as current is one year or the operating cycle, whichever is:(a) longer.(b) shorter.(c) probable.(d) possible.
To be classified as a current liability, a debt must be expected to be paid:(a) out of existing current assets.(b) by creating other current liabilities.(c) within 2 years.(d) Both (a) and (b).
Maggie Sharrer Company borrows $88,500 on September 1, 2014, from Sandwich State Bank by signing an $88,500, 12%, one-year note. What is the accrued interest at December 31,
Becky Sherrick Company has total proceeds from sales of $4,515. If the proceeds include sales taxes of 5%, the amount to be credited to Sales Revenue is:(a) $4,000.(b) $4,300.(c) $4,289.25.(d) No
Employer payroll taxes do not include:(a) federal unemployment taxes.(b) state unemployment taxes.(c) federal income taxes.(d) FICA taxes.
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