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fundamental accounting
Fundamental Accounting Principles Volume 2 21st Edition John Wild, Ken Shaw, Barbara Chiappetta - Solutions
How does a just-in-time inventory system differ from a safety stock system?
In preparing a budgeted balance sheet, (a) plant assets are determined by analyzing the capital expenditures budget and the balance sheet from the beginning of the budget period,(b) liabilities are determined by analyzing the general and administrative expense budget, or(c) retained earnings are
What sequence is followed in preparing the budgets that constitute the master budget?
Wild Wood Company’s management asks you to prepare its master budget using the following information. The budget is to cover the months of April, May, and June of 2013Additional Informationa. Sales for March total 10,000 units. Each month’s sales are expected to exceed the prior month’s
Describe the importance and benefits of budgeting and the process of budget administration.
Describe a master budget and the process of preparing it
Analyze expense planning using activity-based budgeting.
A plan that reports the units or costs of merchandise to be pur¬ chased by a merchandising company during the budget period is called aa. Capital expenditures budget.b. Cash budget.c. Merchandise purchases budget.d. Selling expenses budget.e. Sales budget
A hardware store has budgeted sales of $36,000 for its power tool department in July. Management wants to have $7,000 in power tool inventory at the end of July. Its beginning inventory of power tools is expected to be $6,000. What is the budgeted dollar amount of merchandise purchases?a. $36,000b.
A store has the following budgeted sales for the next five monthsCash sales are 25% of total sales and all credit sales are expected to be collected in the month following the sale. The total amount of cash expected to be received from customers in September isa. $240,000b. $225,000c. $ 60,000d.
A plan that shows the expected cash inflows and cash outflows during the budget period, including receipts from loans needed to maintain a minimum cash balance and repayments of such loans, is calleda. A rolling budget.b. An income statement.c. A balance sheet.d. A cash budget.e. An operating budget
The following sales are predicted for a company’s next four monthsEach month’s ending inventory of finished goods should be 30% of the next month’s sales. At September 1, the finished goods inventory is 140 units. The budgeted production of units for October isa. 572 units.b. 560 units.c. 548
Which one of the following sets of items are all necessary components of the master budget? 1. Operating budgets, historical income statement, and budgeted balance sheet. 2. Prior sales reports, capital expenditures budget, and financial budgets. 3. Sales budget, operating budgets, and historical
Refer to information from QS 22-8. Forrest Company assigns variable overhead at the rate of $1.50 per unit of production. Fixed overhead equals $4,600,000 per month. Prepare a factory overhead budget for November.
Refer to information from QS 22-10. Grace pays a sales manager a monthly salary of $6,000 and a commission of 8% of camera sales (in dollars). Prepare a selling expense budget for the month of June.
Refer to information from QS 22-10. Assume 60% of Grace’s sales are for cash. The remaining 40% are credit sales; these customers pay in the month following the sale. Compute the budgeted cash receipts for June
Messers Company is preparing a cash budget for February. The company has $20,000 cash at the beginning of February and anticipates $75,000 in cash receipts and $100,250 in cash disbursements during February. What amount, if any, must the company borrow during February to maintain a $5,000 cash
Use the information in Exercise 22-3 and the following additional information to prepare a budgeted in¬ come statement for the month of July and a budgeted balance sheet for July 31.a. Cost of goods sold is 55% of sales.b. Inventory at the end of June is $80,000 and at the end of July is
Hardy Company’s cost of goods sold is consistently 60% of sales. The company plans to carry ending merchandise inventory for each month equal to 20% of the next month’s budgeted cost of good sold. All merchandise is purchased on credit, and 50% of the purchases made during a month is paid for
Big Sound, a merchandising company specializing in home computer speakers, budgets its monthly cost of goods sold to equal 70% of sales. Its inventory policy calls for ending inventory in each month to equal 20% of the next month’s budgeted cost of goods sold. All purchases are on credit, and 25%
Refer to information from Exercise 22-8. Each transmission requires 0.80 pounds of a key raw material. Electro Company aims to end each quarter with an ending inventory of direct materials equal to 50% of next quarter’s budgeted materials requirements. Direct materials cost $170 per unit. Prepare
Refer to information from Exercise 22-8. Each transmission requires 4 direct labor hours, at a cost of $12 per hour. Prepare a direct labor budget for the second quarter
Fortune, Inc., is preparing its master budget for the first quarter. The company sells a single product at a price of $25 per unit. Sales (in units) are forecasted at 45,000 for January, 55,000 for February, and 50,000 for March. Cost of goods sold is $14 per unit. Other expense information for the
Match the definitions 1 through 9 with the term or phrase a through i. A. Budget B. Merchandise purchases budget C. Cash budget D. Safety stock E. Budgeted income statement F. General and administrative expense budget G. Sales budget H. Master budget 1. Budgeted balance sheet 1. A comprehensive
Render Co. CPA is preparing activity-based budgets for 2013. The partners expect the firm to generate bill- able hours for the year as follows:The company pays $10 per hour to data-entry clerks, $40 per hour to audit personnel, $50 per hour to tax personnel, and $50 per hour to consulting
Rida, Inc., a manufacturer in a seasonal industry, is preparing its direct materials budget for the second quarter. It forecasts sales of 225,000 units in the second quarter and 262,500 units in the third quarter. It also plans production of 52,500 units for the third quarter. Based on this
Refer to Exercise 22-25. For the second quarter, prepare (1) a direct labor budget and (2) a factory overhead budget,
Refer to Exercise 22-27. For April, May, and June, prepare (1) a direct labor budget and (2) a factory overhead budget,
Merline, a one-product mail-order firm, buys its product for $75 per unit and sells it for $150 per unit. The sales staff receives a 10% commission on the sale of each unit. Its December income statement follows.Management expects December’s results to be repeated in January, February, and March
Black Diamond Company produces snow skis. Each ski requires 2 pounds of carbon fiber. The company’s management predicts that 5,000 skis and 6,000 pounds of carbon fiber will be in inventory on June 30 of the current year and that 150,000 skis will be sold during the next (third) quarter. A set of
Comp-Media buys its product for $60 and sells it for $130 per unit. The sales staff receives a 10% com¬ mission on the sale of each unit. Its June income statement followsManagement expects June’s results to be repeated in July, August, and September without any changes in strategy. Management,
Adria Lopez expects second quarter 2014 sales of her new line of computer furniture to be the same as the first quarter’s sales (reported below) without any changes in strategy. Monthly sales averaged 40 desk units (sales price of $1,250) and 20 chairs (sales price of $500).Adria Lopez believes
Financial statements often serve as a starting point in formulating budgets. Review Polaris’ financial statements to determine its cash paid for acquisitions of property and equipment in the current year and the budgeted cash needed for such acquisitions in the next year.Required 1. Which
One source of cash savings for a company is improved management of inventory. To il¬ lustrate, assume that Polaris and Arctic Cat both have $ 1,000,000 per month in sales of one model of snowmobiles in Canada, and both forecast this level of sales per month for the next 24 months. Also assume that
Access information on e-budgets through The Manage Mentor:http://vvww.themanagementor.com/kuniverse/kmailers_universe/finance_kmailers/cfa/budgeting2.htm Read the information provided.Required 1. Assume the role of a senior manager in a large, multidivision company. What are the benefits of using
To help understand the factors impacting a sales budget, you are to visit three businesses with the same ownership or franchise membership. Record the selling prices of two identical products at each location, such as regular and premium gas sold at Chevron stations. You are likely to find a
A flexible budget (a) shows fixed costs as constant amounts of cost per unit of activity,(b) shows variable costs as constant amounts of cost per unit of activity, or (c) is prepared based on one expected amount of budgeted sales or production.
What is the initial step in preparing a flexible budget?
What is the main difference between a fixed and a flexible budget?
A Standard cost (a) changes in direct proportion to changes in the level of activity, (b) is an amount incurred at the actual level of production for the period, or (c) is an amount incurred under normal conditions to provide a product or service.
The following information is available for York Company.The labor efficiency variance is (a) $3,750 U, (b) $3,750 F or (c) $3,875 U. Actual direct labor hours per unit... Standard direct labor hours per unit. Actual production (units)..... Budgeted production (units) Actual rate per hour Standard
Refer to Quick Check 7; the labor rate variance is (a) $625 F or [b) $625 U.
If a materials quantity variance is favorable and a materials price variance is unfavorable, can the total materials cost variance be favorable?
Under what conditions is an overhead volume variance considered favorable?
To use management by exception, a company (a) need not study fixed overhead variances,(b) should compute variances from flexible budget amounts to allow management to focus its attention on significant differences between actual and budgeted results, or (c) should analyze only variances for direct
A company uses a standard cost accounting system. Prepare the journal entry to record these direct materials variances:Direct materials cost actuallyincurred. $73,200 Direct materials quantity variance (favorable). 3,800 Direct materials price variance (unfavorable). 1,300
If standard costs are recorded in the manufacturing accounts, how are recorded variances treated at the end of an accounting period?
Pacific Company provides the following information about its budgeted and actual results for June 2013. Although the expected June volume was 25,000 units produced and sold, the company actually produced and sold 27,000 units as detailed here:Standard costs based on expected output of 25,000
Define standard costs and explain how standard cost information is useful for management by exception
Describe variances and what they reveal about performance
A company predicts its production and sales will be 24,000 units. At that level of activity, its fixed costs are budgeted at $300,000, and its variable costs are budgeted at $246,000. If its activity level declines to 20,000 units, what will be its fixed costs and its variable costs?a. Fixed,
Using the following information about a single product com¬ pany, compute its total actual cost of direct materials used.• Direct materials standard cost: 5 lbs. X $2 per lb. = $10.• Total direct materials cost variance: $15,000 unfavorable.• Actual direct materials used: 300,000 lbs.•
Acompany uses four hours of direct labor to produce a product unit. The standard direct labor cost is $20 per hour. This period the company produced 20,000 units and used 84,160 hours of direct labor at a total cost of $1,599,040. What is its labor rate variance for the period?a. $83,200 Fb.
A company’s standard for a unit of its single product is $6 per unit in variable overhead (4 hours X $1.50 per hour). Actual data for the period show variable overhead costs of $150,000 and production of 24,000 units. Its total variable overhead cost variance is a.$6,000 Fb.$6,000 U.c.$1 14,000
A company’s standard for a unit of its single product is $4 per unit in fixed overhead ($24,000 total/6,000 units bud¬ geted). Actual data for the period show total actual fixed overhead of $24,100 and production of 4,800 units. Its volume variance isa. $4,800 U.b. $4,800 F.c. $ 100 U.d. $ 100
Is it possible for a retail store such as Apple to Apple use variances in analyzing its operating performance?Explain.
Beech Company sold 105,000 units of its product in May. For the level of production achieved in May, the budgeted amounts were: sales, $1,300,000; variable costs, $750,000; and fixed costs, $300,000. The following actual financial results are available for May. Prepare a flexible budget performance
Refer to information in QS 23-2. Assume the actual cost to manufacture one metal bat was $40. Compute the cost variance and classify it as favorable or unfavorable.
Refer to the information in QS 23-8. Alvarez records standard costs in its accounts. Prepare the journal entry to charge overhead costs to the Goods in Process Inventory account and to record any variances.
Mosaic Company applies overhead using machine hours and reports the following information. Compute the total variable overhead cost variance. Actual machine hours used...... Standard machine hours. 4,700 hours 5,000 hours Actual variable overhead rate per hour Standard variable overhead rate per
Refer to information in QS 23-14. Assume that actual sales are $480,000, actual variable costs for the year are $112,000, and actual fixed costs for the year are $145,000. Prepare a flexible budget performance report for the year.
Tercer reports the following on one of its products. Compute the direct materials price and quantity variances. Direct materials standard (4 lbs. @ $2/lb.) Actual direct materials used. Actual finished units produced Actual cost of direct materials used. $8 per finished unit 300,000 lbs. 60,000
The following information describes a company’s usage of direct labor in a recent period. Compute the direct labor rate and efficiency variances for the period. Actual direct labor hours used. 65,000 Actual direct labor rate per hour... $15 Standard direct labor rate per hour $14 Standard direct
AirPro Corp. reports the following for November. Compute the controllable overhead variance for November Actual total factory overhead incurred Standard factory overhead: Variable overhead Fixed overhead ($12,000/12,000 predicted units to be produced). Predicted units produced Actual units
Refer to information in QS 23-19. Compute the overhead volume variance for November.
Bay City Company’s fixed budget performance report for July follows. The $647,500 budgeted expenses include $487,500 variable expenses and $160,000 fixed expen.ses. Actual expenses include $158,000 fixed expenses. Prepare a flexible budget performance report that shows any variances between
Sedona Company set the following standard costs for one unit of its product for 2013.The $5.60 ($4.00 + $1.60) total overhead rate per direct labor hour is based on an expected operating level equal to 75% of the factory’s capacity of 50,000 units per month. The following monthly flexible budget
Hart Company made 3,000 bookshelves using 22,000 board feet of wood costing $266,200. The company’s direct materials standards for one bookshelf are 8 board feet of wood at $12 per board foot. (1) Compute the direct materials variances incurred in manufacturing these bookshelves. (2) Interpret
Refer to Exercise 23-8. Hart Company records standard costs in its accounts and its material variances in separate accounts when it assigns materials costs to the Goods in Process Inventory account. (1) 8how the journal entry that both charges the direct materials costs to the Goods in Process
Match the terms a-e with their correct definition 1-5. a. Standard cost card b. Management by exception c. Standard cost d. Ideal standard e. Practical standard 1. Quantity of input required under normal conditions. 2. Quantity of input required if a production process is 100% efficient. 3.
Presented below are terms preceded by letters a through j and a list of definitions 1 through 10. Enter the letter of the term with the definition, using the space preceding the definition. a. Fixed budget b. Standard costs c. Price variance d. Quantity variance e. Volume variance f. Controllable
Resset Co. provides the following results of April’s operations: F indicates favorable and U indicates unfavorable. Applying the management by exception approach, which of the variances are of greatest concern? Why? Direct materials price variance Direct materials quantity variance Direct labor
The following information describes production activities of Mercer Manufacturing for the year:Budgeted standards for each unit produced are 0.50 pounds of raw material at $4.00 per pound and 10 minutes of direct labor at $20 per hour. (1) Compute the direct materials price and quantity variances.
Trico Company set the following standard unit costs for its single product.The predetermined overhead rate is based on a planned operating volume of 80% of the productive capacity of 60,000 units per quarter. The following flexible budget information is available.During the current quarter, the
Refer to information in Problem 23-1 A.Required Compute these variances: (a) variable overhead spending and efficiency, (b) fixed overhead spending and volume, and (c) total overhead controllable.Phoenix Company’s 2013 master budget included the following fixed budget report. It is based on an
Antuan Company set the following standard costs for one unit of its product.The predetermined overhead rate ($18.50 per direct labor hour) is based on an expected volume of 75% of the factory’s capacity of 20,000 units per month. Following are the company’s budgeted overhead costs per month at
Kegler Company has set the following standard costs per unit for the product it manufacturesThe predetermined overhead rate is based on a planned operating volume of 80% of the productive capacity of 10,000 units per month. The following flexible budget information is available.During May, the
Boss Company’s standard cost accounting system recorded this information from its December operations.Required 1. Prepare December 31 journal entries to record the company's costs and variances for the month. (Do not prepare the journal entry to close the variances.) Analysis Component 2.
Kryll Company set the following standard unit costs for its single product.The predetermined overhead rate is based on a planned operating volume of 80% of the productive capacity of 60,000 units per quarter. The following flexible budget information is available.During the current quarter, the
Refer to information in Problem 23-IB.Required Compute these variances: (a) variable overhead spending and efficiency, (b) fixed overhead spending and volume, and (c) total overhead controllable.
Suncoast Company set the following standard costs for one unit of its product.The predetermined overhead rate ($16.00 per direct labor hour) is based on an expected volume of 75% of the factory’s capacity of 20,000 units per month. Following are the company’s budgeted overhead costs per month
Guadelupe Company has set the following standard costs per unit for the product it manufacturesThe predetermined overhead rate is based on a planned operating volume of 80% of the productive capacity of 10,000 units per month. The following flexible budget information is available.During March, the
Kenya Company’s standard cost accounting system recorded this information from its June operations.Required 1. Prepare journal entries dated June 30 to record the company’s costs and variances for the month. (Do not prepare the journal entry to close the variances.)Anaiysis Component 2.
The usefulness of budgets, variances, and related analyses often depends on the accuracy of management’s estimates of future sales activity.Required 1. Identify and record the prior three years’ sales (in dollars) for Polaris and for Arctic Cat using their financial statements in Appendix A.2.
Access iSixSigma’s Website (iSixSigma.com) to search for and read information about benchmarking to complete the following requirements. (Hint: Look in the “dictionary” link.)Required 1. Write a one-paragraph explanation (in layperson’s terms) of benchmarking.2. How does standard costing
Which of these products is likely to involve job order production? (a) inexpensive watches,(b) racing bikes, (c) bottled soft drinks, or id) athletic socks.
What is the difference between a job and a job lot?
Which of these statements is correct? (a) The collection of job cost sheets for unfinished jobs makes up a subsidiary ledger controlled by the Goods in Process Inventory account, (b) Job cost sheets are financial statements provided to investors, or (c) A separate job cost sheet is maintained in
What three costs are normally accumulated on job cost sheets?
In job order cost accounting, which account is debited in recording a raw materials requisition? (a) Raw Materials Inventory, {b) Raw Materials Purchases, (c) Goods in Process Inventory if for a job, or (d) Goods in Process Inventory if they are indirect materials.
What are four sources of information for recording costs in the Factory Overhead account?
Why does job order cost accounting require a predetermined overhead rate?
What events result in a debit to Factory Payroll? What events result in a credit?
In a job order cost accounting system, why does the Factory Overhead account usually have an overapplied or underapplied balance at period-end?
When the Factory Overhead account has a debit balance at period-end, does this reflect overapplied or underapplied overhead?
The following information reflects Walczak Company’s job order production activities for May.Walczak’s predetermined overhead rate is 150% of direct labor cost. Costs are allocated to the three jobs worked on during May as follows.Required 1. Determine the total cost of;a. The April 30
Describe important features of job order production
Explain job cost sheets and how they are used in job order cost accounting
Describe and record the flow of materials costs in job order cost accounting.
Describe and record the flow of labor costs in job order cost accounting
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