Cima Official Learning System Fundamentals Of Management Accounting 4th Edition Janet Walker - Solutions

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E7-15 (Supplement A) Calculating Cost of Ending Inventory and Cost of Goods Sold under Periodic FIFO, LIFO, and Weighted Average Refer to the information in E7-4. Assume the company uses a periodic inventory system. Calculate the cost of ending inventory and the cost of goods sold using the FIFO,
E7-14 (Supplement A) Calculating Cost of Ending Inventory and Cost of Goods Sold under Periodic FIFO, LIFO and Weighted-Average Refer to the information in E7-3. Assume the company uses a periodic inventory system. Calculate the cost of goods sold and the cost of ending inventory using the FIFO,
E7-13 Analyzing and Interpreting the Inventory Turnover Ratio Polaris Industries Inc. is the biggest snowmobile manufacturer in the world. It reported the following amounts in its recent financial statements (in millions): Current Year Prior Year Net sales revenue $1,870 $1,773 Cost of sales 1,452
E7-12 Analyzing and Interpreting the Impact of an Inventory Error Houston Corporation prepared the same two income statements presented in E7-11. During the third quarter, the company’s internal auditors discovered that the ending inventory for the first quarter should have been $3,600. The
E7-11 Analyzing and Interpreting the Impact of an Inventory Error Dallas Corporation prepared the following two income statements:During the third quarter, the company’s internal auditors discovered that the ending inventory for the first quarter should have been $4,400. The ending inventory for
E7-10 Preparing the Journal Entry to Record Lower of Cost or Market (LCM) Adjustments RadioShack Corporation (RadioShack) sells consumer electronic goods and services through its 4,972 stores and 777 kiosks. In its annual report filed with the SEC for a recent year, the company reported that it
E7-9 Reporting Inventory at Lower of Cost or Market Sandals Company was formed on January 1, 2008, and is preparing the annual financial statements dated December 31, 2008. Ending inventory information about the four major items stocked for regular sale follows:Required: 1. Compute the amount that
E7-8 Reporting Inventory at Lower of Cost or Market Peterson Furniture Designs is preparing the annual financial statements dated December 31, 2009. Ending inventory information about the five major items stocked for regular sale follows:Required: Complete the final two columns of the table and
E7-7 Choosing LIFO versus FIFO When Costs Are Rising and Falling Use the following information to complete this exercise: sales, 550 units for $12,500; beginning inventory on January 1 of 300 units; purchases of 100 units on February 18, and 300 units on September 14; sales of 300 units on June 5,
E7-6 Evaluating the Effects of Three Inventory Methods on Income from Operations, Income Taxes, and Net Income (Perpetual Inventory) Following is partial information for the cost of goods sold calculation and income statement of Timber Company under three different inventory costing methods,
E7-5 Evaluating the Effects of Three Inventory Methods on Income from Operations, Income Taxes, and Net Income (Perpetual Inventory) Courtney Company uses a perpetual inventory system. Data for 2009: beginning merchandise inventory (December 31, 2008), 1,000 units at $35; purchases include 2,000
E7-4 Calculating Cost of Goods Sold and Ending Inventory under FIFO, LIFO, and Weighted Average (Perpetual Inventory) In its first month of operations, Literacy for the Illiterate opened a new bookstore and bought merchandise in the following order: (1) 300 units at $7 on January 1, (2) 450 units
A company provides a shirt laundering service. The standard cost and revenue for laundering one batch of shirts is as follows.£ per batch Selling price 23 Materials cost (detergent, starch, etc.) 3 Labour cost 14 Variable overhead cost 1 Fixed costs incurred each month amount to £15,900.The
The following extract is taken from the delivery cost budget of D Limited:Miles travelled 4,000 5,500 Delivery cost £9,800 £10,475 The fl exible budget cost allowance for 6,200 miles travelled is £
A company produces a single product B. The company budgets to sell 2,200 units of product B during period 4 and sales are budgeted to be 10 per cent higher in period 5. It is company policy to hold inventories of fi nished goods equal to 20 per cent of the following period’s sales.The budgeted
Which ONE of the following factors could explain a favourable direct material usage variance?A More staff were recruited to inspect for quality, resulting in a higher rejection rate.B When estimating the standard product cost, usage of material had been set using ideal standards.C The company had
G repairs electronic calculators. The wages budget for the last period was based on a standard repair time of 24 minutes per calculator and a standard wage rate of $10.60 per hour.Following the end of the budget period, it was reported that:Number of repairs 31,000 Labour rate variance $3,100
Data for product W are as follows.Direct material cost per unit £22 Direct labour cost per unit £65 Direct labour hours per unit 5 hours Production overhead absorption rate £3 per direct labour hour Mark-up for non-production overhead costs 8% of total production cost The company requires a 15
A company undertaking long-term building contracts has a fi nancial year-end of 30 April.The following details on the purchase and use of machinery refer to contract A44, which was started on 1 May year 3 and is due for completion after 27 months.1 July year 3: Machine 1 was purchased at a cost of
The following data have been extracted from the budget working papers of GY Limited.Production volume (units) 2,000 3,000£ per unit £ per unit Direct materials 6.00 6.00 Direct labour 7.50 7.50 Production overhead – department A 13.50 9.00 Production overhead – department B 7.80 5.80(a) The
An advertising agency uses a job costing system to calculate the cost of client contracts.Contract A42 is one of several contracts undertaken in the last accounting period. Costs associated with the contract consist of:Direct materials $5,500 Direct expenses $14,500 Design staff worked 1,020 hours
Information concerning contract H7635 is as follows:£Cost incurred to date 592,000 Cost to be incurred to complete contract 189,000 Value of work certifi ed 800,000 Cash received from customer 640,000 Total contract value 1,015,000 No problems are foreseen on the contract and no profi t has been
J absorbs production overheads on the basis of machine hours. The following budgeted and actual information applied in its last accounting period:Budget Actual Production overhead $180,000 $178,080 Machine hours 40,000 38,760(a) At the end of the period, production overhead will be reported
The following graph shows the wages earned by an employee during a single day:Output Wages ($)0 Which ONE of the remuneration systems listed below does the graph represent?Differential piecework.A fl at rate per hour with a premium for overtime working.Straight piecework.Piecework with a guaranteed
The accounting entries necessary to record an adverse labour effi ciency variance in the ledger accounts are:Debit Credit No entry in this account Wages control account Labour variance account Work-in-progress control account
A fi rm calculates the material price variance when material is purchased. The accounting entries necessary to record a favourable material price variance in the ledger are:Debit Credit No entry in this account Material control account Work-in-progress control account Material price variance account
Over long time periods of several years, supervisory labour costs will tend to behave as:linear variable costs step fi xed costs fi xed costs semi-variable costs
A performance standard which assumes effi cient levels of operation, but which includes allowances for factors such as waste and machine downtime is known as:an allowable standard an attainable standard an ideal standard a current standard
A company manufactures three products, X, Y and Z. The sales demand and the standard unit selling prices and costs for the next accounting period, period 1, are estimated as follows:X Y Z Maximum demand (000 units) 4.0 5.5 7.0£ per unit £ per unit £ per unit Selling price 28 22 30 Variable
Which of the following actions are appropriate if a company anticipates a temporary cash shortage (tick all that apply)?(i) issue additional shares;(ii) request additional bank overdraft facilities;(iii) sell machinery currently working at half capacity;(iv) postpone the purchase of plant and
The principal budget factor for a footwear retailer is the cost item taking the largest share of total expenditure.the product line contributing the largest amount to sales revenue.the product line contributing the largest amount to business profi ts.the constraint that is expected to limit the
A hospital’s records show that the cost of carrying out health checks in the last fi ve accounting periods have been as follows:Period Number of patients seen Total cost£1 650 17,125 2 940 17,800 3 1,260 18,650 4 990 17,980 5 1,150 18,360 Using the high–low method and ignoring infl ation, the
The diagram represents the behaviour of a cost item as the level of output changes:Output Total cost ($)0 Which ONE of the following situations is depicted by the graph?Discounts are received on additional purchases of material when certain quantities are purchased.Employees are paid a guaranteed
An engineering fi rm operates a job costing system. Production overhead is absorbed at the rate of £8.50 per machine hour. In order to allow for non-production overhead costs and profi t, a mark up of 60% of prime cost is added to the production cost when preparing price estimates.The estimated
A machine operator is paid £10.20 per hour and has a normal working week of 35 hours.Overtime is paid at the basic rate plus 50%. If, in week 7, the machine operator worked 42 hours, the overtime premium paid to the operator would be £ .
The normal loss in process 2 is valued at its scrap value. Extracts from the process account and the abnormal gain account for the latest period are shown below.Process 2£ £Opening WIP 1,847 Output to fi nished goods Conversion costs 14,555 5,100 units 22,695 Input materials 6,490 Normal loss
Which of the following costs would be classifi ed as production overhead cost in a food processing company (tick all that apply)?The cost of renting the factory building.The salary of the factory manager.The depreciation of equipment located in the materials store.The cost of ingredients.
The management accountant’s report shows that fi xed production overheads were overabsorbed in the last accounting period. The combination that is certain to lead to this situation is Production activity and Fixed overhead expenditure lower than budget lower than budget higher than budget higher
A company uses the repeated distribution method to reapportion service department costs.The use of this method suggests the company’s overhead rates are based on estimates of cost and activity levels, rather than actual amounts.there are more service departments than production cost centres.the
A company expects to sell h units in the next accounting period, and has prepared the following breakeven chart.Costs &Revenues($)Output & sales (units)Total revenue Total cost mn 0 g h pf k(a) The margin of safety is shown on the diagram by (insert correct letter).(b) The effect of an increase
In an integrated accounting system, the accounting entries to complete the production overhead control account at the end of the period, when the production overheads absorbed exceed the actual production overhead incurred are:Debit Credit No entry in this account Production overhead control
The Drop In Café sells specialist coffees to customers to drink on the premises or to take away.The proprietors have established that the cost of ingredients is a wholly variable cost in relation to the number of cups of coffee sold whereas staff costs are semi-variable and rent costs are fi
H Limited budgets to produce and sell 4,000 units of product H next year. The amount of capital investment required to support product H will be £ 290,000 and H Limited requires a rate of return of 14 per cent on all capital invested.The full cost per unit of product H is £ 45.90.To the nearest
In an integrated bookkeeping system, the correct entries to record the issue of indirect materials for production purposes are:Debit Credit No entry in this account Materials control account Work in progress account Production overhead control account
In an integrated bookkeeping system, the correct entries to record the depreciation of production machinery are:Debit Credit No entry in this account Depreciation of production machinery Work in progress account Production overhead control account
Which of the following inventory valuation methods results in charges to cost of sales which are close to the economic cost?First In, First Out (FIFO)Last In, First Out (LIFO)Average Cost (AVCO)
The following data relate to a process for the latest period.Opening work in progress 300 kg valued as follows Input material £ 1,000 Conversion cost £ 200 Input during period 8,000 kg at a cost of £ 29,475 Conversion costs £ 11,977 Output 7,000 kg Closing work in progress 400 kg Closing work
R Ltd has the following year-end information regarding one of its long-term contracts:£Revenue credited to income statement 2,500,000 Profi t recognised 750,000 Cash received 1,875,000 Costs to date 2,200,000 Future costs 220,000(a) The cost charged to the income statement in respect of this
Which of the following would contribute towards a favourable sales price variance (tick all that apply)?(a) The standard sales price per unit was set too high .(b) Price competition in the market was not as fi erce as expected .(c) Sales volume was higher than budgeted and therefore sales revenue
A company is faced with a shortage of skilled labour next period.When determining the production plan that will maximise the company’s profi t next period, the company’s products should be ranked according to their:profi t per hour of skilled labour profi t per unit of product sold contribution
X Ltd manufactures a product called the ‘ ZT ’ . The budget for next year was:Annual sales 10,000 units£ per unit Selling price 20 Variable cost 14 Fixed costs 3 Profi t 3 If the selling price of the ZT were reduced by 10 per cent, the sales revenue that would be needed to generate the
X Ltd uses the FIFO method to charge material issue costs to production. Opening inventory of material M at the beginning of April was 270 units valued at £ 4 per unit.Movements of material M during April were as follows.4 April Received 30 units at £ 4.10 per unit 9 April Issued 210 units 14
The sales price variance is £adverse favourable X Ltd operates a standard costing system. The following budgeted and standard cost information is available:Budgeted production and sales 10,000 units £ per unit Selling price 250 Direct material cost – 3 kg £ 10 30 Direct labour cost – 5
The sales volume contribution variance is £adverse favourable X Ltd operates a standard costing system. The following budgeted and standard cost information is available:Budgeted production and sales 10,000 units £ per unit Selling price 250 Direct material cost – 3 kg £ 10 30 Direct labour
The variable production overhead effi ciency variance is £adverse favourable X Ltd operates a standard costing system. The following budgeted and standard cost information is available:Budgeted production and sales 10,000 units £ per unit Selling price 250 Direct material cost – 3 kg £ 10 30
The variable production overhead expenditure variance is £adverse favourable X Ltd operates a standard costing system. The following budgeted and standard cost information is available:Budgeted production and sales 10,000 units £ per unit Selling price 250 Direct material cost – 3 kg £ 10 30
The direct labour effi ciency variance is £adverse favourable X Ltd operates a standard costing system. The following budgeted and standard cost information is available:Budgeted production and sales 10,000 units £ per unit Selling price 250 Direct material cost – 3 kg £ 10 30 Direct labour
The direct labour rate variance is £adverse favourable X Ltd operates a standard costing system. The following budgeted and standard cost information is available:Budgeted production and sales 10,000 units £ per unit Selling price 250 Direct material cost – 3 kg £ 10 30 Direct labour cost
The direct material usage variance is £adverse favourable X Ltd operates a standard costing system. The following budgeted and standard cost information is available:Budgeted production and sales 10,000 units £ per unit Selling price 250 Direct material cost – 3 kg £ 10 30 Direct labour cost
The direct material price variance is £adverse favourable X Ltd operates a standard costing system. The following budgeted and standard cost information is available:Budgeted production and sales 10,000 units £ per unit Selling price 250 Direct material cost – 3 kg £ 10 30 Direct labour cost
R Ltd makes one product, which passes through a single process.Details of the process for period 1 were as follows:£Material cost – 20,000 kg 26,000 Labour cost 12,000 Production overhead cost 5,700 Output 18,800 kg Normal losses 5% of input There was no work-in-progress at the beginning or end
In a standard cost bookkeeping system, when the actual material usage has been greater than the standard material usage, the entries to record this is in the accounts are:Debit Credit No entry in this account Material usage variance account Raw material control account Work in progress account
Which one of the following statements is correct:Job costing can only be applied where work is undertaken on the customer’s premises Batch costing can only be applied where every unit in the batch is separately identifi able Contract costing can only be applied where every contract is separately
The following details have been extracted from the payables records of X:Invoices paid in the month of purchase 25%Invoices paid in the fi rst month after purchase 70%Invoices paid in the second month after purchase 5%Purchases for July to September are budgeted as follows:July $250,000 August
£ Sales Total cost Fixed cost Level of activity(a) This graph is known as a semi-variable cost chart.conventional breakeven chart.contribution breakeven chart.profi t volume chart.(b) The shaded area on the graph represents:loss fi xed cost variable cost profi t
Which of the following would be included in the cash budget, but would not be included in the budgeted income statement? Tick all that are correct.Repayment of a bank loan.Proceeds from the sale of a non-current asset.Bad debts write off.
The following extract is taken from the overhead budget of X Ltd:Budgeted activity 50% 75%Budgeted overhead £ 100,000 £ 112,500 The overhead budget for an activity level of 80 per cent would be £
When calculating the material purchases budget, the quantity to be purchased equals material usage materials closing inventory materials opening inventory material usage materials closing inventory materials opening inventory material usage materials closing inventory materials opening
The material cost budget for Month 2 will be $ .
The production budget for Month 1 will be units.
Which of the following would NOT be included in a cash budget? Tick all that would NOT be included.Depreciation Provisions for doubtful debts Wages and salaries The following information is required for Questions 17 and 18 X is preparing its budgets for the forthcoming year.The estimated sales for
R Ltd has been asked to quote for a job. The company aims to make a profi t margin of 20% on sales. The estimated total variable production cost for the job is £ 125.Fixed production overheads for the company are budgeted to be £ 250,000 and are recovered on the basis of labour hours. There are
At the end of the year, the total of all of the production overheads debited to the Finishing Department Production Overhead Control Account was £ 130,000, and the actual output achieved was 100,000 units.(a) The overheads for the Finishing Department were:under-absorbed over-absorbed(b) The value
The budgeted production overhead absorption rate for the Assembly Department will be£ per unit.
Overtime premium is the additional amount paid for hours worked in excess of the basic working week.the additional amount paid over and above the normal hourly rate for hours worked in excess of the basic working week.the additional amount paid over and above the overtime rate for hours worked in
A company operates a differential piece-rate system and the following weekly rates have been set:1–500 units £ 0.20 per unit in this band 501–600 units £ 0.25 per unit in this band 601 units and above £ 0.55 per unit in this band Details relating to employee A for the latest week are shown
The following scattergraph has been prepared for the costs incurred by an organisation that delivers hot meals to the elderly in their homes.6000 5000 4000 3000 2000 200 400 Number of meals delivered 1000£Based on the scattergraph:(a) the period fi xed cost is £(b) the variable cost per meal
The budgeted contribution for R Limited last month was £ 32,000. The following variances were reported.Variance £Sales volume contribution 800 adverse Material price 880 adverse Material usage 822 favourable Labour effi ciency 129 favourable Variable overhead effi ciency 89 favourable No other
A Limited has completed the initial allocation and apportionment of its overhead costs to cost centres as follows.Initial Cost centre allocation£ 000 Machining 190 Finishing 175 Stores 30 Maintenance 25 420 The stores and maintenance costs must now be reapportioned taking account of the service
A retailer uses a Last In First Out (LIFO) inventory valuation system. Movements of item M for February are as follows.Units £ per unit 1st February Opening inventory balance 230 7.80 3rd February Receipts 430 7.95 8th February Issues 370 14th February Issues 110 22nd February Receipts 400 8.01 No
In an integrated bookkeeping system, when the actual production overheads exceed the absorbed production overheads, the accounting entries to close off the production overhead account at the end of the period would be:Debit Credit No entry in this account Production overhead account Work in
X Ltd absorbs overheads on the basis of machine hours. Details of budgeted and actual fi gures are as follows:Budget Actual Overheads £ 1,250,000 £ 1,005,000 Machine hours 250,000 hours 220,000 hours(a) Overheads for the period were:under-absorbed over-absorbed(b) The value of the under/over
X operates an integrated cost accounting system. The Work-in-Progress Account at the end of the period showed the following information:Work-in-Progress Account$ $Stores ledger a/c 100,000 ? 200,000 Wage control a/c 75,000 Factory overhead a/c 50,000 Balance c/d 25,000 225,000 225,000 The $200,000
R Ltd absorbs overheads based on units produced. In one period, 110,000 units were produced and the actual overheads were £ 500,000. Overheads were £ 50,000 over-absorbed in the period.The overhead absorption rate was £ per unit.
The principal budget factor is the factor which limits the activities of the organisation and is often the starting point in budget preparation.budgeted revenue expected in a forthcoming period.main budget into which all subsidiary budgets are consolidated.overestimation of revenue budgets and
Which ONE of the following would be classifi ed as direct labour?Personnel manager in a company servicing cars.Bricklayer in a construction company.General manager in a DIY shop.Maintenance manager in a company producing cameras.
Data for sub-questions 56.1–56.3 A company produces a single product that passes through two processes. The details for process 1 are as follows:Materials input 20,000 kg at £2.50 per kg Direct labour £15,000 Production overheads 150 per cent of direct labour Normal losses are 15 per cent of
SS Developments Ltd is currently converting a former hospital into residential apartments.The contract commenced on 1 March 20 X 0 and is expected to take a year and a half to complete. The contract value is £10 million. SS Developments Ltd’s fi nancial year runs from 1 January to 31
Acme Electronics Ltd makes specialist electronic equipment to order. There are three main departments: Preparation, Etching and Assembly. Preparation and Etching are departments which use a considerable amount of machinery while Assembly is mainly a manual operation using simple hand tools.For
A company has been asked to quote for a job. The company aims to make a net profi t of 30 per cent on sales. The estimated cost for the job is as follows:Direct materials 10 kg @ £10 per kg Direct labour 10 hours @ £10 per hour Variable production overheads are recovered at the rate of £4 per
An accountant is to set up in private practice. She anticipates working a 35-hour week and taking four weeks ’ holiday per year. General expenses of the practice are expected to be£20,000 per year, and she has set herself a target of £40,000 a year salary.Assuming that only 75 per cent of her
PZ Ltd undertakes work to repair, maintain and construct roads. When a customer requests the company to do work, PZ Ltd supplies a fi xed price to the customer, and allocates a works order number to the customer’s request. This works order number is used as a reference number on all documentation
STD Ltd operates an integrated standard costing system for its single product. All inventories are valued at standard price.During a period the following variances were recorded:Favourable Adverse£ £Material price 3,950 Material usage 1,925 Labour rate 1,325 Labour effi ciency 1,750(a) Tick the
A company uses standard costing and an integrated accounting system. The double entry to record a favourable labour rate variance is:Debit Credit(A) Work in progress account Labour rate variance account(B) Labour rate variance account Work in progress account(C) Wages control account Labour rate
WYZ Limited operates an integrated accounting system.The following information was available for period 7:£Cost of fi nished goods produced 1,241,500 Direct wages 173,400 Direct material issues 598,050 Indirect material issues 32,800 Direct material purchases on credit 617,300 Production overheads
Wages incurred last period amounted to £33,400, of which £27,400 were direct wages and£6,000 were indirect production wages. Wages paid in cash were £31,700.Which of the following entries would arise as a result of these transactions? (Tick all that are correct.)(a) Debit Wages control account
ABC Ltd operates an integrated cost accounting system. The production overhead control account at 31 July, which is ABC Ltd’s year-end, showed the following information:Production overhead control account£ £Trade payables 50,000 Work in progress 120,000 Bank 20,000 ? 5,000 Depreciation 5,000
A company operates an integrated cost and fi nancial accounting system. The accounting entries for the return to stores of unused direct materials from production would be:Debit Credit(A) Work in progress account Stores control account(B) Stores control account Work in progress account(C) Stores
A company operates a premium bonus system by which employees receive a bonus of 75 per cent of the time saved compared with a standard time allowance (at the normal hourly rate).Details relating to employee X are shown below:Actual hours worked 42 Hourly rate of pay £10 Output achieved 400 units
The sales volume contribution variance for the latest period was favourable. Which of the following reasons could have contributed to this variance? (tick all that apply).(a) A lower selling price was charged than standard(b) The variable cost per unit was lower than standard, which led to a higher

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Cima Official Learning System Fundamentals Of Management Accounting 4th Edition Janet Walker - Solutions

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