MULTIPLE CHOICE
1. CVP analysis requires costs to be categorized as _______. (Points : 1)
2. According to CVP analysis, a company could never incur a loss that exceeded its total _______. (Points : 1)
3. CVP analysis is based on concepts from _______. (Points : 1)
4. Which of the following factors is involved in studying cost-volume-profit relationships? (Points : 1)
5. After the level of volume exceeds the break-even point _______. (Points : 1)
6. The method of cost accounting that lends itself to break-even analysis is _______. (Points : 1)
7. Given the following notation, what is the break-even sales level in units?
SP = selling price per unit, FC = total fixed cost, VC = variable cost per unit
(Points : 1)
8. To compute the break-even point in units, which of the following formulas is used? (Points : 1)
9. Below is an income statement for Thompson Company. Based on the cost and revenue structure on the income statement, below, what was Thompson's break-even point in dollars?
Sales $400,000
Variable costs (125,000)
Contribution margin $275,000
Fixed costs (200,000)
Profit before taxes $ 75,000
(Points : 1)
10. Unique Company manufactures a single product. In the prior year, the company had sales of $90,000, variable costs of $50,000, and fixed costs of $30,000. Unique expects its cost structure and sales price per unit to remain the same in the current year, however total sales are expected to increase by 20 percent. If the current year projections are realized, net income should exceed the prior year's net income by _______. (Points : 1)
11. Which of the following is not a characteristic of relevant costing information? It is _______. (Points : 1)
12. Relevant costs are _______. (Points : 1)
13. If a cost is irrelevant to a decision, the cost could not be _______. (Points : 1)
14. A cost is sunk if it _______. (Points : 1)
15. In deciding whether an organization will keep an old machine or purchase a new machine, a manager would ignore the _______. (Points : 1)
16. The opportunity cost of making a component part in a factory with excess capacity for which there is no alternative use is _______. (Points : 1)
17. In a make or buy decision, the opportunity cost of capacity could _______. (Points : 1)
18. When a scarce resource, such as space, exists in an organization, the criterion that should be used to determine production is _______. (Points : 1)
19. Fixed costs are ignored in allocating scarce resources because _______. (Points : 1)
20. The minimum selling price that should be acceptable in a special order situation is equal to total _______. (Points : 1)
Click here for the solution: CVP analysis requires costs to be categorized as
Showing posts with label requires. Show all posts
Showing posts with label requires. Show all posts
Monday, October 26, 2015
Sunday, September 27, 2015
The agreement under which Patterson, Inc., issued its long-term debt requires the restriction of $200,000 of the company's retained earnings balance
The agreement under which Patterson, Inc., issued its long-term debt requires the restriction of $200,000 of the company's retained earnings balance. Total retained earnings is $250,000 and total paid in capital is $500,000.
Required
Show how to report stockholder's equity on Patterson's balance sheet, assuming the following:
A. Patterson discloses the restrictions in a note. Write the note.
B. Patterson appropriates retained earnings in the amount of the restriction and includes no note in its statements.
C. Patterson's cash balance is $100,000. What is the maximum amount of dividends Patterson can declare?
Click here for the solution: The agreement under which Patterson, Inc., issued its long-term debt requires the restriction of $200,000 of the company's retained earnings balance
Required
Show how to report stockholder's equity on Patterson's balance sheet, assuming the following:
A. Patterson discloses the restrictions in a note. Write the note.
B. Patterson appropriates retained earnings in the amount of the restriction and includes no note in its statements.
C. Patterson's cash balance is $100,000. What is the maximum amount of dividends Patterson can declare?
Click here for the solution: The agreement under which Patterson, Inc., issued its long-term debt requires the restriction of $200,000 of the company's retained earnings balance
Saturday, August 22, 2015
Winston Industries and Ewing Inc. enter into an agreement that requires Ewing Inc. to build three diesel-electric engines to Winston’s specifications
Winston Industries and Ewing Inc. enter into an agreement that requires Ewing Inc. to build three diesel-electric engines to Winston’s specifications. Upon completion of the engines, Winston has agreed to lease them for a period of 10 years and to assume all costs and risks of ownership. The lease is non-cancelable, becomes effective on January 1, 2011, and requires annual rental payments of $413,971 each January 1, starting January 1, 2011. Winston’s incremental borrowing rate is 10%. The implicit interest rate used by Ewing Inc. and known to Winston is 8%. The total cost of building the three engines is $2,600,000. The economic life of the engines is estimated to be 10 years, with residual value set at zero. Winston depreciates similar equipment on a straight-line basis. At the end of the lease, Winston assumes title to the engines. Collectibility of the lease payments is reasonably certain; no uncertainties exist relative to un-reimbursable lessor costs.
(Round all numbers to the nearest dollar.)
(a) Discuss the nature of this lease transaction from the viewpoints of both lessee and lessor.
(b) Prepare the journal entry or entries to record the transaction on January 1, 2011, on the books of Winston Industries.
(c) Prepare the journal entry or entries to record the transaction on January 1, 2011, on the books of Ewing Inc.
(d) Prepare the journal entries for both the lessee and lessor to record the first rental payment on January 1, 2011.
(e) Prepare the journal entries for both the lessee and lessor to record interest expense (revenue) at December 31, 2011. (Prepare a lease amortization schedule for 2 years.)
(f) Show the items and amounts that would be reported on the balance sheet (not notes) at December 31, 2011, for both the lessee and the lessor.
Click here for the solution: Winston Industries and Ewing Inc. enter into an agreement that requires Ewing Inc. to build three diesel-electric engines to Winston’s specifications
(Round all numbers to the nearest dollar.)
(a) Discuss the nature of this lease transaction from the viewpoints of both lessee and lessor.
(b) Prepare the journal entry or entries to record the transaction on January 1, 2011, on the books of Winston Industries.
(c) Prepare the journal entry or entries to record the transaction on January 1, 2011, on the books of Ewing Inc.
(d) Prepare the journal entries for both the lessee and lessor to record the first rental payment on January 1, 2011.
(e) Prepare the journal entries for both the lessee and lessor to record interest expense (revenue) at December 31, 2011. (Prepare a lease amortization schedule for 2 years.)
(f) Show the items and amounts that would be reported on the balance sheet (not notes) at December 31, 2011, for both the lessee and the lessor.
Click here for the solution: Winston Industries and Ewing Inc. enter into an agreement that requires Ewing Inc. to build three diesel-electric engines to Winston’s specifications
Monday, August 17, 2015
The Sarbanes-Oxley Act requires that all US corporations under the jurisdiction of the Securities and Exchange Commission
MULTIPLE CHOICE
1. The Sarbanes-Oxley Act requires that all US corporations under the jurisdiction of the Securities and Exchange Commission
2. The control principle related to NOT having the same person authorize and pay for goods is known as
3. Maximum benefit from independent internal verification is obtained when
4. Allowing only designated personnel to handle cash receipts is an example of
5. Storing cash in a company safe is an application of which internal control principle?
6. Reconciling the bank statement monthly is an example of
7. A voucher system is a series of prescribed control procedures
8. The size of the petty cash fund is dependent on
9. A $100 petty cash fund has cash of $18 and receipts of $86. The journal entry to replenish the account would include a
10. A check returned by the bank marked “NSF” means
11. A bank reconciliation should be prepared
12. Deposits in transit
13. When making a payment from the petty cash fund for postage stamps, the following journal entry is made
14. A bank may issue a credit memorandum for
15. Cash equivalents are highly liquid investments that can be converted into a specific amount of cash with maturities of
16. Interest is usually associated with
17. Which of the following would require a compound journal entry?
18. If a company fails to record estimated bad debts expense
19. The existing balance in Allowance for Doubtful Accounts is considered in computing bad debts expense in the
20. An aging of a company’s accounts receivables indicates that $9,000 are estimated to be uncollectable. If Allowance for Doubtful Accounts has a $1,100 credit balance, the adjustment to record bad debts for the period will require a
21. A reasonable amount of uncollectible accounts is evidence
22. Bad debt Expense is reported on the income statement as
23. Two bases for estimating uncollectible accounts are
24. Using the percentage of receivables method for recording bad debt expense, estimated uncollectible accounts are $25,000. If the balance of the Allowance for Doubtful Accounts is $8000 debit before adjustment, what is the amount of bad debts expense for that period?
25. The sale of receivables by a business
26. A company regularly sales its receivables to a factor who assesses a 2% service charge on the amount of receivables purchased. Which of the following statements is true for the seller of the receivables
27. The interest on a $2,000, 6%, 90 day note receivable is
28. A note receivable is a negotiable instrument which
29. When a note is accepted to settle an open account, Notes receivables is debited for the note’s
30. Which of the following are also called trade receivables?
Click here for the solution: The Sarbanes-Oxley Act requires that all US corporations under the jurisdiction of the Securities and Exchange Commission
1. The Sarbanes-Oxley Act requires that all US corporations under the jurisdiction of the Securities and Exchange Commission
2. The control principle related to NOT having the same person authorize and pay for goods is known as
3. Maximum benefit from independent internal verification is obtained when
4. Allowing only designated personnel to handle cash receipts is an example of
5. Storing cash in a company safe is an application of which internal control principle?
6. Reconciling the bank statement monthly is an example of
7. A voucher system is a series of prescribed control procedures
8. The size of the petty cash fund is dependent on
9. A $100 petty cash fund has cash of $18 and receipts of $86. The journal entry to replenish the account would include a
10. A check returned by the bank marked “NSF” means
11. A bank reconciliation should be prepared
12. Deposits in transit
13. When making a payment from the petty cash fund for postage stamps, the following journal entry is made
14. A bank may issue a credit memorandum for
15. Cash equivalents are highly liquid investments that can be converted into a specific amount of cash with maturities of
16. Interest is usually associated with
17. Which of the following would require a compound journal entry?
18. If a company fails to record estimated bad debts expense
19. The existing balance in Allowance for Doubtful Accounts is considered in computing bad debts expense in the
20. An aging of a company’s accounts receivables indicates that $9,000 are estimated to be uncollectable. If Allowance for Doubtful Accounts has a $1,100 credit balance, the adjustment to record bad debts for the period will require a
21. A reasonable amount of uncollectible accounts is evidence
22. Bad debt Expense is reported on the income statement as
23. Two bases for estimating uncollectible accounts are
24. Using the percentage of receivables method for recording bad debt expense, estimated uncollectible accounts are $25,000. If the balance of the Allowance for Doubtful Accounts is $8000 debit before adjustment, what is the amount of bad debts expense for that period?
25. The sale of receivables by a business
26. A company regularly sales its receivables to a factor who assesses a 2% service charge on the amount of receivables purchased. Which of the following statements is true for the seller of the receivables
27. The interest on a $2,000, 6%, 90 day note receivable is
28. A note receivable is a negotiable instrument which
29. When a note is accepted to settle an open account, Notes receivables is debited for the note’s
30. Which of the following are also called trade receivables?
Click here for the solution: The Sarbanes-Oxley Act requires that all US corporations under the jurisdiction of the Securities and Exchange Commission
Friday, July 31, 2015
Jeremy Costa, owner of Costa Cabinets Inc., is preparing a bid on a job that requires $1,800 of direct materials, $1,600 of direct labor, and $800 of overhead
Problem 13-44 Cost-Based Pricing Decision
Jeremy Costa, owner of Costa Cabinets Inc., is preparing a bid on a job that requires $1,800 of direct materials, $1,600 of direct labor, and $800 of overhead. Jeremy normally applies a standard markup based on cost of goods sold to arrive at an initial bid price. He then adjusts the price as necessary in light of other factors (e.g., competitive pressure). Last year’s income statement is as follows:
Sales $130,000
Cost of Goods Sold $48,100
Gross Margin $81,900
Selling and Admin Expense $46,300
Operating Income $35,600
1. Calculate the markup that Jeremy will use.
2. What is Jeremy's initial bid price?
Click here for the solution: Jeremy Costa, owner of Costa Cabinets Inc., is preparing a bid on a job that requires $1,800 of direct materials, $1,600 of direct labor, and $800 of overhead
Jeremy Costa, owner of Costa Cabinets Inc., is preparing a bid on a job that requires $1,800 of direct materials, $1,600 of direct labor, and $800 of overhead. Jeremy normally applies a standard markup based on cost of goods sold to arrive at an initial bid price. He then adjusts the price as necessary in light of other factors (e.g., competitive pressure). Last year’s income statement is as follows:
Sales $130,000
Cost of Goods Sold $48,100
Gross Margin $81,900
Selling and Admin Expense $46,300
Operating Income $35,600
1. Calculate the markup that Jeremy will use.
2. What is Jeremy's initial bid price?
Click here for the solution: Jeremy Costa, owner of Costa Cabinets Inc., is preparing a bid on a job that requires $1,800 of direct materials, $1,600 of direct labor, and $800 of overhead
Saturday, July 11, 2015
The efficient market hypothesis requires
1) The efficient market hypothesis requires
2) If financial markets are efficient, that suggests that
3) Which of the following is included in an individual's cash budget?
4) The tendency for securities prices to overreact may create an anomaly that can lead to superior returns.
a. True
b. False
5) Contributions to a Roth IRA are not tax-deductible.
a. True
b. False
6) Pension plans permit investors to defer income tax.
a. True
b. False
7) With a Roth IRA, the individual
8) Possible investment objectives may include
9) The amount of an outstanding mortgage appears on the individual's balance sheet.
a. True
b. False
10) One anomaly to the efficient market hypothesis is that investments in debt of large firms will earn higher returns than investments in their stock.
a. True
b. False
11) The process of financial planning requires the individual to
12) Examples of tax shelters for individuals include
13) Short-term capital gains are subject to higher tax rates than long-term capital gains.
a. True
b. False
14) Which of the following currently reduces taxes?
15) Net short-term capital losses are used to offset
16) An active portfolio strategy is premised on
17) The traditional IRA is
18) Contributions to an IRA appear on the individual's estimate of cash receipts and disbursements.
a. True
b. False
19) One of the first steps an investor should take is to establish the goals of the portfolio.
a. True
b. False
20) An implication of the efficient market hypothesis is
Click here for the solution: The efficient market hypothesis requires
2) If financial markets are efficient, that suggests that
3) Which of the following is included in an individual's cash budget?
4) The tendency for securities prices to overreact may create an anomaly that can lead to superior returns.
a. True
b. False
5) Contributions to a Roth IRA are not tax-deductible.
a. True
b. False
6) Pension plans permit investors to defer income tax.
a. True
b. False
7) With a Roth IRA, the individual
8) Possible investment objectives may include
9) The amount of an outstanding mortgage appears on the individual's balance sheet.
a. True
b. False
10) One anomaly to the efficient market hypothesis is that investments in debt of large firms will earn higher returns than investments in their stock.
a. True
b. False
11) The process of financial planning requires the individual to
12) Examples of tax shelters for individuals include
13) Short-term capital gains are subject to higher tax rates than long-term capital gains.
a. True
b. False
14) Which of the following currently reduces taxes?
15) Net short-term capital losses are used to offset
16) An active portfolio strategy is premised on
17) The traditional IRA is
18) Contributions to an IRA appear on the individual's estimate of cash receipts and disbursements.
a. True
b. False
19) One of the first steps an investor should take is to establish the goals of the portfolio.
a. True
b. False
20) An implication of the efficient market hypothesis is
Click here for the solution: The efficient market hypothesis requires
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