ACC 211 Unit 3 MC

Which of the following is a benefit of preparing a cash budget?

A. It helps to estimate the average collection period of sales during a period.
B. It helps to estimate the amount of credit sales during a period.
C. It helps estimate the amount to be borrowed or loans to be repaid during a period.
D. It helps to estimate the current assets ratio during the budgeted period.

C. It helps estimate the amount to be borrowed or loans to be repaid during a period.

Which of the following is part of cash disbursement section of cash budget?

A. Depreciation expense
B. Purchases
C. Loss on sale of assets
D. Cash sales

B. Purchases

The amount of borrowings necessary to achieve minimum desired cash amount is called

A. cash deficiency.
B. operating loss.
C. cash outflow.
D. solvency level.

A. cash deficiency.

Explanations for the budgeted figures are typically provided in the

A. budgeted balance sheet.
B. footnotes.
C. budgeted income statement.
D. participative budgeting.

B. footnotes

Which of the following budgets shows the expected cost of all production costs other than direct materials and direct labor?

A. Production budget
B. Overhead budget
C. Cash budget
D. Direct labor budget

B. Overhead budget

Which of the following is true of the selling and administrative expenses budget?

A. It outlines planned expenditures for nonmanufacturing activities.
B. It outlines planned expenditures for manufacturing as well as nonmanufacturing activities.
C. It is the basis for all of the other operating budgets and financial budgets.
D. It is the basis for all of the other operating budgets and most of the financial budgets.

A. It outlines planned expenditures for nonmanufacturing activities.

The budgeted income statement helps managers:

A. determine the amounts to be spent on nonproduction categories.
B. determine the expected cost of producing one unit of finished goods.
C. determine how much to borrow during the budgeted period.
D. determine how profitable the coming year will be.

D. determine how profitable the coming year will be.

Which of the following is not true?

A.The sales forecast is done before the sales budget.
B. In creating the sales forecast, outside factors such as the state of the economy, should be considered.
C. The production budget is prepared in units and dollars.
D. One approach to forecasting sales is the bottom-up approach.
E.The master budget is the comprehensive plan for the organization as a whole.

C. The production budget is prepared in units and dollars.

Which of the following is a use of budgets for control?

A. Communication is improved.
B. Plans can be made for the future.
C. Budgets set a standard against which results can be compared.
D. If conditions change between the formation of the budget and the current time, budgets can be quickly adapted.
E. All of these choices are correct.

C. Budgets set a standard against which results can be compared.

Sully Company provided the following information for last month.

Production in units 3,000
Direct materials cost $7,000
Direct labor cost $10,000
Overhead cost $9,600
Sales commission per unit sold $4
Price per unit sold $29
Fixed selling and administrative expense $7,000

There were no beginning and ending inventories. What is gross margin for Sully Company last month?
A.$60,400
B.$64,600
C.$32,400
D.$54,000
E.$47,400

A.$60,400

Question Content AreaKenner Company produces two products: SR200 and TX500. Budgeted sales for four months are as follows:

SR200 TX500
May 8,000 20,000
June 13,000 32,000
July 11,000 39,000
August 18,000 46,000

Kenner's ending inventory policy is that SR200 should have 15% of next month's sales in ending inventory and TX500 should have 40% of next month's sales in ending inventory. On May 1, there were 1,200 units of SR200 and 9,000 units of TX500.

TX500 requires 6 units of component A. (SR200 does not use component A.) There were 30,000 units of component A in inventory on May 1. Kenner wants to have 20% of the following month's production needs in inventory for Component A.
What is the desired ending inventory of component A for May?

A.30,000
B.58,500
C.41,760
D.86,000
E.180,000

C.41,760
= production for June*6*20%
= ((39,000*40%) + 32,000 - (32,000*40)) *6*20%

Which of the following is true of the term product mix?

A. It refers to the composition of raw material of the primary product sold by the company.
B. It refers to the benefit sacrificed when one alternative is chosen over another.
C. It refers to the common processes and costs of production up to a split-off point.
D. It refers to the relative amount of each product manufactured by a company.

D. It refers to the relative amount of each product manufactured by a company.

Diamond Materials Corp. produces two types of paper, regular and glossy, with unit contribution margins of $5 and $7, respectively. Each paper must be processed by a special machine. The firm owns four such machines that together provide 12,000 hours of machine time per year. Regular paper requires 0.05 hours of machine time, whereas glossy paper requires 0.20 hours of machine time.

What is the contribution margin per hour of machine time for regular paper?

A. $35
B. $100
C. $25
D. $140

B. $100 (5/0.05)

Pentagon Corporation uses pressure pumps in the production of RO filters. The unit manufacturing costs for the pressure pumps are:

Direct materials $12
Direct labor 3
Variable overhead 1
Fixed overhead 5

Pentagon uses 120,000 units of pressure pumps per year. Hexagon Corporation has offered to sell Pentagon 120,000 units of pressure pumps per year for $17 each. Fixed overhead is unavoidable. Should Pentagon manufacture the pressure pumps or buy them from Hexagon Corporation?

A. Pentagon should buy the pressure pumps because it will save $120,000.
B. Pentagon should make the pressure pumps because it will save $120,000.
C. Pentagon should buy the pressure pumps because it will save $480,000.
D. Pentagon should make the pressure pumps because it will save $480,000.

B. Pentagon should make the pressure pumps because it will save $120,000. (Make sure to include fixed oh in purchase price)

Jack Corporation manufactures steel pipes. It receives a proposal from Crimson Traders to supply Crimson with 4,500 units of pipes. This is a one-time order and will not affect the other sales of the company. Which of the following is most likely to be a relevant cost for Jack Corporation in determining whether it should accept this order or not?

A. Variable manufacturing overheads
B. Fixed manufacturing overheads
C. Variable administrative overheads
D. Fixed administrative overheads

A. Variable manufacturing overheads

Which of the following will help an organization decide whether to keep or drop a product line?

A. Segmented reports on a variable-costing basis
B. Overall fixed overheads on a cash basis
C. Net income on an absorption-costing basis
D. Estimated dividend outflow on an accrual basis

A. Segmented reports on a variable-costing basis

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Question Content Area
The standard quantity of materials allowed is computed as

A. Unit Quantity Standard × Standard Output.
B. Unit Quantity Standard × Normal Output.
C. Unit Quantity Standard × Practical Output.
D. Unit Quantity Standard × Actual Output.
E. None of these.

D. Unit Quantity Standard × Actual Output.

Standards set by engineering studies

A. can determine the most efficient way of operating.
B. can provide rigorous guidelines.
C. may not be achievable by operating personnel.
D. often do not allow operating personnel to have much input.
E. All of these.

E. All of these.

Which of the following is true of currently attainable standards?

A. It demands maximum efficiency and assumes that there will be no inefficiency.
B. It offers less behavioral benefits as compared to ideal standards.
C. It can be achieved only if everything operates perfectly.
D. It can be achieved under efficient operating conditions.

D. It can be achieved under efficient operating conditions.

Which of the following is an advantage of standard product costing?

A. It ensures that the actual product cost does not exceed standard cost of production.
B. It helps to accurately calculate the unit cost for each equivalent unit in process costing.
C. It helps to distinguish between FIFO and weighted average methods of accounting for beginning inventory costs.
D. It provides readily available unit cost information that can be used for pricing decisions at any time throughout a period.

D. It provides readily available unit cost information that can be used for pricing decisions at any time throughout a period.

Which of the following is true of standard quantity of materials allowed?

A. It is the product of unit quantity standard and actual output.
B. It is the product of unit quantity standard and standard output.
C. It is the product of actual unit quantity and actual output.
D. It is the product of actual unit quantity and standard output.

A. It is the product of unit quantity standard and actual output.

Which of the following is true concerning labor variances that are not material in amount?

A. They are closed to Cost of Goods Sold.
B. They are prorated among Work in Process, Finished Goods, and Cost of Goods Sold.
C. They are prorated among Materials, Work in Process, Finished Goods, and Cost of Goods Sold.
D. They are reported on the balance sheet at the end of the year.
E. All of these.

A. They are closed to Cost of Goods Sold.