1.) The management of Zorrilla Corporation is considering dr…
1.) The management of Zorrilla...
1.) The management of Zorrilla Corporation is considering dropping product R10C. Data from the company's accounting system appear below:Submitted: 10 years ago.Category: Homework
All fixed expenses of the company are fully allocated to products in the company's accounting system. Further investigation has revealed that $42,000 of the fixed manufacturing expenses and $48,000 of the fixed selling and administrative expenses are avoidable if product R10C is discontinued.
What would be the effect on the company's overall net operating income if product R10C were dropped?
A. Overall net operating income would decrease by $28,000.
B. Overall net operating income would decrease by $45,000.
C. Overall net operating income would increase by $28,000.
D. Overall net operating income would increase by $45,000.
The following information is used to complete #2
The Clemson Company reported the following results last year for the manufacture and sale of one of its products known as a Tam.
Clemson Company is trying to determine whether or not to discontinue the manufacture and sale of Tams. The operating results reported above for last year are expected to continue in the foreseeable future if the product is not dropped. The fixed manufacturing overhead represents the costs of production facilities and equipment that the Tam product shares with other products produced by Clemson. If the Tam product were dropped, there would be no change in the fixed manufacturing costs of the company.
2.) Assume that discontinuing the manufacture and sale of Tams will have no effect on the sale of other product lines. If the company discontinues the Tam product line, the change in annual operating income (or loss) should be:
A. $55,000 decrease
B. $65,000 decrease
C. $90,000 decrease
D. $70,000 increase
3.) Which of the following is not a benefit of budgeting?
A. It uncovers potential bottlenecks before they occur.
B. It coordinates the activities of the entire organization by integrating the plans and objectives of the various parts.
C. It ensures that accounting records comply with generally accepted accounting principles.
D. It provides benchmarks for evaluating subsequent performance.
4.) There are various budgets within the master budget. One of these budgets is the production budget. Which of the following BEST describes the production budget?
A. It details the required direct labor hours.
B. It details the required raw materials purchases.
C. It is calculated based on the sales budget and the desired ending inventory.
D. It summarizes the costs of producing units for the budget period.
The information below is regarding the next 3 problems.
Coles Company, Inc. makes and sells a single product, Product R. Three yards of Material K are needed to make one unit of Product R. Budgeted production of Product R for the next five months is as follows:
The company wants to maintain monthly ending inventories of Material K equal to 20% of the following month's production needs. On July 31, this requirement was not met since only 2,500 yards of Material K were on hand. The cost of Material K is $0.85 per yard. The company wants to prepare a Direct Materials Purchase Budget for the rest of the year.
5.) The total cost of Material K to be purchased in August is:
6.) The desired ending inventory of Material K for the month of September is:
A. 7,560 yards
B. 8,400 yards
C. 8,700 yards
D. 9,300 yards
7.) The total needs (i.e., production requirements plus desired ending inventory) of Material K for the month of November are:
A. 37,800 yards
B. 44,940 yards
C. 37,380 yards
D. 45,360 yards
8. Kronstedt Corporation has a standard cost system in which it applies manufacturing overhead to products on the basis of standard machine-hours (MHs). The company has provided the following data for the most recent month:
What was the variable overhead rate variance for the month?
A. $710 unfavorable
B. $1,340 unfavorable
C. $630 favorable
D. $3,000 unfavorable
The information below is used to answer #9 and #10
Osier Corporation, which produces cellular transmission towers, has provided the following data:
9. The variable overhead efficiency variance for indirect labor is:
A. $10,107 F
B. $1,288 F
C. $10,107 U
D. $1,288 U
10. The variable overhead efficiency variance for power is:
A. $2,205 F
B. $238 U
C. $2,443 F
D. $2,205 U
The following information is used in completing #11 and #12
The following labor standards have been established for a particular product:
The following data pertain to operations concerning the product for the last month:
11. What is the labor rate variance for the month?
A. $160 U
B. $160 F
C. $480 U
D. $480 F
12. What is the labor efficiency variance for the month?
A. $2,208 U
B. $2,272 U
C. $2,688 F
D. $2,688 U
The following information is used to solve problems #13 and #14
The following materials standards have been established for a particular product:
The following data pertain to operations concerning the product for the last month:
13. What is the materials price variance for the month?
A. $3,420 F
B. $3,720 F
C. $3,720 U
D. $3,420 U
14. What is the materials quantity variance for the month?
A. $9,150 U
B. $8,850 U
C. $15,921 U
D. $15,399 U
The following information is used to solve #15, #16, #17
Manago Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During March, the company budgeted for 5,300 units, but its actual level of activity was 5,310 units. The company has provided the following data concerning the formulas to be used in its budgeting:|
15. The selling and administrative expenses in the planning budget for March would be closest to:
16. The net operating income in the planning budget for March would be closest to:
17. The direct materials in the flexible budget for March would be closest to:
The following information is needed to complete #18, #19 and #20.
Laboe Kennel uses tenant-days as its measure of activity; an animal housed in the kennel for one day is counted as one tenant-day. During February, the kennel budgeted for 2,900 tenant-days, but its actual level of activity was 2,940 tenant-days. The kennel has provided the following data concerning the formulas to be used in its budgeting:
18. The administrative expenses in the planning budget for February would be closest to:
19. The net operating income in the planning budget for February would be closest to:
20. The expendables in the flexible budget for February would be closest to:
21. Capid Corporation is a wholesaler of industrial goods. Data regarding the store's operations follow:
• Sales are budgeted at $360,000 for November, $330,000 for December, and $320,000 for January.
• Collections are expected to be 60% in the month of sale, 36% in the month following the sale, and 4% uncollectible.
• The cost of goods sold is 75% of sales.
• The company purchases 40% of its merchandise in the month prior to the month of sale and 60% in the month of sale. Payment for merchandise is made in the month following the purchase.
• The November beginning balance in the accounts receivable account is $77,000.
• The November beginning balance in the accounts payable account is $271,000.
a. Prepare a Schedule of Expected Cash Collections for November and December.
b. Prepare a Merchandise Purchases Budget for November and December.
22. Wrape Urban Diner is a charity supported by donations that provides free meals to the homeless. The diner's budget for April was based on 2,100 meals. The diner's director has provided the following cost data to use in the budget: groceries, $2.55 per meal; kitchen operations, $4,700 per month plus $1.70 per meal; administrative expenses, $3,300 per month plus $0.60 per meal; and fundraising expenses, $1,000 per month. The director has also provided the diner's statement of actual expenses for the month:
Prepare a flexible budget performance report showing both the activity variances and the spending variances for each of the expenses and for total expenses for April. Label each variance as favorable (F) or unfavorable (U).
23. Lido Company's standard and actual costs per unit for the most recent period, during which 400 units were actually produced, are given below:
From the foregoing information, compute the following variances. Show whether the variance is favorable (F) or unfavorable (U):
a. Materials price variance.
b. Materials quantity variance.
c. Direct labor rate variance.
d. Direct labor efficiency variance.
e. Variable overhead rate variance.
f. Variable overhead efficiency variance.
24. The Winter Products Division of American Sports Corporation produces and markets two products for use in the snow: Sleds and Saucers. The following data were gathered on activities last month:
Prepare a segmented income statement in the contribution format for last month.
25. The management of Drummer Corporation is considering dropping product D84L. Data from the company's accounting system appear below:
All fixed expenses of the company are fully allocated to products in the company's accounting system. Further investigation has revealed that $201,000 of the fixed manufacturing expenses and $156,000 of the fixed selling and administrative expenses are avoidable if product D84L is discontinued.
What would be the effect on the company's overall net operating income if product D84L were dropped? Should the product be dropped? Show your work!
Tilson Company has projected sales and production in units for the second quarter of the coming year as follows:
Cash-related production costs are budgeted at $7 per unit produced. Of these production costs, 40% are paid in the month in which they are incurred and the balance in the following month. Selling and administrative expenses will amount to $110,000 per month. The accounts payable balance on March 31 totals $193,000, which will be paid in April.
All units are sold on account for $16 each. Cash collections from sales are budgeted at 60% in the month of sale, 30% in the month following the month of sale, and the remaining 10% in the second month following the month of sale. Accounts receivable on April 1 totaled $520,000 $(100,000 from February's sales and the remainder from March).
a. Prepare a schedule for each month showing budgeted cash disbursements for the Tilson Company.
b. Prepare a schedule for each month showing budgeted cash receipts for Tilson Company.