ADMS 2510 Study Guide - Accounts Payable, Cash Flow, Accounts Receivable

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raspberryswan810

12 Apr 2014

School

York University

Department

Administrative Studies

Course

ADMS 2510

Professor

John Parkinson

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ADMS 2510 Full Course Notes

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Income measurement and the objectives of financial reporting. E4-1: employee wages of employees actually making the candy would be a product cost because they can be attached to the production of candy. People indirectly associated with production of candy could be treated as a period cost: the advertising costs can be attached to the produce to evaluate the overall performance of the candy sensation. Sales commissions would be expensed when the revenue they pertained to was recognized. Ingredients are product costs since they can be easily allocated to specific products. e: conceptually these are product costs since they can be allocated to products. Utilities in a plant can be associated with the production of products. E4-3: recognize revenue when the contract is signed. [it"s assumed that the provision for warranty costs is included in this entry. The important point is that the warranty cost should be accrued at the time the revenue is recognized. ]

Related Questions

The Harrington Honey Company purchases honeycombs from beekeepers for $2.4 a pound. The company produces two main products from the honeycombsâhoney and beeswax. Honey is drained from the honeycombs, and then the honeycombs are melted down to form cubes of beeswax. The beeswax is sold for $2.0 a pound. The honey can be sold in raw form for $3.4 a pound. However, some of the raw honey is used by the company to make honey drop candies. The candies are packed in a decorative container and are sold in gift and specialty shops. A container of honey drop candies sells for $4.8. Each container of honey drop candies contains three quarters of a pound of honey.

The other variable costs associated with making the candies are as follows:

Decorative container $ 0.42

Other ingredients 0.26

Direct labor 0.21

Variable manufacturing overhead 0.11

Total variable manufacturing cost $ 1.00

The monthly fixed manufacturing overhead costs associated with making the candies follow:

Master candy makerâs salary $ 4,200

Depreciation of candy making equipment 460

Total fixed manufacturing cost $ 4,660

The master candy maker has no duties other than to oversee production of the honey drop candies. The candy making equipment is special-purpose equipment that was constructed specifically to make this particular candy. The equipment has no resale value and does not wear out through use. A salesperson is paid $1,920 per month plus a commission of 4% of sales to market the honey drop candies. The company had enjoyed robust sales of the candies for several years, but the recent entrance of a competing product into the marketplace has depressed sales of the candies. The management of the company is now wondering whether it would be more profitable to sell all of the honey rather than converting some of it into candies.

Required:

1. What is the incremental contribution margin per container from further processing the honey into candies?

2. What is the minimum number of containers of candy that must be sold each month to justify the continued processing of honey into candies?

maroonprairie-dog173

Preble Company manufactures one product. Its variablemanufacturing overhead is applied to production based on directlabor-hours and its standard cost card per unit is as follows:


Direct material: 5 pounds at $9.00 per pound	$	45.00
Direct labor: 3 hours at $18.00 per hour		54.00
Variable overhead: 3 hours at $9.00 per hour		27.00

Total standard variable cost per unit	$	126.00

The company also established the following cost formulas for itsselling expenses:

	Fixed Cost per Month		Variable Cost per Unit Sold
Advertising	$	300,000
Sales salaries and commissions	$	220,000	$	16.00
Shipping expenses			$	4.00

The planning budget for March was based on producing and selling20,000 units. However, during March the company actually producedand sold 24,800 units and incurred the following costs:

a.	Purchased 155,000 pounds of raw materials at a cost of $7.20 perpound. All of this material was used in production.
b.	Direct-laborers worked 68,000 hours at a rate of $19.00 perhour.
c.	Total variable manufacturing overhead for the month was$615,000.
d.	Total advertising, sales salaries and commissions, and shippingexpenses were $308,000, $614,720, and $106,000, respectively.

Questions:

What is the variable overhead rate variance for March?

What amounts of advertising, sales salaries and commissions, andshipping expenses would be included in the companyâs flexiblebudget for March?

Preble Company
Flexible Budget
For the Month Ended March 31
Units sold (q)	24,800
Expenses:
Advertising
Sales salaries and commissions
Shipping expenses
Total

What is the spending variance related to advertising?

What is the spending variance related to sales salaries andcommissions?

What is the spending variance related to shipping expenses?

cerisesnake32

1. The marginal product of labor is:

A. equal to the demand for labor.

B. the payment made to workers for their contribution to the output they produce.

C. the change in a firm's revenue as a result of hiring one more worker.

D. the additional output a firm produces as a result of hiring one more worker.

2. What does the phrase "internalizing an external cost" mean?

A. limiting the extent to which domestic firms can outsource production

B. prohibiting economic activities that create externalities

C. finding a way to address cross-border pollution

D. forcing producers to factor into their production costs the cost of the externalities created in the production of their output

3. The highest-valued alternative that must be given up to engage in an activity is the definition of

A. implicit cost

B. opportunity cost.

C. utility.

D. economic sacrifice.

4. What is market failure?

A. It refers to the inability of the market to allocate resources efficiently up to the point where marginal social benefit equals marginal private cost.

B. It refers to a situation where an entire sector of the economy (for example, the airline industry) collapses because of some unforeseen event.

C. It refers to a breakdown in a market economy because of widespread corruption in government.

D. It refers to the inability of the market to allocate resources efficiently up to the point where marginal social benefit equals marginal social cost.

5. Suppose a competitive firm is paying a wage of $12 an hour and sells its product at $3 per unit. Assume that labor is the only input. If the last worker hired increases output by three units per hour, then to maximize profits the firm should

A. lay off some of its workers.

B. does not change the number of workers it currently hires.

C. hire additional workers.

D. There is not enough information to answer the question.

6. When the price of summer tank tops falls and you buy more of them because they are relatively less expensive, this is called

A. the deadweight loss effect.

B. the income effect.

C. the substitution effect.

D. the elasticity effect.

7. An externality is

A. a benefit realized by the purchaser of a good or service.

B. a benefit or cost experienced by someone who is not a producer or consumer of a good or service.

C. a cost paid for by the producer of a good or service.

D. anything that is external or not relevant to the production of a good or service.

8. Firms pay famous individuals to endorse their products because

A. apparently demand is affected not just by the number of people who use a product but also by the type of person that uses the product. '

B. famous people only consume high-quality products.

C. famous people obviously know what are the best goods and services.

D. the firms are irrational and are wasting advertising expenditures.

9. If a consumer receives 20 units of utility from consuming two candy bars, and 25 units of utility from consuming three candy bars, the marginal utility of the second candy bar is

A. 25 utility units.

B. 20 utility units.

C. 5 utility units.

D. unknown as more information is needed to determine the answer.

10. When there is a negative externality, the private cost of production ________ the social cost of production.

A. is less than

B. is greater than

C. eliminates

D. is equal to

pinkmink286

ADMS 2510 Study Guide - Accounts Payable, Cash Flow, Accounts Receivable

ADMS 2510 Full Course Notes

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