ACTG 2010 Chapter Notes -Order Of Merit
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Related Questions
1. The following is a listof various costs of producing T-shirts. Classify each cost aseither a variable, fixed, or mixed cost for units produced andsold.
(a) | Leather used to make a handbag. |
(b) | Warehouse rent of $8,000 per month plus $.50 per square foot ofstorage used. |
(c) | Thread. |
(d) | Electricity costs of $.038 per kilowatt-hour. |
(e) | Janitorial costs of $4,000 per month. |
(f) | Advertising costs of $12,000 per month. |
(g) | Accounting salaries. |
(h) | Color dyes for producing different colors of sweatshirts. |
(i) | Salary of the production supervisor. |
(j) | Straight-line depreciation on sewing machines. |
(k) | Patterns for different designs. Patterns typically last manyyears before being replaced. |
(l) | Hourly wages of sewing machine operators. |
(m) | Property taxes on factory, building, and equipment. |
(n) | Cotton and polyester cloth. |
(o) | Maintenance costs with sewing machine company. The cost is$2,000 per year plus $.001 for each machine hour of use. |
2. Copper Hillsmanufactures laser printers within a relevant range of productionof 70,000 to 100,000 printers per year. The following partiallycompleted manufacturing cost schedule has been prepared:
Number of Printers Produced | |||
70,000 | 90,000 | 100,000 | |
Total costs: | |||
Total variable costs | $350,000 | (d) | (j) |
Total fixed costs | 630,000 | (e) | (k) |
Total costs | $980,000 | (f) | (l) |
Cost per unit: | |||
Variable cost per unit | (a) | (g) | (m) |
Fixed cost per unit | (b) | (h) | (n) |
Total cost per unit | (c) | (i) | (o) |
Complete the preceding cost schedule, identifying each cost bythe appropriate letter (a) through (o).
3. For the current year ending April 30, HaleyCompany expects fixed costs of $60,000, a unit variable cost of$70, and anticipated break-even of 1,715 sales units.
(a) | Compute the unit sales price. |
(b) | Compute the sales (units) required to realize an operatingprofit of $8,000. |
Round your answer to the nearest whole number.
4. Currently, the unitselling price is $50, the variable cost, $34, and the total fixedcosts, $108,000. A proposal is being evaluated to increase theselling price to $54.
(a) | Compute the current break-even sales (units). |
(b) | Compute the anticipated break-even sales (units), assuming thatthe unit selling price is increased and all costs remainconstant. |
5. For the coming year,Reve Company estimates fixed costs at $109,000, the unit variablecost at $21, and the unit selling price at $85. Determine (a) thebreak-even point in units of sales, (b) the unit sales required torealize operating income of $150,000 and (c) the probable operatingincome if sales total $500,000.
Round units to the nearest whole number and percentage to onedecimal place.
FILL IN THE CORRECT TERMINOLOGIES IN THE BLANK SPACES | ||
_____ 1. | a. A method of internal (managerial accounting) reporting that emphasizes the distinction between variable and fixed costs. | |
_____ 2. | b. A discounted cash flow approach to capital budgeting that computes the present value of all future cash flows. | |
_____ 3. | c. Determination of the maximum cost a company can spend to make a product given a set volume, selling price and desired operating profit. | |
_____ 4. | d. An analysis of the additional costs and benefits of a proposed alternative compared with the current situation. | |
_____ 5. | e. A historical cost that the company has already incurred which is irrelevant to the decision making process. | |
_____ 6. | f. Costs that will not continue if an ongoing operation is changed or deleted. | |
_____ 7. | g. An already owned production site that is not currently in use. | |
_____ 8. | h. The maximum available benefit foregone by using a resource for a particular purpose. | |
_____ 9. | i. The predicted future costs and revenues that will differ among alternative courses of action. | |
_____ 10. | J. The time it will take to recoup, in the form of cash inflows from operations, the initial dollars invested in a project | |
_____ 11. | k. Those costs of facilities and services that are shared by users | |
_____ 12. | l. The juncture of manufacturing where separate products developed in the same process become individually identifiable. | |
_____ 13. | m. A costing approach that considers all indirect manufacturing costs (both variable and fixed) to be product (inventoriable) costs. | |
_____ 14. | n. Purchasing products or services from a supplier outside the company. | |
_____ 15. | o. Capital budgeting models that focus on cash inflows and ouflows while taking into account the time value of money | |
_____ 16. | p. Calculation of a selling price sufficient to cover the cost of producing a product as well as desired operating income | |
_____ 17 | q. The long-term planning for investment commitments with returns spread over multiple years | |
_____ 18. | r. A decision process that compares the differential revenues and costs of alternatives. | |
_____ 19. | s. Costs that will continue even if a company discontinues one of its current operations | |
_____ 20. | t. The increase in expected average annual operating income divided by the original required investment |