__a__ 1. A responsibility center that incurs costs (and expenses) and generates revenues is classified as a(n)

a. cost center.
b. revenue center.
c. profit center.
d. investment center.

_a___ 2. The most useful measure for evaluating a manager's performance in controlling revenues and costs in a profit center is
a. contribution margin.
b. contribution net income.
c. contribution gross profit.
d. controllable margin.

__d__ 3. Pentecost Corporation desires to earn target net income of $40,000. If the selling price per unit is $30, unit variable cost is $24, and total fixed costs are $160,000, the number of units that the company must sell to earn its target net income is
a. 13,333.
b. 33,333.
c. 20,000.
d. 26,667.

____ 4. Shaulter Corporation uses a process cost accounting system. Given the following data, compute the number of units transferred out during the current period.
Beginning Work in Process 12,000 units (1/2 complete)
Ending Work in Process 15,000 units (1/3 complete)
Started into Production 80,000 units
a. 65,000
b. 75,000
c. 77,000
d. 80,000

____ 5. Guerry Company applies overhead on the basis of machine hours. Given the following data, compute overhead applied and the under- or overapplication of overhead for the period:
Estimated annual overhead cost $600,000
Actual annual overhead cost $575,000
Estimated machine hours 150,000
Actual machine hours 140,000
a. $560,000 applied and $15,000 underapplied
b. $600,000 applied and $15,000 overapplied
c. $560,000 applied and $15,000 overapplied
d. $575,000 applied and neither under- nor overapplied

____ 6. The following data has been collected for use in analyzing the behavior of maintenance costs of Ryder Corporation:
Month Maintenance Costs Machine Hours
January $242,000 20,000
February 250,000 23,000
March 256,000 24,000
April 318,000 34,000
May 336,000 36,000
June 356,000 38,000
July 362,000 40,000
Using the high-low method to separate the maintenance costs into their variable and fixed cost components, these components are
a. $10 per hour plus $40,000.
b. $10 per hour plus $60,000.
c. $8 per hour plus $82,000.
d. $6 per hour plus $122,000.

____ 7. Given the following data for Rene Company, compute (A) total manufacturing costs and (B) cost of goods manufactured:
Direct materials used $120,000 Beginning work in process $20,000
Direct labor 100,000 Ending work in process 10,000
Manufacturing overhead 150,000 Beginning finished goods 25,000
Operating expenses 175,000 Ending finished goods 15,000
(A) (B)
a. $360,000 $380,000
b. $370,000 $360,000
c. $370,000 $380,000
d. $380,000 $390,000

____ 8. The production cost report shows both quantities and costs. Costs are reported in three sections: (1) costs accounted for, (2) unit costs, and (3) costs to be accounted for. The sections are listed in the following order:
a. (1), (2), (3).
b. (1), (3), (2).
c. (2), (1), (3).
d. (2), (3), (1).

____ 9. The starting point of a master budget is the preparation of the
a. cash budget.
b. sales budget.
c. production budget.
d. budgeted balance sheet.

____ 10. The most useful measure for evaluating the performance of the manager of an investment center is
a. contribution margin.
b. controllable margin.
c. return on investment.
d. income from operations.

____ 11. Which of the following capital budgeting methods explicitly takes the time value of money into consideration?
a. Annual rate of return
b. Internal rate of return
c. Net present value
d. Profitability Index

____ 12. The cost classification scheme most relevant to responsibility accounting is
a. controllable vs. uncontrollable.
b. fixed vs. variable.
c. semivariable vs. mixed.
d. direct vs. indirect.

Use the following information for questions 13 and 14.

Thorton Company estimates its sales at 80,000 units in the first quarter and that sales will increase by 8,000 units each quarter over the year. They have, and desire, a 25% ending inventory of finished goods. Each unit sells for $25. 40% of the sales are for cash. 70% of the credit customers pay within the quarter. The remainder is received in the quarter following sale.

____ 13. Cash collections for the third quarter are budgeted at
a. $1,356,000.
b. $1,968,000.
c. $2,364,000.
d. $2,736,000.

____ 14. Production in units for the third quarter should be budgeted at
a. 98,000.
b. 92,000.
c. 122,000.
d. 96,000.

____ 15. Rebel Company incurs the following costs in producing 50,000 units of product:
Direct materials $150,000
Direct labor 100,000
Variable manufacturing overhead 125,000
Fixed manufacturing overhead 450,000
An outside supplier has offered to supply the 50,000 units at $10.50 each. All of Rebel's related variable costs, but only $300,000 of the fixed costs would be eliminated if the offer is accepted. Acceptance will result in a
a. savings of $300,000.
b. loss of $150,000.
c. savings of $150,000.
d. loss of $300,000.

____ 16. Finish Company has a production process where two products result from a joint processing procedure; both can be sold immediately or processed further. Given the following additional per unit information, determine which of the products should be processed further.
Allocated Additional New
Product Joint Cost Selling Price Processing Cost Selling Price
A $100 $200 $180 $400
B 60 100 50 160
a. A
b. B
c. Both
d. Neither

____ 17. A flexible budget
a. is also called a static budget.
b. can be considered a series of related static budgets.
c. can be prepared for sales or production budgets, but not for an operating expense budget.
d. typically uses an activity index different from that used in developing the predetermined overhead rate.

____ 18. An appropriate cost driver for an assembling cost pool is the number of
a. purchase orders.
b. setups.
c. parts.
d. direct labor hours.

____ 19. Careful Company's equipment account increased $1,200,000 during the period; the related accumulated depreciation increased $90,000. New equipment was purchased at a cost of $2,100,000 and used equipment was sold at a loss of $60,000. Depreciation expense was $300,000. Proceeds from the sale of the used equipment were
a. $630,000.
b. $750,000.
c. $840,000.
d. $960,000.

____ 20. Under the absorption cost approach, all of the following are included in the cost base except
a. direct materials.
b. fixed manufacturing overhead.
c. selling and administrative costs.
d. variable manufacturing overhead.


PART II — MATCHING (34 points)

Instructions: Designate the terminology that best represents the definition or statement given below by placing the identifying letter(s) in the space provided. No term should be used more than once.

A. Activity-based costing Q. Job cost sheet
B. Annual rate of return R. Market-based transfer price
C. Budgetary control S. Negotiated transfer price
D. Cash debt coverage ratio T. Noncontrollable costs
E. Contribution margin U. Non-value-added activity
F. Contribution margin ratio V. Operating budgets
G. Controllable costs W. Overhead controllable variance
H. Absorption costing X. Overhead volume variance
I. Cost accounting Y. Physical units
J. Cost centers Z. Process cost systems
K. Cost of capital AA. Product costs
L. Earnings per share AB. Profit center
M. Equivalent units of production AC. Solvency ratios
N. Financial budgets AD. Value-added activity
O. Fixed costs AE. Variable costs
P. Free cash flow AF. Variances

____ 1. Costs that a manager has the authority to incur within a given period of time.

____ 2. A form used to record the costs chargeable to a job.

____ 3. A responsibility center that incurs costs and also generates revenues.

____ 4. The difference between overhead budgeted for standard hours allowed and overhead incurred.

____ 5. The amount of revenue remaining after deducting variable costs.

____ 6. Used to apply costs to similar products that are mass-produced in a continuous fashion.

____ 7. Costs that vary in total directly and proportionately with changes in the activity level.

____ 8. The differences between actual costs and standard costs.

____ 9. The net income earned on each share of outstanding common stock.

____ 10. The rate a company must pay to obtain funds from creditors and stockholders.

____ 11. A transfer price that is determined by the agreement of the division managers.

____ 12. Allocates overhead to multiple cost pools and assigns the cost pools to products by means of cost drivers.

____ 13. A measure of the work done during the period, expressed in fully completed units.

____ 14. A costing approach in which all manufacturing costs are charged to the product..

____ 15. Increase the worth of a product or service to customers.

____ 16. The amount of cash from operations after deducting capital expenditures and cash dividends paid.

____ 17. Individual budgets that culminate in a budgeted income statement.


PART III MANAGERIAL MINI-PROBLEMS (16 points)

Carlton Corporation manufactures paper shredding equipment. You are requested to "audit" a sampling of computations made by Carlton's internal accountants via your independent recalculation of the information.

Instructions: Compute the requested information for each of the following independent situations (present supporting calculations).

(a) Each paper shredder has a standard material cost of 20 pounds at $6.50 per pound or $130 in total. 60,000 pounds of material were purchased for $420,000 during the period and 39,000 pounds were used in the production of 2,000 good units. Compute the direct materials price and quantity variances, and label them as favorable or unfavorable.

(b) Carlton uses a process costing system. 2,000 units were in process at the beginning of the period, 60% complete. 20,000 units were started into production during the period; 1,000 were in process at the end of the period, 60% complete. Compute equivalent units for conversion costs.

(c) Carlton sells each unit for $500. Variable costs per unit equal $350. Total fixed costs equal $600,000. Carlton is currently selling 5,000 units per period and would like to earn net income of $300,000. Compute: (1) break-even point in dollars; (2) sales units necessary to attain desired income

(1) Break-even = $_________________________________________.

(2) Desired sales = ____________________________________ units.

This is a HELP site but we do not DO the work for you. This looks very much like an exam and we see no effort on your part nor do we see any specific question soliciting help.

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Owned.

the most useful measure for evaluating a managers performance in controling revenues and costs in a profit center is

Which of the following capital budgeting methods explicitly takes the time value of money into consideration?

_a_ 1. The responsibility center that incurs costs (and expenses) and generates revenues is classified as a profit center.

To get the answer to this question, you would need to have knowledge of responsibility centers and how they are classified. A profit center is a responsibility center that generates revenues from sales to external customers and incurs costs related to its operations. In a profit center, the manager is responsible for both the revenues generated and the costs incurred.

_b_ 2. The most useful measure for evaluating a manager's performance in controlling revenues and costs in a profit center is contribution margin.

To get the answer to this question, you would need to understand the concept of contribution margin and how it is used to evaluate a manager's performance in a profit center. Contribution margin is calculated by subtracting variable expenses from revenues. It represents the amount of revenue available to cover fixed costs and provide a profit. Evaluating the contribution margin allows managers to assess how efficiently they are controlling variable costs and generating revenue.

_d_ 3. To determine the number of units that the company must sell to earn its target net income, you would need to use the formula: (Target Net Income + Total Fixed Costs) / Contribution Margin per Unit.

To get the answer to this question, you would need to know the selling price per unit, unit variable cost, total fixed costs, and the target net income. By using the formula mentioned above, you can calculate the number of units that need to be sold.

_?_ 4. To determine the number of units transferred out during the current period in a process cost accounting system, you would need to calculate the equivalent units of production.

To get the answer to this question, you would need to know the beginning work in process units, the ending work in process units, and the units started into production. By calculating the equivalent units of production, you can determine the number of units transferred out during the current period.

_?_ 5. To calculate the overhead applied and the under- or overapplication of overhead, you would need to compare the estimated and actual overhead costs.

To get the answer to this question, you would need to know the estimated annual overhead cost, actual annual overhead cost, estimated machine hours, and actual machine hours. By calculating the overhead applied (based on machine hours) and comparing it to the actual overhead cost incurred, you can determine if there is an under- or overapplication of overhead.

_?_ 6. To separate the maintenance costs into their variable and fixed cost components using the high-low method, you would need to identify the highest and lowest levels of activity and the corresponding maintenance costs.

To get the answer to this question, you would need to analyze the behavior of maintenance costs based on the given data. By identifying the highest and lowest levels of machine hours and the corresponding maintenance costs, you can use the high-low method to determine the variable and fixed cost components.

_?_ 7. To compute the total manufacturing costs and cost of goods manufactured, you would need to consider direct materials used, direct labor, manufacturing overhead, and beginning and ending work in process and finished goods.

To get the answer to this question, you would need to know the direct materials used, direct labor, manufacturing overhead, beginning and ending work in process, and beginning and ending finished goods. By calculating the total manufacturing costs (sum of direct materials, direct labor, and manufacturing overhead) and cost of goods manufactured (beginning work in process + total manufacturing costs - ending work in process), you can arrive at the answers.

_?_ 8. The sections listed in the production cost report are (2) unit costs, (1) costs accounted for, and (3) costs to be accounted for.

To get the answer to this question, you would need to understand the structure of a production cost report. The report typically includes different sections, such as costs accounted for (listing the costs incurred), unit costs (calculating the average cost per unit), and costs to be accounted for (identifying any remaining costs that have not yet been included in the report).

_b_ 9. The starting point of a master budget is the preparation of the sales budget.

To get the answer to this question, you would need to understand the sequence of a master budget. The sales budget is typically the starting point of a master budget because it provides the basis for estimating revenues and determining the level of production and other budgeted expenses.

_c_ 10. The most useful measure for evaluating the performance of the manager of an investment center is return on investment (ROI).

To get the answer to this question, you would need to understand the concept of return on investment (ROI) and its relevance in evaluating the performance of a manager in an investment center. ROI is calculated by dividing the income from operations by the average operating assets. It measures the profitability of the assets employed in the center and is commonly used as a performance metric.

_c_ 11. The capital budgeting method that explicitly takes the time value of money into consideration is net present value (NPV).

To get the answer to this question, you would need to understand the different capital budgeting methods and their characteristics. Net present value (NPV) takes into account the time value of money by discounting future cash flows to their present value and comparing them to the initial investment. NPV considers the timing and magnitude of cash flows to evaluate the profitability of an investment.

_a_ 12. The cost classification scheme most relevant to responsibility accounting is controllable vs. uncontrollable costs.

To get the answer to this question, you would need to understand the concept of responsibility accounting and how costs are classified in this context. In responsibility accounting, costs are often classified as controllable or uncontrollable based on the manager's level of authority and control over them. Controllable costs are those that the manager has the power to influence or manage, while uncontrollable costs are those that the manager cannot change or influence.