Additional questions-C213 PDF

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Please show you work when solving the questions below. Question 1 A running shoe manufacturer produces three types of shoes: traditional, minimalist, and spikes. The company uses the following information to determine activity rates for each pool: Cost Pool

Cost Driver

Shoe Production

Costs $250,000

Shoe batches

$10,000

Batches

Shoe design

$5,000

Parts

Total

$265,000

Pairs of Shoes

Data concerning the three shoe products appear below: Cost Driver

Traditional Minimalist Spikes 15,000 5,000 Number of pairs of shoes 20,000 Number of batches

300

500

200

Number of parts

50

70

80

What is the total amount of overhead applied to Minimalist shoes?

Question 2 A company manufactures and sells widgets. The following information is available: • • •

Each widget sells for $200. The variable cost per widget is $75. Total fixed costs per month are $375,000.

a. How many widgets does the company need to sell each month to break-even? b. How much in sales revenue does the company need to generate each month in order to break-even?

Question 3 A company has projected the following sales for February – July of 2014: February March April May June July

$250,000 $270,000 $240,000 $220,000 $230,000 $260,000

45% of all sales are paid for with cash. The remainder is on credit. The pattern for credit receivables collections are: Month of Sale Month After Sale Second Month After Sale

30% 45% 25%

What are the forecasted cash collections for the month of May?

Question 4 A company budgeted the following purchases for raw materials:

Month January February March

April

May

June

Budget $10,000 $20,000 $25,000 $22,000 $27,000 $30,000

July $24,000

The company has a policy of paying for 50% of the purchases in the month of purchase, 30% in the month following the purchase, and 20% in the second month following the purchase. Based on this information, what are the budgeted cash disbursements for June?

Question 5 A corporation has total assets of $400 million, total owner’s equity of $100 million, and noncurrent liabilities of $250 million. What is the value of the corporation’s current liabilities?

Question 6 What was the 2012 net income amount if the 2013 pro-forma net income of $250,000 was based on a 150% increase?

Question 7 During its first month of operations, a manufacturing company incurs the following costs: dollars: Direct materials

$10,000

Administrative expenses

$ 3,000

Indirect materials

$ 1,000

Direct labor

$20,000

Selling expenses

$ 2,000

Indirect labor

$ 5,000

Depreciation on factory and factory equipment

$ 4,000

What are the manufacturing company’s total product costs for the month?

Question 8 On June 1, 2011, a company purchases a one-year insurance policy for $24,000. How much insurance expense should the company recognize for the year ending 2011?

Question 9 During its first month of operations, a manufacturing company incurs the following costs related to the production of its product: Direct materials

$25,000

Direct labor

$50,000

Manufacturing Overhead

$60,000

What amount should be reported as cost of goods sold if 10,000 units are produced and 8,000 units are sold?

Question 10 A company’s statement of cash flows includes the following cash transactions: Collections from customers

$1,250,000

Inventory purchase

$ 750,000

Property and equipment purchase

$ 270,000

Receipt of cash dividends from investments

$

5,000

Interest payment on long-term debt

$

25,000

Payment of wages

$ 315,000

Payment of rent on office building

$

Borrowing long-term debt

$ 200,000

Payment of cash dividends

$

Sale of long-term investments

$ 100,000

Issuance of stock

$ 200,000

40,000

15,000

Assuming the company uses U.S. GAAP standards, what is the net cash flow from a) Operating activities (along with the amount, please indicate whether it is a net cash inflow or net cash outflow). b) Investing activities (along with the amount, please indicate whether it is a net cash inflow or net cash outflow). c) Financing activities (along with the amount, please indicate whether it is a net cash inflow or net cash outflow).

Question 11 A company reported the following information for the production and sale of 600,000 gallons of oil: Sales

$2,100,000

Production costs: Direct materials Direct labor

$500,000 800,000

Applied overhead (using ABC) Overhead based on number of gallons

390,000

Overhead based on number of batches

150,000

Overhead based on number of machine hours

270,000

Total Production costs Gross profit

2,110,000 ($ 10,000)

Overhead was applied based on the following predetermined overhead rates: $0.65 per gallon $400 per batch $90 per machine hours

What would be the gross profit if the company increased the selling price per gallon by $0.15?

Question 12

Based on the above graph: a. What is the break-even in units?

b. What is the break-even in sales dollars?

c. At 250 units sold, what is the dollar amount of the total fixed costs?

d. At 400 units sold, what is the dollar amount of the total variable costs?

e. If total costs are $5,000, how many units are sold?

f.

If 400 units are sold, what is the profit?

Question 13 A company manufactures and sells widgets. The following information is available: • • • •

Each widget sells for $200. The variable cost per widget is $75. Total fixed costs per month are $375,000. The company desires a target profit of $100,000 per month.

a. How many widgets does the company need to sell each month in order to achieve their monthly target profit of $100,000? b. How much in sales revenue does the company need to generate each month in order to achieve their monthly target profit of $100,000?

Question 14 Company A plans to begin their operations in January of 2016 and has forecasted the following inventory purchases, all on credit: January 2016

$200,000

February 2016

$250,000

March 2016

$300,000

April 2016

$325,000

They project that they will pay for 25% of their monthly inventory purchases in the month of the purchase, 35% in the month following the purchase, and 40% in the second month following the purchase. What is the forecasted cash disbursement for inventory purchases for the four-month period (January through April)?

Question 15 What are two impacts on variable costs as sales volume increases? a. b. c. d.

Total variable costs will stay the same and variable costs per unit will increase. Total variable costs will decrease and variable costs per unit will stay the same. Total variable costs will increase and variable costs per unit will stay the same. Total variable costs will stay the same and variable cost per unit will decrease.

Question 16 Which situation would result in revenue recognition on the income statement for the year ending 12/31/15 if the company is using accrual-basis accounting? a. An airline company sells tickets in 2015 for flights that passengers will take in 2016. b. A retail company sells merchandise on credit to a customer in December 2015. The customer pays for the merchandise purchased in January 2016. c. In 2015, an architectural company enters in contract with a customer to provide services in 2016. d. In 2015, a company collects cash from a customer for services they provided to the customer in 2014.

Question 17 The following information was taken from the records of a manufacturing company:

Actual overhead

$2,000,000

Estimated overhead

$2,100,000

Actual units produced Units expected to be produced

900,000 units 1,050,000 units

What is the amount of applied overhead?

Question 18 Adams Company had net income of $250,000 in 2008. What is their 2009 pro-forma net income if they are expecting the 2009 net income to be 30% more than the 2008 net income?...