Jenny Durdil Company is considering an investment of $200,000 in new equipment which will be depreciated on a straight-line basis (8-year life, no salvage value). The expected annual revenues and costs of the new product that will be produced from the equipment are: Sales $292,000 Less costs and expenses: Manufacturing costs S200,000 Equipment depreciation 25,000 Selling and administrative 43,900 268,900 Income before income taxes 23,100 […]

Use this income statement to answer the questions that follow. Sales ($50 per unit) $5,000 Less: Cost of goods sold ($32 per unit) 3,200 Gross margin 1,800 Less operating expenses: Salaries $800 Advertising 400 Shipping ($2 per unit) 200 1,400 Operating Income $ 400 Required What is the variable cost per unit? What is the total fixed expense? What is the contribution margin per unit? […]

Ellis McCormick and Elaine Sury are owners of MeetingKeeper, a company that sells personalized daily planners. Last month, the company sold 1,500 planners at a price of $6 per planner. Variable costs were $2.40 per unit; fixed expenses were $3,600. This month, Ellis and Elaine have decided to spend $2,000 to advertise in the local newspaper. They believe that the additional advertising will generate 25% […]

A flexible budget provides a basis for evaluating a manager’s performance for: Production Cost Control Control a No No b. YeS No c. No Yes d. Yes Yes

When production levels decline within a relevant range and a flexible budget is used, what effects would be anticipated with respect to each of the following? Total Total Fixed Costs Variable Costs a Decrease Decrease b. Decrease No change c. No change No change d. No change Decrease

A flexible budget is appropriate for: Direct Labor Manufacturing Overhead Costs Costs a No No b. Yes Yes c. Yes No d. No Yes

Responsibility reports for cost centers will include: Controllable Costs Noncontrollable Costs a No No b. No Yes c. Yes No d. Yes Yes

Gaylord Company has the following flexible budget for manufacturing overhead: Activity level: Direct labor hours 20.000 25,000 30,000 Variable costs: Indirect materials $10,000 $ 12,500 $ 15,000 Indirect labor 40,000 50,000 60:000 Supplies 30 000 37,500 45,000 Total 80,000 100,000 120,000 Fixed costs: Depreciation 30,000 30,000 30,000 Supervision 45,000 45,000 45,000 Total 75,000 75,000 75,000 Total costs$155,000 $175.000 $195.000 In January, 22,000 direct labor hours […]

Morgan Inc. is a small company that manufactures baseball caps. For the past several years. the company has used a standard cost accounting system. Cole prepares monthly income statements for management with variances reported within the statement. In April 2014, 67,500 caps were produced. There were no finished caps on hand at either April or April 30. The selling price per cap was $10.00. The […]

Indicate whether each of the following is true (T) or false (F) in the space provided. 1. In concept, standards and budgets are essentially the same. 2. Standards may be useful in setting selling prices for finished goods. 3. Ideal standards represent an efficient level of performance under normal operating conditions. 4. The materials price standard is based on the purchasing department’s best estimate of […]