Petrie company manufactures chairs. If raw material used was $100,000 and Raw material inventory at the beginning and end of the period, respectively, was $27,000 and 31,000, what was the amount of raw material was purchased?
100,000+(31,000-27,000)
104,000
Refer to Richards company. The cost of raw material purchased during the year was
$336
If oversupplied factory overhead is material, the account is closed by a credit to cost of goods sold.
False
Predetermined overhead rates are computed based on
Estimated overhead costs
Estimated level of activity
Yes and yes
An indirect cost can be easily traced to a cost object
False
If actual overhead exceeds applied overhead, factory overhead is said to be under applied.
True
A mixed costs has which of the following components?
Variable components
Fixed components
Yes yes
Weaknesses of the high low method include all of the following except
The mathematical calculations are relatively complex
A variable cost remains constant on a per unit basis as production increases
True
If the cost of an additive is $5000 + $0.50 for every unit of solvent produced, the cost is classified as a mixed cost
True
A functional classification of costs would classify “depreciation on office equipment†as a
General and administrative expense
In a high-low model, which months’ observations would be used to compute the model’s parameters
2 and 5
Product costs are deducted from revenue
As goods are sold
Another name for absorption costing is
Full costing
A credit to the factory overhead account represents actual overhead costs
False
The formula to compute cost of goods manufactured is
Beginning work in process inventory plus direct material used plus overhead incurred minus ending Work in process inventory
Ryan corporations is relocating its facilities. The company estimates that it will take three trucks to move office contents. If the per truck rental charge is $1000 plus 25 cents per mile, what is the expected cost to move 800 miles?
3,600
Refer to bridges company, cost of good sold was
$746
Which of the following would generally be considered a fixed factory overhead cost?
Straight line depreciation
Factory insurance
Units of production depreciation
Yes yes no
The three primary inventory accounts in a manufacturing company are
Raw material inventory, work in process inventory, and finished goods inventory
When multiple products are produced and sold, a change in the sales price of one product may cause a change in the sales mix of the firm
True
Refer to Stewart company. How many units would Stewart company need to sell to earn a profit before taxes of $10,000
12,000
Lewis company has only $25,000 hours of machine time each month to manufacture its two products. Product X has a contribution margin of $50, and product Y has a contribution margin of $64. Product X requires 5 hours of machine time, and product Y requires 8 hours of machine time. If Lewis company wants to dedicate 80% of its machine time to the product that will the most income, the company will have a total distribution margin of
$240,000
Refer to Putnam company. Based on the cost and revenue structure on the income statement, what was Putnam’s break even point in dollars?
$400,000
Refer to the Parker company, based on the cost and revenue structure on the income statement, what was Parker’s break even point in dollars?
$290,909
Assuming that there would be no commission in this potential sale, the lowest price the firm can bid is some price greater than
$17
The first stages in the budgeting process is the preparation of a sales budget
True
Refer to Parker Company, what was the margin of safety?
$109,091
Stone corporation has a policy of maintaining an inventory of finished goods equal to 40% of the next months budgeted sales. If stone corporation plans to produce 6,000 units in June, what are budgeted sales for July?
9,000 units
Beg Inv June 1600 (4,000*.40)
Produced in June 6000
Deduct June (4000)
Ending inv 3600
3,600/0.40 = $9000 units
