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“Carlson Manufacturing has some equipment that needs to be rebuilt or replaced. The following information has been gathered relative to this decision: Present Equipment New Equipment Purchase cost new $50,000 $48,000 Remaining book value $30,000 – Cost to rebuild now $25,000 – Major maintenance at the end of 3 years $ 8,000 $ 5,000 Annual cash operating costs $10,000 $ 8,000 Salvage value at the end of 5 years $ 3,000 $ 7,000 Salvage value now $ 9,000 – Carlson uses the total-cost approach and a discount rate of 12% in making capital budgeting decisions. Regardless of which option is chosen, rebuild or replace, at the end of five years Carlson Manufacturing plans to close its domestic manufacturing operations and to move these operations to foreign countries.106. If the new equipment is purchased, the present value of all cash flows that occur now is: a. $(48,000). b. $(39,000). c. $(41,000). d. $(37,000).”,”2If the new machine is purchased the present value of all the cash flows that occur now will equal the price of the new machine minus the selling price of the old machine.$48,000 – $9,000 = $ 39
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Read more“43. When production exceeds sales, net income reported under variable costing generally will be a. greater than net income reported under absorption costing. b. less than net income reported under absorption costing c. equal to net income reported under absorption costing. d. higher or lower because no generalization can be made.”
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Read more“59. In the decision to replace an old machine with a new machine, which of the following would be considered a relevant cost? a. The book value of the old equipment. b. Depreciation expense on the old equipment. c. The loss on the disposal of the old equipment. d. The current disposal price of the old equipment.”
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Read more“44. In an income statement prepared as an internal report using the variable costing method, variable selling and administrative expenses would a. not be used. b. be used in the computation of the contribution margin. c. be used in the computation of operating income but not in the computation of the contribution margin. d. be treated the same as fixed selling and administrative expenses.”
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Read more60. Which of the following regarding relevant cost analysis is true? a. A contribution income statement should be prepared as part of every relevant cost analysis. b. A contribution income statement considers all costs and can result in arriving at a different and more accurate answer than that obtained by simply isolating relevant costs. c. A contribution income statement tends to focus the attention of the decision maker directly on the problems critical to the decision at hand. d. All of the above are true. e. None of the above is true.
Average Rating 0 out of 5 stars. 0 votes.You must log in to submit a review.60. Which of the following[…]
Read more29. Which of the following regarding activity-based costing is not true? a. Both departmental overhead rates and activity-based costing rely upon a two-stage allocation process. b. Overhead costing using departmental rates typically utilizes more cost pools than activity-based costing. c. An activity is an event or transaction that acts as a causal factor in the incurrence of cost in an organization. d. Activity-based costing typically will result in more accurate allocation of overhead costs between high-volume and low-volume products.
Average Rating 0 out of 5 stars. 0 votes.You must log in to submit a review.29. Which of the following[…]
Read more“45. During 19×5, Craft Company had a net income of $80,000 using absorption costing and $74,500 using variable costing. The fixed overhead application rate has been $5 per unit for the last three years. If 21,500 units were produced during 19×5, then sales in units for 19×5 were a. 16,000 units. b. 20,400 units. c. 22,600 units. d. 27,000 units.”,”2Difference in Net Income = (Diff in Production and Sales Units x Fixed Overhead Rate per unit $5,500 = ????? x 5 5,500/5 = 1,100 unitsSo …………… 21,500 units – 1,100 units = 20
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Read more61. Which of the following regarding vertical integration is not correct? a. Vertical integration assists a firm in controlling the quality of parts and materials used in the production process. b. Vertical integration could result in a company with insufficient capacity being unable to obtain parts and materials during periods of heavy product demand. c. Vertical integration may tend to direct attention away from periodic review of the make or buy decision for certain parts or materials. d. All of the above are true. e. None of the above is true.
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Read more30. Overhead allocation based on volume alone a. is a key aspect of the activity-based costing model. b. will systematically overcost high-volume products and undercost low-volume products. c. will systematically overcost low-volume products and undercost high-volume products. d. must be used for external financial reporting since an activity-based costing system cannot be designed to generate full product costs for external reporting purposes.
Average Rating 0 out of 5 stars. 0 votes.You must log in to submit a review.30. Overhead allocation based on[…]
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