Question: Aces Inc., a manufacturer of tennis rackets,

> Certified Management Accountants must understand budgeting. Access the Institute of Management Accountants website (imanet.org), click on the “CMA Certification” tab, and select “Taking the Exam.” Scroll down and select “Review the Most Recent Content Sp

> A hotel reports the following for its two divisions. The company uses a balanced scorecard and sets a goal of 85% occupancy in its hotels. 1. Which division(s) exceeded the occupancy goal for the current year? 2. Which division(s) improved its occupancy

> Classify each of the performance measures below into the most likely of four balanced scorecard perspectives it relates to: Customer, Internal process, Innovation & learning, or Financial.

> A company’s division has sales of $2,000,000, income of $80,000, and average assets of $1,600,000. Compute the division’s profit margin, return on investment, and investment turnover.

> For each of the following, select its best description.

> AirPro Corp. reports the following for this period. Compute the (a) total overhead variance and (b) controllable variance and identify each variance as favorable or unfavorable.

> Derr Co. reports the following. Compute (a) controllable variance, (b) volume variance, and (c) total overhead variance.

> A company shows a $20,000 unfavorable direct labor rate variance and a $10,000 unfavorable direct labor efficiency variance. The company’s standard cost of direct labor is $400,000. What is the actual cost of direct labor?

> A company reports the following for its direct labor. Compute the direct labor rate and efficiency variances and identify each as favorable or unfavorable.

> For the current period, Juan Company’s standard cost of direct materials is $150,000. The direct materials variances consist of a $12,000 favorable price variance and a $2,000 favorable quantity variance. What is the actual cost of direct materials?

> A company reports the following for one of its products. Compute the direct materials price and quantity variances and identify each as favorable or unfavorable.

> Explain how the budgeting process for service companies differs from that for manufacturers.

> A company reports the following for one of its products. Compute the total direct materials variance and identify it as favorable or unfavorable.

> The fixed budget for 20,000 units of production shows sales of $400,000; variable costs of $80,000; and fixed costs of $150,000. The company’s actual sales were 26,000 units at $480,000. Actual variable costs were $112,000 and actual fixed costs were $14

> A company’s returns department incurs annual overhead costs of $72,000 and budgets 2,000 returns per year. Management believes it has found a better way to package its products. As a result, the company expects to reduce the number of shipments that are

> Management believes it has found a more efficient way to package its products and use less cardboard. This new approach will reduce shipping costs from $10.00 per shipment to $9.25 per shipment. (1) If the company budgets 1,200 shipments this year, what

> In a recent year a car manufacturer sold 182,158 cars. The company budgeted to sell 191,158 cars during the year. The budgeted sales price for each car was $30,000 and the actual sales price for each car was $30,200. Compute the sales price variance and

> Refer to the information in QS 23-19. Compute the variable overhead spending variance and the variable overhead efficiency variance and identify each as favorable or unfavorable.

> Refer to the information in QS 23-17. Alvarez records standard costs in its accounts. Prepare the journal entry to charge overhead costs to the Work in Process Inventory account and to record any variances.

> Alvarez Company for the current period shows a $20,000 favorable volume variance and a $60,400 unfavorable controllable variance. Standard overhead applied for the period is $225,000. (a) What is the actual total overhead for the period? (b) What is the

> Refer to the information in QS 23-15. Compute the volume variance and identify it as favorable or unfavorable.

> The fixed budget for 20,000 units of production shows sales of $400,000; variable costs of $80,000; and fixed costs of $150,000. If the company actually produces and sells 26,000 units, calculate the flexible budget income.

> How can managers use the master budget in controlling operations?

> Data below are from recent annual reports for Samsung, Apple, and Google. Required 1. Compute revenue per employee for Samsung for the current year and the prior year. 2. Using revenue per employee, did Samsung’s workforce become more

> Music World reports the following budgeted sales: August, $150,000; and September, $170,000. Cash sales are 40% of total sales, and all credit sales are collected in the month following the sale. Prepare a schedule of cash receipts from sales for Septemb

> Hockey Pro budgets 320 hours of direct labor during May. The company applies variable overhead at the rate of $18 per direct labor hour. Budgeted fixed overhead equals $46,000 per month. Prepare a factory overhead budget for May.

> Miami Solar budgets production of 5,300 solar panels for August. Each unit requires 4 hours of direct labor at a rate of $16 per hour. The company applies variable overhead at the rate of $12 per direct labor hour. Budgeted fixed factory overhead is $180

> Atlantic Surf manufactures surfboards. The company’s budgeted sales units for the next three months is shown below. Company policy is to maintain finished goods inventory equal (in units) to 40% of the next month’s uni

> Champ Inc. budgets the following sales in units for the coming two months. Each month’s ending inventory of finished units should be 60% of the next month’s sales. The April 30 finished goods inventory is 108 units. Pr

> Zahn Co. budgets sales of 220 units in May and 240 units in June. Each month’s ending inventory should be 25% of the next month’s sales. The April 30 ending finished goods inventory is 55 units. Prepare the production budget for May.

> Scora Inc. sells a single product for $50 per unit. Budgeted sales units for the next three months follow. Prepare a sales budget for the months of January, February, and March.

> For each of the following indicate yes if it describes a potential benefit of budgeting or no if it describes a potential negative outcome of budgeting. 1. Budgets help coordinate activities across departments. 2. A budget forces managers to spend time p

> Montel Company’s July sales budget shows sales of $600,000. The company budgets beginning merchandise inventory of $50,000 and ending merchandise inventory of $40,000 for July. Cost of goods sold is 60% of sales. Determine the budgeted cost of merchandis

> Raider-X Company budgets sales of 18,000 units for April and 20,000 units for May. Beginning inventory on April 1 is 3,600 units, and the company wants to have 20% of next month’s unit sales in inventory at the end of each month. The merchandise cost per

> Apple regularly uses budgets. What is the difference between a production budget and a manufacturing budget?

> Torres Co. budgets merchandise purchases of $15,800 in January, $18,600 in February, and $20,200 in March. For those purchases, 40% of purchases are paid in the month of purchase and 60% are paid in the month after the purchase. The company purchased $25

> Santos Co. is preparing a cash budget for February. The company has $20,000 cash at the beginning of February and budgets $75,000 in cash receipts from sales and $100,250 in cash payments during February. Prepare the cash budget for February assuming the

> Kingston budgets total sales for June and July of $420,000 and $398,000, respectively. Cash sales are 60% of total sales. Of the credit sales, 20% are collected in the month of sale, 70% are collected during the first month after the sale, and the remain

> Wells Company reports the following budgeted sales: September, $55,000; October, $66,000; and November, $80,000. All sales are on credit, and 5% of those credit sales are budgeted as uncollectible. Collection of the remaining 95% of credit sales are budg

> The Guitar Shoppe reports the following budgeted sales: August, $150,000; and September, $170,000. For its total sales, 40% are immediately collected in cash, 55% are credit sales and collected in the month following sale, and the remaining 5% are writte

> For each of the following indicate yes if the item is an important budgeting guideline or no if it is not. 1. Employees should have the opportunity to explain differences from budgeted amounts. 2. Budgets should include budgetary slack. 3. Employees impa

> Zhao Co. has fixed costs of $354,000. Its single product sells for $175 per unit, and variable costs are $116 per unit. Determine the break-even point in units.

> Viva sells its waterproof phone case for $90 per unit. Fixed costs total $162,000, and variable costs are $36 per unit. Determine the (1) contribution margin ratio and (2) break-even point in dollars.

> Viva sells its waterproof phone case for $90 per unit. Fixed costs total $162,000, and variable costs are $36 per unit. Determine the (1) contribution margin per unit and (2) break-even point in units.

> Solve for the missing amounts a through f for the following separate cases.

> Google prepares cash budgets. What is a cash budget? Why must operating budgets and the capital expenditures budget be prepared before the cash budget?

> Compute the contribution margin ratio and fixed costs using the following data.

> This scatter diagram shows past units produced and their corresponding maintenance costs. 1. Review the scatter diagram and classify maintenance costs as either fixed, variable, or mixed. 2. If 3,000 units are produced, are maintenance costs expected to

> Following are costs for eight different items. Costs are shown for three different levels of units produced and sold. Classify each of the eight cost items as either variable, fixed, or mixed.

> Aces Inc., a manufacturer of tennis rackets, began operations this year. The company produced 6,000 rackets and sold 4,900. Each racket was sold at a price of $90. Fixed overhead costs are $78,000 for the year, and fixed selling and administrative costs

> Determine whether each of the following is best described as a fixed, variable, or mixed cost with respect to product units.

> Refer to QS 21-23. Compute its product cost per unit under variable costing.

> Vintage Company reports the following information. Compute its product cost per unit under absorption costing.

> US-Mobile manufactures and sells two products, tablet computers (60% of sales) and smart phones (40% of sales). Fixed costs are $500,000, and the weighted-average contribution margin per unit is $125. How many units of each product are sold at the break-

> A manufacturer’s contribution margin income statement for the year follows. Prepare a contribution margin income statement if the number of units sold (a) increases by 200 units and (b) decreases by 200 units.

> Identify at least two potential negative outcomes of budgeting.

> Zulu sells its waterproof phone case for $90 per unit. Fixed costs total $200,000, and variable costs are $40 per unit. Compute the units that must be sold to get a target income of $216,000.

> Zulu sells its waterproof phone case for $90 per unit. Fixed costs total $200,000, and variable costs are $40 per unit. (a) Compute its break-even in units. (b) Will the break-even point in units increase or decrease in response to each of the following

> Refer to the CVP chart in QS 21-14 and solve for each of the items below. 1. Units produced at break-even point 2. Dollar sales at break-even point 3. Capacity in units is there a profit or a loss? 4. Are fixed costs greater than $10,000? 5. If 1

> Match the descriptions 1 through 5 with labels a through e on the CVP chart. 1. Break-even point 2. Total sales line 3. Loss area 4. Profit area 5. Total costs line

> Coors Company expects sales of $340,000 (4,000 units at $85 per unit). The company’s total fixed costs are $175,000 and its variable costs are $35 per unit. Compute (a) break-even in units and (b) the margin of safety in dollars.

> Solve for the missing amounts a through d for the following separate cases.

> Listed here are three separate series of costs measured at various volume levels. Examine each series and identify whether it is best described as a fixed, variable, or step-wise cost. Hint: It can help to graph each cost series.

> Zia Co. makes flowerpots from recycled plastic in two departments, Molding and Packaging. Zia uses the weighted average method, and units completed in the Molding department are transferred to the Packaging department. Production unit information for the

> Refer to the information in QS 20-8. (a) Compute the number of units started and completed this period. (b) Compute the total equivalent units of production for conversion. The company uses the FIFO method.

> An ice cream maker reports the following. Compute the total equivalent units of production for conversion. The company uses the weighted average method.

> Google uses variable costing for several business decisions. How can variable costing income be converted to absorption costing income?

> A production department reports the following conversion costs. Equivalent units of production for conversion total 450,000 units this period. Calculate the cost per equivalent unit of production for conversion. The company uses the weighted average meth

> A process manufacturer reports the following. Compute the total equivalent units of production for conversion. The company uses the weighted average method.

> Prepare a physical unit flow reconciliation with the following information.

> For each of the following products and services, indicate whether it is more likely produced in a process operation or a job order operation.

> Label each statement below as either true or false. 1. Cost per unit is computed by combining costs per unit across separate processes. 2. Service companies cannot use process costing. 3. Costs per job are computed in both job order and process costing s

> For the current period, an ice cream producer added raw materials to production that should have produced 50,000 gallons of ice cream. Actual production was 47,000 gallons of (non defective) ice cream. Compute the yield for this production process. Expre

> Trident Bikes uses a hybrid costing system and reports the following for its motorcycle assembly process. a. Compute the cost per unit for the Mega option. b. If the company has a target markup of 20% above cost, compute the selling price per unit for th

> Cool Scoops makes ice cream in two processes, Mixing and Packaging. During April, its first month of business, the packaging department transferred 50,000 units and $175,000 of production costs to finished goods. The company completed and sold 48,000 uni

> Prepare journal entries to record the following production activities for Hot wax. a. Requisitioned $9,000 of indirect materials for use in production of surfboard wax. b. Incurred $156,000 in actual other overhead costs (paid in cash). c. Applied overhe

> Prepare journal entries to record the following production activities for Hotwax. a. Incurred $75,000 of direct labor in its Mixing department and $50,000 of direct labor in its Shaping department. Hint: Credit Factory Wages Payable. b. Incurred indirect

> Apple produces tablet computers. Identify some of the variable and fixed product costs associated with that production. Hint: Limit costs to product costs.

> Refer to the information in QS 20-21. Using the FIFO method, assign direct materials costs to the Roasting department’s output—specifically, to the units completed and transferred out to the Mixing department and to the units that remain in work in proce

> BOGO Inc. has two sequential processing departments, Roasting and Mixing. BOGO uses the FIFO method. Production unit information for the Roasting department follows. Production cost information for the Roasting department for the same period follows. Com

> Azule Co. manufactures in two sequential processes, Cutting and Binding. The two processes report the information below for a recent month. Determine the ending balances in the Work in Process Inventory accounts for Cutting and for Binding. Hint: Set up

> For each of the following products and services, indicate whether it is more likely produced in a process operation or in a job order operation.

> At the beginning of the year, a company estimates total overhead costs of $560,000. The company applies overhead using machine hours and estimates it will use 1,400 machine hours during the year. What amount of overhead should be applied to Job 65A if t

> A company estimates the following manufacturing costs at the beginning of the period: direct labor, $468,000; direct materials, $390,000; and factory overhead, $117,000. Compute its predetermined overhead rate as a percent of (1) direct labor and (2) dir

> A company that uses job order costing incurred a monthly factory payroll of $180,000. Of this amount, $30,000 is indirect labor and $150,000 is direct labor. Prepare journal entries to record the (a) use of direct labor and (b) use of indirect labor.

> A company that uses job order costing purchases $50,000 in raw materials for cash. It then uses $12,000 of raw materials as indirect materials and uses $32,000 of raw materials as direct materials. Prepare journal entries to record the (a) purchase of ra

> The following partial job cost sheet is for a job lot of 2,500 units completed. 1. What is the total cost of this job lot? 2. What is the total cost per unit completed?

> Eco Skate makes skateboards from recycled plastic. For a recent job lot of 100 skateboards, the company incurred direct materials costs of $600 and direct labor costs of $200. Factory overhead applied to this job is $900. (1) What is the total manufactur

> What is the degree of operating leverage? How is it computed?

> Auto Safe’s job cost sheet for Job A40 shows that the total cost to add security features to a car was $10,500. The car was delivered to the customer, who paid $14,900 cash for this job. Prepare the journal entries for Job A40 to record (a) its completio

> A manufacturer reports sales of $80,000 and cost of goods sold of $60,000. 1. Compute its gross profit ratio. 2. If competitors average a 10% gross profit ratio, does this manufacturer compare favorably or unfavorably to its peers?

> Indicate whether each item a through e is a feature of a job order or process operation.

> A marketing agency used 60 hours of direct labor in creating advertising for a film festival. Direct labor costs $50 per hour. The agency applies overhead at a rate of $40 per direct labor hour. 1. What is the total estimated cost for this job? 2. If t

> Custom Co. reports the following (partial) T-account activity at the end of its first year of operations. 1. Compute the under- or over applied overhead for the year. 2. Prepare the journal entry to close Factory Overhead to Cost of Goods Sold.

> Raze Co. reports the following (partial) T-account activity at the end of its first year of operations. 1. Compute the under- or over applied overhead for the year. 2. Prepare the journal entry to close Factory Overhead to Cost of Goods Sold.

> A company applies overhead at a rate of 150% of direct labor cost. Actual overhead cost for the current period is $950,000, and direct labor cost is $600,000. 1. Compute the under- or over applied overhead. 2. Prepare the journal entry to close over- o

> Shin Co. reports the costs incurred below for the month ended May 31. The company has no beginning Work in Process Inventory. Overhead is applied using a predetermined overhead rate of 120% of direct materials costs. Job 4 was completed and Job 5 is stil

> A company that uses job order costing reports the costs incurred below. Overhead is applied at the rate of 60% of direct materials cost. The company has no beginning Work in Process or Finished Goods inventories. Jobs 1 and 3 are not finished by the end

> Built-Tate uses job order costing. The T-account below summarizes Factory Overhead activity for the current year. 1. Compute total applied overhead cost. 2. Compute total actual overhead cost. 3. Compute the under applied or over applied overhead.

> What important assumption underlies multiproduct CVP analysis?