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Managerial Accounting Exam 2.
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Managerial Accounting Exam 2.
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Managerial Accounting Exam 2The general, selling and administrative expense budget is normally prepared -
ANS-before the cash budget.
Which of the following items would not appear in a selling and administrative expense
budget? - ANS-Cost of goods sold.
The following budget information is available for the HD Sales Company (HDC) for
January:Sales$320,000 Freight out$.25per unit soldDepreciation on Admin.
Equipment$10,000 Sales & Admin. Salaries$40,000+2% of salesAdvertising$12,000
Depreciation on Manuf. Equip.$15,000 Lease on Sales Building$45,000 Miscellaneous
Selling Expenses$5,000
All operating expenses are paid in cash in the month incurred. If HDC expects to sell
20,000 units of inventory, the total budgeted selling and administrative exp -
ANS-$123,400
The following budget information is available for the HD Sales Company for January:
Sales$320,000 Freight out$.25per unit soldDepreciation on Admin. Equipment$10,000
Sales & Admin. Salaries$40,000+2% of salesAdvertising$12,000 Depreciation on
Manuf. Equip.$15,000 Lease on Sales Building$45,000 Miscellaneous Selling
Expenses$5,000
Based on January sales of 20,000, the amount of HDC's expected cash outflow for
selling and administrative expenses would be - ANS-$113,400.
Overhead expenses are budgeted at $2,000 per month. Included in the $2,000 are $500
of monthly depreciation expense and $200 of allocated expenses related to the
insurance premium that is paid in September. What is the cash outflow for overhead for
the month of May? - ANS-$1,300
Indirect costs are frequently called overhead costs. This statement is - ANS-true.
As a result of the cost/benefit concept, a cost that could be traced directly to a cost
object may still be treated as an indirect cost. This statement is - ANS-true.
, Many costs that can be traced directly are treated as indirect cost because directly
tracing the cost is not worth the effort necessary to do the tracing. For example, a
furniture manufacturer could count the drops of glue used to produce each piece of
furniture. However, there is no benefit in knowing that a few drops more or less of glue
were used on one piece of furniture versus another piece. As a result glue and other
minor supplies are frequently treated as indirect cost rather than expending the effort
necessary to directly trace their use to each individual product.
The process of assigning costs to two or more cost objects requires - ANS-cost tracing.
cost allocation.
cost/benefit analysis.
Costs that can be traced to objects in a cost-effective manner are called - ANS-direct
costs.
Of the following statements, which is NOT true concerning indirect costs?
Indirect costs may also be called overhead costs.
An indirect cost is a cost that cannot easily be traced to a cost object.
A cost that could be directly traced may still be treated as an indirect cost.
An indirect cost may be fixed but cannot be variable. - ANS-An indirect cost may be
fixed but cannot be variable.
Which of the following would be classified as an indirect cost when assigning costs to a
particular department of a large retail sales store? - ANS-utility costs
Direct costs and variable costs are synonymous terms. This statement is - ANS-false.
The process of dividing a total cost into parts, and assigning the parts among relevant
cost objects is called - ANS-allocation.
The allocation process requires answers to which of the following questions?
What is the amount of the cost to be allocated?
Where is the cost going to be allocated?
How will the allocation be made? - ANS-All these questions
Logan Corporation has 30 employees, 10 in "A-line," and 20 in "B-line." Logan incurred
$180,000 in fringe benefits costs last year. How much in fringe benefit costs should be
allocated to "A-line"? - ANS-$ 60,000
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