ACCT 2302 Exam 2 Version #2 Student Choose the best answer from the glven choice

Question

ACCT 2302 Exam 2 Version #2 Student Choose the best answer from the glven choices (Ad points tota) 1. Which of the following accounts would appear on a budgeted balance sheet? A. Income tax expense. B. Accounts receivable. C. Sales commissions D. Depreciation expense. E. All of the choices are correct. 2. Noel Enterprises has budgeted sales in units for the next five months as follows: 6,800 units 5,400 units 7,200 unit 4,600 units 3,800 units August Past experience has shown that the ending inventory for each month must be equal to 10% of the next month's sales units. The inventory on May 31 contained 400 units. The company needs to prepare a production quarter of the year. The desired ending inventory for August is: budget for the second A. 720 units B. 460 units C. 540 units D. 380 units 3. Crow Corporation produces a single product and has the following cos structure 2,000 Number of units produced each year Variable costs per unit: S28 S61 S6 $7 Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative expense Fixed costs per year: Fixed manufacturing overhead 190,000 Fixed selling and administrative expense $36,000 The variable costing unit product cost is: A. $190 per unit B. $95 per unit C. $102 per unit D. $96 per unit

Explanation / Answer

Solution 1:

Accounts Receivables would appear on the budgeted balance sheet because the remaining accounts are in the nature of expense which would appear on Income Statement.

Hence. Option "B" is correct.

Solution 2:

Desired Ending Inventory for August = Sale units of September * 10% = 4600 *10% = 460 units

Hence Option "B" is correct.

Solution 3:

Variable costing Unit Product cost = Direct Material + direct labor + variable Manufacturing Overhead

= $28 + $61 + $6 = $95 per unit

Hence Option "B" is correct.

Solution 4:

Incresae in sale units = 170 units

Contributio margin per unit = $44

Total Increse in contribution = 170*$44 = $7,480

Increase in Net operating Income = Increase in contribution - Increase in Advertising Cost

= $7480 - $6000 = $1480 Increase

Hence Option "A" is correct.

Solution 5:

Ending Inventory for August = Sales of September *30% = 90000*30% = 27,000 units

Beginning Inventory for August = ending Inventory of July = Sales of August *30% = 80000 *30% = 24,000 units

Production for August = Sale unit in August + Ending Inventory for August - Beginning Inventory for August

= 80000 +27000 - 24000 = 83,000 units

Hence option "A" is correct.

Solution 6:

Master Budget Process usually begins with the "sale budget" because every other projection is based on "how much sales is to be achieved".

Hence Option "C" is correct.

Solution 7:

Break even units will decrease if there is an increase in Selling Price. As break even units is fixed cost divided by contribution margin per unit therefore increase in selling price will increase the contribution margin per unit and hence break even in units will decrease.

Hence, Option "D" is correct.

Solution 8:

Under Absorption Costing, Variable Manufacturing OH and Fixed Manufacturing OH, both are part of product cost.

Hence Option "B" is correct.

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