Question

21.

Under variable costing, which of the following costs would be included in finished goods inventory?

a.wages of carpenters in a furniture factory

b.straight-line depreciation on factory equipment

c.salary of vice-president of finance

d.salary of salesperson

22.

A business operated at 100% of capacity during its first month and incurred the following costs:

Production costs (10,000 units):
Direct materials	$170,000
Direct labor	360,000
Variable factory overhead	190,000
Fixed factory overhead	50,000	$770,000
Operating expenses:
Variable operating expenses	$ 60,000
Fixed operating expenses	18,000	78,000

If 500 units remain unsold at the end of the month, what is the amount of inventory that would be reported on the variable costing balance sheet?

a.$41,500

b.$36,000

c.$38,500

d.$42,800

23.

Budgets are normally used only by profit-making businesses.

True

False

24.

Budget preparation is best determined in a top-down managerial approach.

True

False

25.

Part of the cash budget is based on information drawn from the capital expenditures budget.

True

False

26.

The budgeting process is used to effectively communicate planned expectations regarding profits and expenses to the entire organization.

True

False

27.

The budget procedures used by a large manufacturer of automobiles would probably not differ from those used by a small manufacturer of paper products.

True

False

28.

A formal written statement of management's plans for the future, expressed in financial terms, is a

a.gross profit report

b.responsibility report

c.performance report

d.budget

29.

Chelsa Manufacturing Co.'s static budget at 5,000 units of production includes $40,000 for direct labor and $5,000 for variable electric power. Total fixed costs are $23,000. At 8,000 units of production, a flexible budget would show

a.variable costs of $64,000, and $23,000 of fixed costs

b.variable costs of $64,000, and $28,000 of fixed costs

c.variable and fixed costs totaling $107,000

d.variable costs of $72,000, and $23,000 of fixed costs

30.

At the beginning of the period, the Cutting Department budgeted direct labor of $155,000, direct materials of $165,000, and fixed factory overhead of $15,000 for 9,000 hours of production. The department actually completed 10,000 hours of production. What is the appropriate total budget for the department, assuming it uses flexible budgeting?

a.$370,556

b.$335,000

c.$368,889

d.$416,000

Answer 1