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40. 1 Which area of public relations deals with emerging issues and their potential impact on an organiz
1 Which area of public relations deals with emerging issues and their potential impact on an organization?
a Public opinion
b Issues management
c Public affairs
d Lobbying
2 Approximately half of all public relations practitioners work in
a government
b business and commercial areas
c health care and hospitals
d public relations firms
Break-even point at pezzo corporation
Problem: The following information relates to the break-even point at Pezzo Corporation: Sales dollars …………………. $120,000 Total fixed expenses ………. $30,000
If Pezzo wants to generate net operating income of $12,000, what will its sales dollars have to be? A) $132,000 B) $136,000 C) $168,000 D) $176,000
Break-even point at pezzo corporation Accounting Basics
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42. Comprehensive problem Part B - Genuine Spice Inc., continuation from Part A
Part B:
Note: This section is a continuation from Part A of the comprehensive problem. Be sure you have completed Part A before attempting Part B. You may have to refer back to data presented in Part A and use answers from Part A when completing this section.
Genuine Spice Inc. began operations on January 1, 2014. The company produces a hand and body lotion in an eight-ounce bottle called Eternal Beauty. The lotion is sold wholesale in 12-bottle cases for $100 per case. There is a selling commission of $20 per case. The January direct materials, direct labor, and factory overhead costs are as follows:
During July of the current year, the management of Genuine Spice Inc. asked the controller to prepare August manufacturing and income statement budgets. Demand was expected to be 1,500 cases at $100 per case for August. Inventory planning information is provided as follows:
There was negligible work in process inventory assumed for either the beginning or end of the month; thus, none was assumed. In addition, there was no change in the cost per unit or estimated units per case operating data from January.
8. Prepare the August factory overhead budget. If an amount box does not require an entry, leave it blank.
Genuine Spice Inc. Factory Overhead Budget For the Month Ended August 31, 2014
Factory overhead:
Fixed
Variable
Total
Utilities
$
$
$
Facility lease
Equipment depreciation
Supplies
Total
$
$
$
9. Prepare the August budgeted income statement, including selling expenses. Enter all amounts as positive numbers.
Genuine Spice Inc. Budgeted Income Statement For the Month Ended August 31, 2014
Sales
$
Finished goods inventory, August 1
$
Direct materials inventory, August 1
$
Direct materials purchases
Less direct materials inventory, August 31
Cost of direct materials for production
$
Direct labor
Factory overhead
Less finished goods inventory, August 31
Cost of goods sold
Gross profit
$
Selling expenses
Income before income tax
$
43. 1. The fundamental accounting equation is a reflection of the:
1. The fundamental accounting equation is a reflection of the:
Money measurement concept
Conservatism concept
Dual-aspect concept
Historical cost concept
2. The historical cost concept reflects the fact that financial accounting practice favors:
Reliability over relevance
Management's best guess over historical financial information
Relevance over reliability
Consensus market values over historical financial information
3. Jon Sports' inventory account increased from $25,000 on December 31, 2003 to $30,000 on December 31, 2004. Which one of the following items would be included in the operating section of its 2004 indirect method statement of cash flows?
Add increase in inventory $5,000
Subtract increase in inventory ($5,000)
Add inventory balance $20,000
Subtract inventory balance ($20,000)
4. Turnkey Systems, Inc. began the month of June, 2004 with a prepaid expenses balance of $240,000. During the month, debits totaling $110,000 and credits totaling $80,000 were made to the prepaid expenses account. What was the June, 2004 ending balance of prepaid expenses?
A debit balance of $210,000
A credit balance of $210,000
A debit balance of $270,000
A credit balance of $270,000
5. Pentex and Marbro, small companies in the stationery business, each had a dollar gross margin of $20,000 during September 2004. Pentex's September sales were twice that of Marbro's. If Pentex's gross margin as a percentage of sales for September was 10%, Marbro's gross margin as a percentage of sales for the same period was:
10%
5%
20%
Cannot be calculated
6. When an entity recognizes revenue before it has received cash for the sale, it records an increase in a(n):
assets
liabilities
expenses
none of the above
7. Juan Foods pays off a long-term debt in full. Which one of the following statements describes the effect of the sale on Juan Foods?
Current ratio increases; total debt to equity ratio decreases
Current ratio decreases; total debt to equity ratio decreases
Current ratio decreases; total debt to equity ratio increases
Current ratio increases; total debt to equity ratio increases
8. On January 1, 2005, Mansfield Company has a retained earnings balance of $256,000. During 2005, its net income is $44,000 and it announces and pays $12,000 in dividends. There is no other dividend-related activity during the year. Its December 31, 2005 retained earnings balance is:
$212,000
$288,000
$300,000
$224,000
9. Juan Foods makes a cash sale with a positive gross margin. Which one of the following statements describes the effect of the sale on Juan Foods?
Current ratio increases
Current ratio decreases
No change to Juan Foods' current ratio
Insufficient information to judge effect on current ratio
10. Juan Foods pays off a long-term debt in full. Which one of the following statements best describes the appropriate book-keeping for this transaction?
Debit cash; credit long-term debt
Debit long-term debt; credit owners' equity
Debit owners' equity; credit long-term debt
Debit long-term debt; credit cash
11. On March 31, 2005, Cars, Inc. owes Preston Devices, one of its suppliers, $25,000 for previous purchases. During April 2005, Preston sells Cars devices with a sales price of $10,000 and a cost to Preston of $8,000. During April Cars pays Preston $12,000 against the amount owed to Preston. What is the effect of these April transactions on Preston's balance sheet?
Cash increased by $12,000; accounts receivable decreased by $2,000; inventory decreased by $8,000; retained earnings increased by $2,000.
Accounts receivable increased by $2,000; inventory decreased by $8,000; cash increased by $12,000; retained earnings increased by $12,000.
Cash increased by $12,000; retained earnings decreased by $2,000; inventory decreased by $10,000; accounts receivable decreased by $12,000.
Cash increased by $2,000; accounts receivable decreased by $2,000; inventory decreased by $8,000; retained earnings decreased by $12,000.
12. Consider the same scenario as in the previous question: On March 31, 2005, Cars, Inc. owes Preston Devices, one of its suppliers, $25,000 for previous purchases. During April 2005, Preston sells Cars devices with a sales price of $10,000 and a cost to Preston of $8,000. During April Cars pays Preston $12,000 against the amount owed to Preston. If Preston had no other sales and records no other collections from customers during the month of April, the operating section of Preston's indirect method statement of cash flows for April will show the following de-accrual adjustments to net income:
Subtract change in accounts receivable; add change in inventory.
Add change in accounts receivable; subtract change in inventory
Add change in accounts receivable; add change in inventory.
Subtract change in accounts receivable; subtract change in inventory
13. Planet Music buys all of its inventory on credit. During 2005, Planet Music's inventory account increased by $10,000. Which of the following statements must be true for Planet Music during 2005?
It made payments of less than $10,000 to suppliers.
It made cash payments of $10,000 to suppliers.
It made more cash payments to its suppliers than it recorded as cost of goods sold.
It paid less cash to suppliers than it recorded as cost of goods sold.
14. On December 31, 2005, Juan Foods purchases a van for $12,000. How does the purchase of the van affect Juan Foods' 2005 income statement?
Decreases sales by $12,000
Increases operating expenses by $12,000
No material effect
Increases cost of goods sold by $12,000
15. To be recorded as a liability, an item must meet three specific conditions. Two of them are: it must involve probable future sacrifice of economic resources by the entity, and it must be a present obligation that arose as a result of a past transaction. Which one of the following is the third condition?
The item must reduce the market value of the recording entity
It must involve a transfer of resources to another entity
It must involve the expenditure of cash now or in the future
It must not cause total liabilities to exceed total assets
44. Ex 12-19 Present value of an annuity On January 1, 2016, you win $50,000,000 in the state...
Ex 12-19 Present value of an annuity
On January 1, 2016, you win $50,000,000 in the state lottery. The $50,000,000 prize will be paid in equal installments of $6,250,000 over eight years. The payments will be made on December 31 of each year, beginning on December 31, 2016. If the current interest rate is 5%, determine the present value of your winnings. Use the present value tables in Appendix A.
45. Arial Company maintains a petty cash fund for small expenditures. The following transactions...
Arial Company maintains a petty cash fund for small expenditures. The following transactions occurred over a 2-month period.
July 1
Established petty cash fund by writing a check on Coulter Bank for $200.
15
Replenished the petty cash fund by writing a check for $198.00. On this date the fund consisted of $2.00 in cash and the following petty cash receipts: freight-out $87.00, postage expense $51.40, entertainment expense $46.60, and miscellaneous expense $11.20.
31
Replenished the petty cash fund by writing a check for $192.00. At this date, the fund consisted of $8.00 in cash and the following petty cash receipts: freight-out $82.10, charitable contributions expense $45.00, postage expense $25.50, and miscellaneous expense $39.40.
Aug. 15
Replenished the petty cash fund by writing a check for $187.00. On this date, the fund consisted of $13.00 in cash and the following petty cash receipts: freight-out $75.60, entertainment expense $43.00, postage expense $33.00, and miscellaneous expense $37.00.
16
Increased the amount of the petty cash fund to $300 by writing a check for $100.00.
31
Replenished petty cash fund by writing a check for $277.00. On this date, the fund consisted of $23 in cash and the following petty cash receipts: postage expense $133.00, travel expense $95.60, and freight-out $47.10.
46. Which of the following best explains why a firm that needs to borrow money would borrow at long-t...
Which of the following best explains why a firm that needs to borrow money would borrow at long-term rates when short-terms rates are lower than long-term rates? A firm will only borrow at short-term rates when the yield curve is downward-sloping. The firm's interest payments will be the same whether it uses short-term or long-term financing, so it is essentially indifferent to which type of financing it uses. The use of short-term financing over long-term financing for a long-term project will increase the risk of the firm. Credit ratings affect the yields on bonds. Based on the scenario described in the following table, determine whether yields will increase or decrease and whether it will be more expensive or less expensive, as compared to other players in the market, for a company to borrow money from the bond market.
47. Landen Corporation uses a job-order costing system. At the beginning of the year, the company mad...
Landen Corporation uses a job-order costing system. At the beginning of the year, the company made the following estimates:
Direct labor-hours required to support estimated production
150,000
Machine-hours required to support estimated production
75,000
Fixed manufacturing overhead cost
$
420,000
Variable manufacturing overhead cost per direct labor-hour
$
4.60
Variable manufacturing overhead cost per machine-hour
$
9.20
During the year, Job 550 was started and completed. The following information is available with respect to this job:
Direct materials
$
195
Direct labor cost
$
288
Direct labor-hours
15
Machine-hours
5
Required:
1. Assume that Landen has historically used a plantwide predetermined overhead rate with direct labor-hours as the allocation base. Under this approach:
a. Compute the plantwide predetermined overhead rate.
b. Compute the total manufacturing cost of Job 550.
c. If Landen uses a markup percentage of 200% of its total manufacturing cost, what selling price would it establish for Job 550?
2. Assume that Landen’s controller believes that machine-hours is a better allocation base than direct labor-hours. Under this approach:
a. Compute the plantwide predetermined overhead rate.
b. Compute the total manufacturing cost of Job 550.
c. If Landen uses a markup percentage of 200% of its total manufacturing cost, what selling price would it establish for Job 550?
(Round your intermediate calculations to 2 decimal places. Round your Predetermined Overhead Rate answers to 2 decimal places and all other answers to the nearest whole dollar.)
48. . 1.Compute the total prime costs for both Garcon Company and Pepper Company. . 2.Compute t...
1.Compute the total prime costs for both Garcon Company and Pepper Company.
.
2.Compute the total conversion costs for both Garcon Company and Pepper Company.
Beginning finished goods inventory
$
12,000
$
16,450
Beginning work in process inventory
14,500
19,950
Beginning raw materials inventory
7,250
9,000
Rental cost on factory equipment
27,000
22,750
Direct labor
19,000
35,000
Ending finished goods inventory
17,650
13,300
Ending work in process inventory
22,000
16,000
Ending raw materials inventory
5,300
7,200
Factory utilities
9,000
12,000
Factory supplies used
8,200
3,200
General and administrative expenses
21,000
43,000
Indirect labor
1,250
7,660
Repairs—Factory equipment
4,780
1,500
Raw materials purchases
33,000
52,000
Selling expenses
50,000
46,000
Sales
195,030
290,010
Cash
20,000
15,700
Factory equipment, net
212,500
115,825
Accounts receivable, net
13,200
19,450
49. 69. Which pair of accounts follows the rules of debit and credit in the same manner? A. Service...
69. Which pair of accounts follows the rules of debit and credit in the same manner? A. Service Revenue and Equipment B. Land and Dividends C. Notes Payable and Buildings D. Wages Expense and Service Revenue
70. Which pair of accounts follows the rules of debit and credit in the opposite manner? A. Prepaid Insurance and Dividends B. Advertising Expense and Land C. Dividends and Service Revenue D. Interest Payable and Common Stock
71. The double-entry system A. requires that each transaction be recorded with at least one debit and one credit. B. requires that the total amount of the debits must always equal the total amount of the credits. C. is based on the principle of duality. D. All of these choices.
72. Which of the following does not impact the Statement of Retained Earnings? A. Common Stock B. Revenues C. Expenses D. Dividends
73. Which of the following is the final step in the accounting cycle? A. Prepare financial statements. B. Close the accounts. C. Prepare an adjusted trial balance. D. Post the journal entries to the ledger.
74. Which of the following is the first step in the accounting cycle? A. Prepare financial statements. B. Analyzebusiness transactions from source documents. C. Prepare an adjusted trial balance. D. Post the journal entries to the ledger.
75. The declaration of dividends will A. decrease net income. B. increase liabilities. C. not affect total assets. D. increase stockholders’ equity.
76. A company records a transaction in which six months’ rent is paid in advance. Which of the following journal entries records the transaction? A. Prepaid Rent – Debit; Cash – Credit B. Rent Receivable – Debit; Cash – Credit C. Rent Revenue – Debit; Cash – Credit D. Rent Expense– Debit; Cash – Credit.
77. Receiving cash from a customer for settlement of an Accounts Receivable will A. decrease Stockholders’ Equity. B. increase net income. C. increase total assets. D. not affect total assets.
78. Which of the following events does not require a journal entry? A. Purchase of a one-year insurance policy. B. Agreement to perform a service at a future date. C. Payment for a service performed previously. D. All of these choices.
79. When a company has performed a service but has not yet received payment, what is the required journal entry to be recorded? A. Accounts Receivable – Debit; Service Revenue – Credit B. Service Revenue – Debit; Accounts Payable – Credit. C. Service Revenue – Debit; Accounts Receivable – Credit D. No entry is required until the cash is received.
50. Calculate the direct labour cost variance from the following
Calculate the direct labour cost variance from the following:
Standard output
=
500 units
Actual output
=
400 units
Standard time per unit
=
5 hrs
Total actual time taken
=
2,200 hrs
Standard rate of wages
=
Rs. 20 per hour
Actual rate of wages
=
Rs. 25 per hour