1. (TCO 1) Who are the users of managerial accounting information? How does their use of accounting information differ from the users of financial accounting information?
2. (TCO 2) What is an indirect labor cost? What is an example of an indirect labor cost?
3. (TCO 3) What is job-order costing? What type of company would us job-order costing?
4. (TCO 4) What is a variable cost? What is an example of a variable cost?
5. (TCO 5) What is full costing? How does it differ from variable costing?
6. (TCO 6) Explain why companies might choose to allocate the costs of their service departments (ie. Human Resources, Maintenance, Mailroom, etc...) to their production departments. Also describe some typical bases companies use to base their allocations on. Last, what should a company be mindful of when analyzing the profitability of segments that have allocated costs.
7. (TCO 7) What is an incremental cost? What is an example of one?
8. (TCO 8) What is cost plus pricing? How does the company determine the profit level?
9. Gina's Boutique makes custom jewelry. One item, the guru necklace, is a best seller and sales in units for the first quarter are as follows:
January 100,000 units
February 150,000 units
March 180,000 units
Desired ending inventory is budgeted at 20% of next month sales.
10. Acme Fireworks uses a traditional overhead allocation based on direct labor hours. For the current year overhead is estimated at $1,000,000 and direct labor hours are budgeted at 200,000 hours. Actual hours worked were 195,000 and actual overhead was $978,000.
(a) Compute the predetermined manufacturing overhead rate.
(b) Compute the applied manufacturing overhead.
11. Joanie Corp sells it products on a credit basis only . Credit sales are collected 40% in the month of sale and 60% the following month. Sales for the first quarter are as follows:
12. (TCO 9) A project will require an initial investment of $300,000 and will return $75,000 each year for eight years. If taxes are ignored and the required rate of return is 9%, what is the project's net present value? Based on this analysis, should the company proceed with the project?
13. The following data (in thousands of dollars) have been taken from the accounting records of Karmana Corporation for the just-completed year.
Raw materials inventory, beginning .....................$10
Raw materials inventory, ending .........................$30