ACCT 322 absorp var and bgt

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1. Which of the following costs/expenses is included in product costs under both absorption costing and
variable costing?

A.Variable manufacturing costs

B.Supervisory salaries

C.Variable selling expenses

D.Office equipment depreciation

2. An allocated portion of fixed manufacturing overhead is included in product costs under which of the
following? Absorption CostingVariable Costing A) NoNo B) NoYes C) YesNo D) YesYes

A.Option B

B.Option D

C.Option C

D.Option A

3. The total fixed manufacturing overhead costs of Cay Company are $100,000, and the total variable
selling costs are $80,000. Under variable costing, how should these costs be classified? Period
CostsProduct Costs A) $0$180,000 B) 80,000100,000 C) 100,00080,000 D) 180,0000

A.Option D

B.Option A

C.Option C

D.Option B

4. What factor is the cause of the difference between operating income computed using absorption
costing and operating income computed using variable costing?

A.Absorption costing considers all manufacturing costs in the determination of operating income,
whereas variable costing considers only prime costs.

B.Absorption costing includes all variable manufacturing costs in product costs, but variable costing
considers variable manufacturing costs to be period costs.

C.Absorption costing includes all fixed manufacturing costs in product costs, but variable costing
expenses all fixed manufacturing costs.
 D.Absorption costing allocates fixed manufacturing costs between cost of goods sold and
inventories, and variable costing considers all fixed manufacturing costs as period costs.

5. Operating income reported under absorption costing will generally exceed operating income reported
under variable costing for a given period in which of the following cases?

A.If the variable manufacturing overhead exceeds the fixed manufacturing overhead.

B.If production exceeds sales for that period.

C.If sales exceed production for that period.

D.If production equals sales for that period.

6. The cash budget must be prepared before you can complete which of the following?

A.Raw materials purchases budget.

B.Schedule of cash disbursements.

C.Production budget.

D.Budgeted balance sheet.

7. Parlee Company's sales are 30% in cash and 70% on credit. Sixty percent of the credit sales are
collected in the month of sale, 25% in the month following sale, and 12% in the second month
following sale. The remainder is uncollectible. The following are budgeted sales data: January
February March April Total Sales$60,000$70,000$50,000$30,000 What would be the budgeted total
cash receipts in April?

A.$38,900

B.$47,900

C.$36,230.

D.$27,230

8. Pardee Company plans to sell 12,000 units during the month of August. If the company has 2,500
units on hand at the start of the month, and plans to have 2,000 units on hand at the end of the month,
how many units must be produced during the month?

A.11,500 units

B.12,000 units

C.12,500 units

D.14,000 units

9. Superior Industries' sales budget shows quarterly sales for the next year as follows: QuarterSales
(Units) First10,000 Second8,000 Third12,000 Fourth14,000 Company policy is to have a finished
goods inventory at the end of each quarter equal to 20% of the next quarter's sales. What should be the
budgeted production for the second quarter?
 A.8,400 units

B.8,000 units

C.8,800 units

D.7,200 units

10. Justin's Plant Store, a retailer, started operations on January 1. On that date, the only assets were
$16,000 in cash and $3,500 in merchandise inventory. For purposes of budget preparation, assume
that the company's cost of goods sold is 60% of sales. Expected sales for the first four months appear
below: Expected Sales January$10,000 February24,000 March16,000 April25,000 The company
desires that the merchandise inventory on hand at the end of each month be equal to 50% of the next
month's merchandise sales (stated at cost). All purchases of merchandise inventory must be paid in the
month of purchase. Sixty percent of all sales should be for cash; the balance will be on credit.
Seventy-five percent of the credit sales should be collected in the month following the month of sale,
with the balance collected in the following month. Variable operating expenses should be 10% of
sales, and fixed expenses (all depreciation) should be $3,000 per month. Cash payments for the
variable operating expenses are made during the month the expenses are incurred. What would be the
accounts receivable balance that would appear in the March 31 budgeted balance sheet?

A.$15,000

B.$8,800

C.$16,000

D.$12,400