2024 – PROBLEM 1 Describe the major differences between managerial accounting and financial accounting ESSAY 2 You have been

 

PROBLEM
1. Describe the major differences between managerial accounting and financial accounting.
ESSAY
2. You have been working as a staff accountant at Sanborn Industries for three months. Mr. Jones, the accounting manager as well as your boss, has informed you that he has decided to change vendors for the company’s office supplies. He notifies you that your company will now be utilizing the store owned by his best friend. Mr. Jones is hopeful that this will bring in a significant profit for his friend’s business possibly preventing the closing of his store. You receive the first invoice from that store and realize that the prices are nearly double the amount that the company was paying when using a large retail chain.
What should you do about the situation?
Chapter 2
MULTIPLE CHOICE
3. Product costs consist of
a. period costs.
b. indirect materials, indirect labor, and administrative costs.
c. direct materials, direct labor, and selling costs.
d. direct materials, direct labor, and overhead.

4. Which of the following would not be included in overhead?
a. marketing costs
b. property taxes on the factory
c. factory utility costs
d. deprecation on factory machinery

5. Which of the following is an example of a period cost?
a. research and development
b. selling and marketing
c. general accounting
d. all of these
6. The cost of the partially completed goods at the end of the period would be
a. ending work in process inventory.
b. cost of goods sold.
c. beginning finished goods inventory.
d. beginning work in process inventory.
7. Product costs are expensed
a. when the product is finished.
b. when the product unit cost is calculated.
c. when the product is sold.
d. all of these are correct.
8. Cost of goods sold
a. represents all costs associated with research, development, and general administration of the organization.
b. is found on the Balance Sheet.
c. is the cost of the partially completed goods that are still on the factory floor at the end of the period.
d. is the total product cost for the units sold during a period.

9. Gross margin equals
a.  selling and administrative expenses.–cost of goods sold
b. direct materials + direct labor + manufacturing overhead.
c.  cost of goods sold.–sales revenue
d. cost of goods manufactured + selling and administrative expenses.

Chapter 3
10. The average unit cost at a monthly volume of 9,000 units is $3, and the average unit cost at a monthly volume of 22,500 units is $2.10.
Required:
A. Develop a cost formula for total monthly costs.
B. What are the total monthly costs if 15,000 units are produced?
11. Ruskin Company had utilities cost of $95,000 at an output level of 30,000 units. The utilities cost was a mixed cost and the fixed portion was $50,000. What would the estimate of total utilities cost be at an output level of 40,000 units?
a. $65,000
b. $95,000
c. $110,000
d. $125,000
Chapter 4
12. At the break-even point,
a. total revenue equals variable cost.
b. total fixed cost equals variable cost.
c. total contribution margin equals total fixed cost.
d. total sales equals total fixed cost.
e. total margin of safety equals variable cost.
13. If the contribution margin per unit decreases, the break-even point in units
a. will increase.
b. will decrease.
c. will remain the same.
d. cannot be determined from the information given.
14. The following information was extracted from the accounting records of MVP Corporation:
Selling price per unit $60
Variable cost per unit $20
Total fixed costs $480,000
Required:
A. What is MVP’s break-even point in units?
B. How many units must be sold to earn operating income of $80,000?
C. What is MVP’s break-even point in units if the selling price increases by 20% and the variable costs decrease by 20%?