Question

In: Accounting

Which of the following is correct? Select one: a. Qualitative data is generally non-numerical information b....

Which of the following is correct?

Select one:

a. Qualitative data is generally non-numerical information

b. Information can only be extracted from external sources

c. Operational information gives details of long-term plans only

W. Ltd makes leather purses. It has drawn up the following budget for its next financial period:

Selling price per unit                                                       $11.60

Variable production cost per unit                              $3.40

Sales Commission                                                            $5% of selling price

Fixed production costs                                                  $430,500

Fixed selling and administration cost                       $198,150

Sales                                                                                      90,000 units


The marketing manager has indicated that an increase in the selling price to $12.25 per unit would not affect the number of units sold, provided that the sales commission is increased to 8% of the selling price. The changes will cause the break-even point ( to the nearest whole number ) to be

Select one:

a. 71,033 units

b. 76,016 units

c. 79,879 units

d. 87,070 units

A company absorbs overheads on machine hours which were budgeted at 11,250 with overheads of $258,750. Actual results were 10,980 hours with overheads of $254692. Overheads were:

Select one:

a. Under-absorbed by $4058

b. Over-absorbed by $4058

c. Under-absorbed by $2152

d. Over-absorbed by $2152

The manager of a profit center is responsible for which of the following?
(i) Revenues of the centre,
(ii) Cost of the centre,
(iii) Assets employed in the centre

Select one:

a. (i) only

b. (ii) only

c. (i) and (ii) only

d. (i), (ii) and (iii)

Budgeted labour hours 8500

                Budgeted Overheads       $148750

                Actual Labour hours        7928

                Actual overheads            $146,200

Based on the data given above, what is the labour hour overhead absorption rate?

Select one:

a. $18.76 per hour

b. $17.20 per hour

c. $18.44 per hour

d. $17.50 per hour

Which of the following would be best described as a short-term tactical plan?

Select one:

a. Reviewing cost variances and investigate as appropriate

b. Comparing actual market share to budget

c. Lowing the selling price by 15%

d. Monitoring actual sales to budge

A company has established the following information for the costs and revenues at an activity  level of 500 units                                                                     $

                                                Direct materials                                   2,500

                                                Direct Labour                                     5,000                    

                                                Production overheads                   1,000

                                                Selling costs                                       1,250

                                                TOTAL COST                                      9,750

                                                Sales revenue                                 17,500

                                                Profit                                                   7,750

20% of the selling costs and 50% of production overheads are fixed over all levels of activity.

The following data relate to two output levels of a department:

                Machine hours                  17,000                   18,500

                Overheads                          $246,500              $251,750

The variable overhead rate per hour is $3.50. The amount of fixed overheads is:

Select one:

a. $59,500

b. $187,000

c. $5250

d. $246,500

All of the following may be cost objects except:

Select one:

a. a cost centre

b. a customer

c. a manager

d. a product

Using the FIFO system for pricing stock issues means that when prices are rising:

Select one:

a. product costs are overstated and profits understated

b. product costs are kept in line with price changes

c. product costs are understated and profits are overstated.

d. product costs are understated and profits understated

Solutions

Expert Solution

Answer to question 1

a.) Qualitative data is generally non- numerical information.

Reason: Qualitative data is defined as the data that approximates and characterizes. Qualitative data can be observed and recorded. This data type is non-numerical in nature.

Answer to question 2

     c.)79,879 units.

Reason: break even point= fixed cost /contribution per unit

                                                =$430500+$198150/$12.25-$3.40-8%of $12.25

                                                =$628650/$7.87

            Break even point     = 79879 units

Answer to question 3

b.) Under-absorbed by $2152

Reason: standard o/h for actual production= 258750/11250*10980=$252540

            Less; Actual overhead                            =$254692

                        Under absorbed                             =$2152

Answer to question 4

c.) (i) and (ii) only

Reason : A profit center manager is held accountable for both revenue and costs (expenses), and therefore for profits. This means that the manager is accountable for driving the sales revenue generating activities which lead to cash inflows and at the same time controlling the cost-generating activities.

Answer to question 5

d.) $17.50 per hour

Reason: overhead absorption rate =budgeted overhead /budgeted labour hours

                                                          =$148750/8500

                                                            = $17.50 per hour

           


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