# ACCOUNTING

1.

The first budget to be prepared when making a master budget is the

a.
 sales budget.
b.
 production budget.
c.
 cash budget.
d.
 direct labor budget.

1 points

Question 2

1.

J.         J. Johnson has decided to supplement his income by selling beehives. He expects to sell 25,000 hives in 2010. He ended 2009 with 2,500 completed hives in inventory and would like to complete operations in 2010 with at least 2,800 completed hives in inventory. There is no ending work in process inventory. One beehive holds about 250 bees. The bees are purchased for \$4.00 per 1,000 bees. The hives sell for \$15.00 each.

How many beehives would the 2010 production budget identify as needing to be produced?

a.
 24,700
b.
 25,000
c.
 25,300
d.
 30,300

1 points

Question 3

1.

J.        J. Johnson has decided to supplement his income by selling beehives. He expects to sell 25,000 hives in 2010. He ended 2009 with 2,500 completed hives in inventory and would like to complete operations in 2010 with at least 2,800 completed hives in inventory. There is no ending work in process inventory. One beehive holds about 250 bees. The bees are purchased for \$4.00 per 1,000 bees. The hives sell for \$15.00 each.

What would be the total of the 2010 period sales budget?

a.
 \$375,000
b.
 \$376,500
c.
 \$378,000
d.
 \$379,500

1 points

Question 4

1.

Fantastic Futons goes through two departments in the production process. Each futon requires two direct labor hours in Department A and one hour in Department B. Labor cost is \$8 per hour in Department A and \$10 per hour in Department B.

Assuming the amount budgeted to be produced in January is 30,000 units, what is the budgeted direct labor cost for January?

a.
 \$540,000
b.
 \$780,000
c.
 \$810,000
d.
 \$840,000

1 points

Question 5

1.

Selling and administrative expenses are billed and paid the month after they occur. Selling and administrative expenses have both a fixed and a variable component. The fixed component is a constant \$4,700 a month. The variable component equals 5 percent of revenues. Given revenues of \$300,000 for January, \$350,000 for February, and \$400,000 for March, what would be the budgeted selling and administrative expenses that would be paid in March?

a.
 \$4,700
b.
 \$13,200
c.
 \$19,700
d.
 \$22,200

1 points

Question 6

1.

The projections of direct materials purchases that follow are for the Sombo Corporation.

 Purchases on Account Cash Purchases December \$40,000 \$30,000 January 60,000 20,000 February 50,000 35,000 March 70,000 25,000

The company pays for 60 percent of purchases on account in the month of purchase and 40 percent in the month following the purchase. What is the expected cash payment for direct materials for the month of February?

a.
 \$52,000
b.
 \$72,000
c.
 \$89,000
d.
 \$95,000

1 points

Question 7

1.

Smile Industries capital structure consists of \$1,000,000 of debt at 6 percent interest and 1,500,000 of stockholders equity at 2 percent.

The average cost of capital of Smile Industries is

a.
 .6%
b.
 1.2%
c.
 2.4%
d.
 3.6%

1 points

Question 8

1.

Discounting calculates the __________ value of an amount to be received.

a.
 present
b.
 future
c.
 compounded
d.
 book

1 points

Question 9

1.

The net present value method of evaluating proposed investments

a.
 measures a project’s time-adjusted rate of return.
b.
 discounts cash flows at the minimum desired rate of return.
c.
 ignores cash flows beyond the payback period.
d.
 applies only to mutually exclusive investment proposals.

1 points

Question 10

1.

A company is considering a project with annual after-tax cash flows of \$5,700.00 per year for six years. The company’s cost of capital is 14 percent. Present and future value factors for a 14 percent interest rate for six years are as follows:

 Future value of \$1 2.195 Present value of \$1 0.456 Future value of a series of equal payments 8.536 Present value of a series of equal payments 3.889

Using the net present value method, what is the maximum amount that the company should invest?

a.
 \$22,167.30
b.
 \$48,655.20
c.
 \$12,511.50
d.
 \$2,599.20

1 points

Question 11

1.

When using the net present value method to compare keeping an old building or disposing of it and acquiring a new building, the current cash residual value of the old building should be

a.
 viewed as a cash flow.
b.
 an addition to the price paid for the new building.
c.
 a subtraction from the price paid for the new building.
d.
 irrelevant to the decision.

1 points

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