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Question
You are reviewing the accounting records of Buddy's Foreign Automotive, Inc., owned by Bruce Jones. You have uncovered the following situations. List the appropriate accounting principle related to each independent scenario and suggest a correct action for each .1) In August, a check for $500 was written to Community Sports. This amount represents soccer camp for his daughter Cassie.
2) Bruce plans a Going Out of Business Sale for June, since he will be closing the business for a month-long vacation in July. He plans to reopen August 1 and will continue operating Buddy's Foreign Automotive indefinitely.
3) Buddy received a shipment of tools from Ontario, Canada. The invoice was stated in Canadian dollars.
4) Sandy Lane paid $1,500 for a major repair services. The amount was recorded as revenue. The parts for the repair must be ordered from overseas and the service won"t be complete until the following month.
Answer
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Direct labor X X
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Variable manufacturing overhead
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Direct materials
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Match the following
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Given the following data, calculate product cost per unit under variable costing.
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Direct materials $3 per unit
Overhead
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Total fixed overhead $85,000
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A. $7 per unit
B. $13.30 per unit
C. $11.00 per unit
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E. $16.50 per unit
Q:
Tim's Tools, a manufacturer of cordless drills, began operations this year. During this year, the company produced 20,000 units and sold 18,000 units. At year-end the company reported the following income statement using absorption costing:
Sales (18,000 $30) $540,000
Cost of goods sold (18,000 $14) 252,000
Gross margin $288,000
Selling and administrative expenses 90,000
Net income $198,000
Production costs per unit total $14, which consists of $12.90 in variable production costs and $1.10 in fixed production costs (based on the 20,000 units produced). 60% of total selling and administrative expenses are variable. Compute net income under variable costing.
A. $307,800
B. $198,000
C. $195,800
D. $288,000
E. $220,000
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Units produced 52,000 units
Sales price $33 per unit
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Direct labor $2.50 per unit
Variable overhead $3.50 per unit
Fixed overhead $234,000 in total
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B. $1,716,000
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D. $1,650,000
E. $1,450,000
Q:
What is the Red and White's contribution margin for this month if 980 units were sold?
A. $38,000
B. $18,620
C. $24,500
D. $50,000
E. $21,560
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Given the Cool Pools Company data, what is net income using absorption costing?
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B. $1,648,600
C. $1,627,150
D. $1,709,480
E. $1,708,600
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Given the Scavenger Company data, what is net income using variable costing?
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B. $181,250
C. $150,000
D. $177,600
E. $276,250
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Given the Galaxy, Inc. data, what is net income using absorption costing?
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B. $17,400,000
C. $16,360,000
D. $16,800,000
E. $16,220,000