Suppose Iron City manufactures cast iron skillets. One model is a 10-inch skillet that sells for $20. Iron City projects sales of 500 IO-inch skillets per month. The production costs are$9 per skillet for direct materials, $1 per skillet for direct labor, and$2 per skillet for manufacturing overhead. Iron City has 50 10-inch skillets in inventory at the beginning of July but wants to have an ending inventory equal to 20% of the next month's sales. Selling and administrative expenses for this product line are $1,500 per month. Compute the budgeted gross profit for July. a.$6,000 c. $4,000 b.$5,000 d. $3,000

Suppose Iron City manufactures cast iron skillets. One model is a 10-inch skillet that sells for $20. Iron City projects sales of 500 10-inch skillets per month. The production costs are$9 per skillet for direct materials, $1 per skillet for direct labor, and$2 per skillet for manufacturing overhead. Iron City has 50 10-inch skillets in inventory at the beginning of July but wants to have an ending inventory equal to 20% of the next month's sales. Selling and administrative expenses for this product line are $1,500 per month.

How many 10-inch skillets should Iron City produce in July?

• a. 500 skillets
• b. 550 skillets
• c. 600 skillets
• d. 650 skillets

Suppose Iron City manufactures cast iron skillets. One model is a 10-inch skillet that sells for $20. Iron City projects sales of 500 IO-inch skillets per month. The production costs are$9 per skillet for direct materials, $1 per skillet for direct labor, and$2 per skillet for manufacturing overhead. Iron City has 50 10-inch skillets in inventory at the beginning of July but wants to have an ending inventory equal to 20% of the next month's sales. Selling and administrative expenses for this product line are $ 1,500 per month. How many 10-inch skillets should Iron City produce in July? a. 500 skillets c. 600 skillets b. 550 skillets d. 650 skillets

What is the primary difference between variable costing and absorption costing?

A company prepares a five-year budget. This budget would be considered a(n) a. strategic budget c. master budget b. operational budget d. flexible budget

Suppose Mallcentral sells 1,000 hardcover books per day at an average price of $30. Assume that Mallcentral's cost for the books is 75% of the selling price it charges retail customers. Mallcentral has no beginning inventory, but it wants to have a three-day supply of ending inventory. Assume that selling and administrative expenses are$1,000 per day. Compute Mallcentral's budgeted sales for the next (seven-day) week. a. $157,500 c.$435,000 b. $217,000 d.$210,000

Sammie's Pizza sells an average of 150 pizzas per week, of which 20% are single-topping pizzas and 80% are supreme pizzas with multiple toppings. Singles sell for $8 each and incur variable costs of$2. Supremes sell for $12 each and incur variable costs of$6. The contribution margin per unit and total contribution margin for Singles and Supremes are

$$\begin{array}{cc} \hline&&&\textbf{Single}&&&&&&&&&&&&&&&&&&&&&&&\textbf{Supremes}\\ \hline \end{array}$$

$$\begin{array}{cccc} &\textbf{Contribution}&\textbf{Total}&\textbf{Contribution}&\textbf{total}\\ &\textbf{Margin per Unit}&\textbf{Contribution Margin}&\textbf{Margin per Unit}&\textbf{Contribution Margin}\\ \hline \end{array}$$

$$\begin{array}{ccccc} \text{a.}&&&&\$6&&&&&&&\$720&&&&&&&&&&\$6&&&&&&&&&\$180\\ \text{b.}&&&&\$6&&&&&&&\$180&&&&&&&&&&\$6&&&&&&&&&\$720\\ \text{a.}&&&&\$6&&&&&&&\$240&&&&&&&&&&\$6&&&&&&&&&\$360\\ \text{a.}&&&&\$6&&&&&&&\$180&&&&&&&&&&\$6&&&&&&&&&\$180\\ \end{array}$$

Donovan Company incurred the following costs while producing 500 units: direct materials, $10 per unit; direct labor,$25 per unit; variable manufacturing overhead, $15 per unit; total fixed manufacturing overhead costs,$10,000; variable selling and administrative costs, $5 per unit; total fixed selling and administrative costs,$7,500. There are no beginning inventories. What is the operating income using absorption costing if 500 units are sold for $100 each? a.$500 b. $2,500 c.$2,750 d. $5,000

Donovan Company incurred the following costs while producing 500 units: direct materials, $10 per unit; direct labor,$25 per unit; variable manufacturing overhead, $15 per unit; total fixed manufacturing overhead costs,$10,000; variable selling and administrative costs, $5 per unit; total fixed selling and administrative costs,$7,500. There are no beginning inventories.

What is the unit product cost using variable costing?

• a. $50 per unit
• b.$55 per unit
• c. $70 per unit
• d.$90 per unit

Donovan Company incurred the following costs while producing 500 units: direct materials, $10 per unit; direct labor,$25 per unit; variable manufacturing overhead, $15 per unit; total fixed manufacturing overhead costs,$10,000; variable selling and administrative costs, $5 per unit; total fixed selling and administrative costs,$7,500. There are no beginning inventories. What is the unit product cost using variable costing? a. $50 per unit c.$70 per unit b. $55 per unit d.$90 per unit

A company has already incurred $5,000 of costs in producing 6,000 units of Product XY. Product XY can be sold as is for$15 per unit. Instead, the company could incur further processing costs of $8 per unit, and sell the resulting product for$21 per unit. Should the company sell Product XY as is or process it further?

Donovan Company incurred the following costs while producing 500 units: direct materials, $10 per unit; direct labor,$25 per unit; variable manufacturing overhead, $15 per unit; total fixed manufacturing overhead costs,$10,000; variable selling and administrative costs, $5 per unit; total fixed selling and administrative costs,$7,500. There are no beginning inventories. What is the operating income using variable costing if 450 units are sold for $100 each? a.$2,750 c. $500 b.$5,000 d. $2,500

Booth has $12,500 in cash on hand on January 1 and has collected the following budget data:

$$\begin{array}{lcc} \hline &\textbf{January}&\textbf{February}\\ \hline\\ \text{Sales}&\text{\$\hspace{5pt}529,000}&\text{\$\hspace{5pt}568,000}\\ \text{Cash receipts from customers}&\text{\hspace{10pt}443,000}&\text{\hspace{10pt}502,200}\\ \text{Cash payments for direct materials purchases}\hspace{5pt}&\text{\hspace{10pt}180,624}&\text{\hspace{10pt}160,284}\\ \text{Direct labor costs}&\text{\hspace{10pt}135,010}&\text{\hspace{10pt}113,348}\\ \text{Manufacturing overhead costs (includes}\\ \hspace{10pt}\text{depreciation of \$900 per month)}&\text{\hspace{15pt}55,058}&\text{\hspace{15pt}53,922}\\ \\\hline \end{array}$$

Assume direct labor costs and manufacturing overhead costs are paid in the month incurred. Additionally, assume Booth has cash payments for selling and administrative expenses including salaries of $40,000 per month plus commissions that are 1% of sales, all paid in the month of sale. The company requires a minimum cash balance of$20,000. Prepare a cash budget for January and February. Round to the nearest dollar. Will Booth need to borrow cash by the end of February?

Yates has $13,500 in cash on hand on January 1 and has collected the following budget data:

$$\begin{array}{lrr} \hline&\textbf{January}&\textbf{February}\\ \hline \text{Sales}&\$528,000&\$560,000\\ \text{Cash receipts from customers}&442,400&502,800\\ \text{Cash payments for direct materials purchases}&180,598&160,464\\ \text{Direct labor costs}&135,040&113,792\\ \text{Manufacturing overhead costs (includes depreciation}\\ \text{of \$2,100 per month)}&55,428&53,436\\ \hline \end{array}$$

Assume direct labor costs and manufacturing overhead costs are paid in the month incurred. Additionally, assume Yates has cash payments for selling and administrative expenses including salaries of $45,000 per month plus commissions that are 2% of sales, all paid in the month of sale. The company requires a minimum cash balance of$10,000. Prepare a cash budget for January and February. Round to the nearest dollar. Will Yates need to borrow cash by the end of February?