Answer the following questions using the information below:   Gibson Manufacturing is a small textile manufacturer using machine-hours as the single indirect-cost rate to allocate manufacturing overhead costs to the various jobs contracted during the year. The following estimates are provided for the coming year for the company and for the Winfield High School band jacket job.   CompanyWinfield High School Job Direct materials              […]

  3) Which of the following is true of depreciation cost? A) Depreciation cost on equipment is irrelevant in decision making because depreciation on equipment that has already been purchased is a past cost. B) Depreciation cost on equipment is relevant in decision making because depreciation on equipment that has already been purchased is an opportunity cost. C) Depreciation cost on equipment is irrelevant in […]

    21) Which of the following increases retained earnings? A) issuance of stock B) revenues C) purchase of inventory D) dividends   22) Mia Hero, Inc. had a retained earnings balance of $7,000 on December 31, 2011. For the year 2012, sales revenues are $15,000 and expenses are $13,000. If no dividend is declared or paid in 2012, retained earnings at December 31, 2012 […]

  17) Customer life-cycle costs do not influence the prices a company can charge for its products.   18) Managing environmental costs is an example of life-cycle costing and value engineering. 19) Life-cycle budgeting estimates the costs and revenues attributed to a product from its initial R&D through production of a prototype product.   20) Environmental costs that are incurred over several years of the […]

      Objective 15.1   1) The method that allocates costs in each cost pool using the same rate per unit is known as the: A) incremental cost-allocation method B) reciprocal cost-allocation method C) single-rate cost allocation method D) dual-rate cost-allocation method   2) The dual-rate cost-allocation method classifies costs in each cost pool into a: A) budgeted-cost pool and an actual-cost pool B) […]

  55) Maremount Tire Company needs to overhaul its auto lift system or buy a new one. The facts have been gathered, and they are as follows:     Current Machine New Machine Purchase Price, New $112,500 $148,000 Current book value 33,500   Overhaul needed now 27,500   Annual cash operating costs 63,000 48,000 Current salvage value 40,000   Salvage value in five years 8,000 […]

  71. The primary difference between a fixed budget and a flexible budget is that a fixed budget  A. cannot be changed after the period begins, whereas flexible budget can be changed after the period begins. B. is concerned only with future acquisitions of fixed assets, whereas a flexible budget is concerned with expenses that vary with sales. C. includes only fixed costs, whereas a flexible budget includes only […]

  1) A prepaid expense recorded initially as an expense is adjusted by crediting the asset account.   2) When a prepaid expense is recorded initially as an expense, the adjusting entry transfers the unused portion of the expense to the asset account.   3) A liability account is credited when a prepaid expense is recorded initially as an expense.   4) When a prepaid […]

  143. (CMA Jun 96 #6) All-Things Inc. manufactures a variety of consumer products. The company’s founders have managed the company for thirty years and are now interested in retiring. Consequently, they are seeking to sell the company. Trial Associates is looking into the acquisition of All-Things and has requested the latest financial statements and selected financial ratios in order to evaluate All-Things’ financial stability and […]

  187.Prepare a corporate income statement in good form from the following year-end balances as of December 31, 20×9, from the general ledger of Hammond Corporation. Assume 10,000 shares of common stock are outstanding for the year.   Administrative Expenses $  24,000 Cost of Goods Sold 120,000 Discontinued Operations   (1) Income from Operations of Discontinued Segment 30,000   (net of taxes, $10,000) (2) Loss […]