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## Accounting 203 Exam 1 Flashcards

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## Accounting 203 Exam 1

Prime Cost

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Direct Materials + Direct Labor costs

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Conversation Cost

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Direct labor costs and Overhead costs

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### Terms in this set (14)

Prime Cost

Direct Materials + Direct Labor costs

Conversation Cost

Direct labor costs and Overhead costs

Direct and indirect materials are known as

raw materials

Consider a service company that provides carpet cleaning and uses straight-line depreciation. Classify the cost of the depreciation on the carpet cleaning machines

Variable Indirect Fixed Direct Fixed Indirect Materials activity

the flow of raw materials.

Production Activity

beginning goods in process inventory, direct materials, direct labor, and overhead.

Unfinished products are considered ending goods in process inventory.

Sales activity

Finished goods beginning inventory

goods manufactured

Costs which are tangible components of the finished product are called

Direct Materials

A company incurred the following costs: Selling and administrative expenses: $45,000; Direct materials:$15,000; Income tax expense: $10,000; Direct labor:$30,000; Factory overhead: $5,000. Total manufacturing costs reported on the schedule of cost of goods manufactured are 50000 Consider a service company that provides carpet cleaning. Classify the cost of the hourly workers who clean carpets for customers. Direct Variable Which of the following is the correct statement about fixed costs? The fixed cost per unit does not change when volume changes. The fixed cost per unit will decrease when volume increases. The fixed cost per unit will increase when volume increases. The fixed cost per unit will decrease when volume decreases. The fixed cost per unit will decrease when volume increases. Which of the following is the correct statement about variable costs? The variable cost per unit will increase when volume increases. The variable cost per unit does not change when volume changes. The variable cost per unit will decrease when volume increases. The variable cost per unit does not change when volume changes. An emphasis on the changing needs and wants of customers is called customer __ orientation Jack works on the production line at an assembly plant. Jack receives a base salary plus$1.25 per unit assembled. This is an example of a ______ cost.

variable mixed step-wise fixed mixed

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### Verified questions

ACCOUNTING

a. What information is included on each line of the petty cash register? b. Why is the petty cash register not considered a journal?

Rita and Rick Redding own and operate a tomato grove. After preparing the following income statement, Rita and Rick are concerned about the loss on the No. 3 tomatoes.

\begin{matrix} \text{RITA AND RICK REDDING Income Statement For Year Ended December 31, 2017}\\ & \text{No. 1} & \text{No. 2} & \text{No. 3} & \text{Combined}\\ \text{Sales (by grade)}\\ \text{No. 1: 500,000 Ibs. @ \$1.80/lb }\ldots\ldots\ldots & \text{\$900,000}\\ \text{No. 2: 400,000 Ibs. @ \$1.25/lb} \ldots\ldots\ldots & \quad & \text{\$500,000}\\ \text{No. 3: 100,000 Ibs. @ \$0.40/lb}\ldots\ldots\ldots & \quad & \quad & \text{\$ 40,000}\\ \text{Total sales}\ldots\ldots\ldots & \quad & \quad & \quad & \text{\$1,440,000}\\ \text{Costs}\\ \text{Land preparation, seeding, and cultivating @ \$0.70/Ib} \ldots\ldots\ldots & \text{350,000} & \text{280,000} & \text{70,000} & \text{700,000}\\ \text{Harvesting, sorting, and grading @ \$0.04/Ib}\ldots\ldots\ldots & \text{20,000} & \text{16,000} & \text{4,000} & \text{40,000}\\ \text{Delivery costs .}\ldots\ldots\ldots & \text{10,000} & \text{7,000} & \text{3,000} & \text{20,000}\\ \text{Total costs . .} \ldots\ldots\ldots & \text{380,000} & \text{303,000} & \text{77,000} & \text{760,000}\\ \text{Net income (loss)} \ldots\ldots\ldots & \text{\$520,000} & \text{\$197,000} & \text{\$(37,000)} & \text{\$680,000}\\ \end{matrix} RITA AND RICK REDDING Income Statement For Year Ended December 31, 2017 Sales (by grade) No. 1: 500,000 Ibs. @$1.80/lb ………

No. 2: 400,000 Ibs. @ $1.25/lb……… No. 3: 100,000 Ibs. @$0.40/lb………

Total sales……… Costs

Land preparation, seeding, and cultivating @ $0.70/Ib……… Harvesting, sorting, and grading @$0.04/Ib………

Delivery costs .……… Total costs . .………

Net income (loss)………

​ No. 1 $900,000 350,000 20,000 10,000 380,000$520,000 ​ No. 2 $500,000 280,000 16,000 7,000 303,000$197,000 ​ No. 3 $40,000 70,000 4,000 3,000 77,000$(37,000) ​ Combined $1,440,000 700,000 40,000 20,000 Source : quizlet.com ## Jack works on the production line at an assembly plant. Jack receives a base salary plus$1.25 per unit assembled. This is an ex

Answer:The correct word for the blank space is: mixed. Explanation:Mixed costs or semi-variable costs are the results of adding fixed costs (those th KonstantinChe  1 year ago 5

## Jack works on the production line at an assembly plant. Jack receives a base salary plus $1.25 per unit assembled. This is an ex ample of a ______ cost. Business 1 answer: Vanyuwa 1 year ago 7 0 Answer: The correct word for the blank space is: mixed. Explanation:Mixed costs or semi-variable costs are the results of adding fixed costs (those that do not change) to a variable cost (vary in proportion to the level of activity). Different levels of production in a company determine how much the mixed cost will be.Thus, in Jack's case, his salary is the fixed costs and the$1.25 per unit assembled is the variable cost.

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The answer is: C) Kromer Company debits Cash $9,700. Explanation: When assets increase, you should record a debit. When liabilities increase, you should record a credit. Since cash is a current asset, then you should record a debit for$9,700.

$9,700 is the difference between the sales ($10,000) and the amount the credit card company charges ($300). 3 0 1 year ago Sharon is thinking about opening a bakery. She knows she wants to set her own hours, reduce her stress and make a profit. But sh prisoha  Starting a new business requires through and careful planning, which takes all aspects of the business into consideration. Funds for starting the business must also be available and the entrepreneur must be very disciplined and ready to put in a lot of work in order for the business to succeed. Any step that will result in the eventual failure of the business is not a good step to take. At the early days of the new business especially, care must be taken not to take any step that will put the finances of the business in jeopardy. 3 0 1 year ago Read 2 more answers How can the amount of us currency in circulation be so much higher than the amount held by the u.s? Dennis_Churaev  We do a lot of business with other countries so they have some of it. 8 0 1 year ago Estimated Income Statements, using Absorption and Variable Costing zzz  Answer: Marshall Inc. 1. Estimated Income Statement for the year ending October 31 (Absorption Costing) Sales volume 40,000 Units 50,000 Units Sales Revenue$2,120,000      $2,650,000 Cost of goods sold: Direct materials ($31.90 per unit)               1,276,000         1,595,000

Direct labor ($7.60 per unit) 304,000 380,000 Variable factory overhead ($3.50 per unit)  140,000            175,000

Total cost of goods sold                           $1,783,840$2,213,840

Gross profit                                                  $336,160$436,160

Expenses:

Fixed selling & administrative expenses       17,400              17,400

Variable selling & administrative expenses 55,263             69,079

Total selling & administrative expenses    $72,663$86,479

Net income                                                $263,497$349,681

2. Estimated Income Statement for the year ending October 31 (Variable Costing)

Sales volume                                            15,200 Units     16,800 Units

Sales Revenue                                             $805,600$890,400

Cost of goods sold:

Direct materials ($31.90 per unit) 484,880 535,920 Direct labor ($7.60 per unit)                           115,520             127,680

Variable factory overhead ($3.50 per unit) 53,200 58,800 Variable selling & administrative expenses 21,000 23,210 Total Variable costs$674,600           $745,610 Gross profit$131,000           $144,790 Fixed Expenses: Fixed selling & administrative expenses 17,400 17,400 Fixed factory overhead 63,840 63,840 Total fixed expenses$81,240             $81,240 Net income$49,760            $63,550 Explanation: a) Data and Calculations: Estimated Operating Results Sales (15,200 x$53) $805,600 Manufacturing costs (15,200 units): Direct materials 484,880 ($31.90 per unit)

Direct labor 115,520 ($7.60 per unit) Source : answer-ya.com ## Which of the following is the correct statement about variable costs? *The variable cost per unit does not change when volume changes. *The variable cost per unit will decrease when volume increases *The variable cost per unit will increase when volume in. The variable cost per unit does not change when volume changes. Variable costs per unit will remain the same. Variable costs in total will increase with volume increases.. Study Sets for Managerial Accounting CH 18. Which of the following is the correct statement about variable costs? *The variable cost per unit does not change when volume changes. *The variable cost per unit will decrease when volume increases *The variable cost per unit will increase when volume in. The variable cost per unit does not change when volume changes. Variable costs per unit will remain the same. Variable costs in total will increase with volume increases.. ## Managerial Accounting CH 18 Fixed Profits Fixed *Has A Profit Of$0 *Contribution Margin Equals Fixed Costs

Based On Visual Fit And Subject To Interpertation

*Uses Only Two Sets Of Values *Less Precise Because It Uses The Extreme Points

*Uses A Statistical Technique And All Data Points *Most Precise Method

1. Production Supervisor's Salary 2. Sales Rep's Pay Which Includes Salary Plus Commission 3. Production Line Worker's Pay, Which Is An Hourly Wage

Costs Sales $40,000$75,000. $10 - 6 =$4/$10 = 40%.$30,000/40% = $75,000. Contribution Margin Ratio 1. Scatter Diagrams 2. High-Low Method 3. Least-Squares Regression *Depreciation,$4,500 Per Month *Property Taxes, $12,000 Per Year *Direct Materials,$25 Per Unit *Shipping Costs, $15 Per Unit *Water & Sewer,$50 Per Month Plus $0.10 Per Gallon *Sales Rep's Pay,$1,000 Per Month Plus 10% Sales Commission

Sales - Variable Costs = Contribution Margin - Fixed Costs = Net Income

Change In Cost/Change In Units

*Total Loss To The Left Of The Intersection *Total Profit To The Right Of The Intersection

$50,000 ($110,000 - $87,500)/(4000-2500) =$22,500/1500u= $15/Unitl FC =$110,000 - ($15/Unit X 4,000 Units) =$50,000

The Variable Cost Per Unit

$1,200 (800 X$16 Selling Price) - (800 X $12 Variable Costs) -$1,200 Fixed Costs X (1- 40%) = $1,200 The Variable Cost Per Unit Does Not Change When Volume Changes. Variable Costs Per Unit Will Remain The Same. Variable Costs In Total Will Increase With Volume Increases. *The Amount Sales Can Drop Before The Company Incurs A Loss. *The Difference Between Expected Sales And Break-Even Sales Divided By Expected Sales. 12,500 ($30,000 + $20,000) / ($10 - $6) = 12,500 Mixed 28,000 (2,500 X$36) - $62,000 =$28,000

5,000 $50,000 / ($14 - $4) = 5,000 Units 26,000 ($3,000 + $10,000) / 50% =$26,000

60% ($500,000 -$200,000) / $500,000 = 60% False 40 ($10 - $6) /$10 = 40% * Per Unit Is "4" *

0.60 VC = $300,000 / 750,000 Units =$0.40/Unit; CM = $1 -$0.40 = $0.60$0.05 And $0.04$12,500 / 250,000 And $12,500 / 300,000 *Constant Selling Price Per Unit. *Constant Total Fixed Costs. *Constant Variable Cost Per Unit. Increase *Scatter Diagrams *Least-Square Regression *High-Low Method 4$10 - $6 =$4

64 ($125,000 -$45,000) / $125,000 = 64% 12500 ($30,000 + $20,000) / ($10 - $6) = 12,500 Units Amount Of Fixed Costs$81,250 $125,000 X (1 - 35%) =$81,250

$2,000 (800 X$16) - (800 X $12) -$1,200 = $2,000 2:1 5,000/2,500 = 2:1 Increase By 25% Least-Squares Regression$25 Variable Normal $314,750 Step-Wise Cost Composite Operating Leverage 2 Contribution Margin = 15,000 X$4 = $60,000; Pre-Tax Income =$60,000 - $30,000; Degree Of Operating Leverage =$60,000 / $30,000 = 2 100 2 X ($100 - $75) + 1 X ($150 - $100) =$100

150 $15,000 / (2 X ($100 - $75) + 1 X ($150 - $100)) = 150 Units 33.34$25 X 2/3 + $50 X 1/3 =$16.67 + $16.67 =$33.34

Ratio

75000 ($30,000 +$15,000) / ($10 -$4) / $10 =$45,000 / 60% = \$75,000

Curvilinear

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