14.6 Pro Forma Financial Statements

Question 1

Calculate COGS with below

A. Sales
B. Beginning finished goods inventory
C. Ending finished goods inventory
D. Selling and administrative expenses
E. Cost of goods manufactured

Answer 1

COGS = Cost of Goods Manufactured + Beginning finished goods inventory - Ending finished goods inventory

COGS = E + B - C

Question 2

Gross margin percentage

A. Sales
B. Beginning finished goods inventory
C. Ending finished goods inventory
D. Selling and administrative expenses
E. Cost of goods manufactured
F. COGS

Answer 2

(A. Sales - F. COGS) / A. Sales

Question 3

The information contained in a cost of goods manufactured budget most directly relates to the

A. Materials used, direct labor, overhead applied, and work-in-process inventories budgets
B. Materials used, direct labor, overhead applied, work-in-process inventories, and finished goods inventories budgets
C. Materials used, direct labor, overhead applied, and ending work-in-process budgets
D. Materials used, direct labor, overhead applied, and finished goods inventories budgets.

Answer 3

A. Materials used, direct labor, overhead applied, and work-in-process inventories budgets

Question 4

When preparing the annual budget, which one of the following is an acceptable method of allocating production line workers’ fringe benefits?

A. Pro rata allocation between nonoperating expenses and administrative expenses.
B. Pro rata allocation between manufacturing overhead and administrative expenses
C. 100% allocation to administrative expenses
D. 100% allocation to manufacturing overhead

Answer 4

D. 100% allocation to manufacturing overhead