student questions f22 part #2

Question 1

Question 25 – Chapter 2
Benny’s ice cream has estimated $15,750 overhead for the upcoming period. Benny’s ice cream’s cost driver is direct labor with an estimated 3,500 hours to meet its demand for next period. Its actual direct labor hour was 2,700 hours as the unexpected COVID-19 pandemic had a drastic effect on demand. What was Benny’s ice cream’s total applied overhead?

$12,150

$15,750

$20,400

$13,200

Answer 1

$12,150

Correct Answer:
Overhead rate = 15,750 / 3500 = 4.5
Applied overhead = 4.5 * 2,700 = 12,150

Question 2

Question 26 – Chapter 13
What best describes “Cash flow from operations” when using the indirect method?

Net income is adjusted to cash basis

The income statement is reconstructed on a cash basis from top to bottom

Cash collected from customers is being listed instead of sales

Both methods result in different amounts of net cash provided by operating activities

Answer 2

Net income is adjusted to cash basis

Correct Answer
This is the true definition of indirect method

Question 3

Question 30 – Chapter 12
Which of the following is not considered a cash inflow when calculating net present value?

initial investment

revenues

salvage value

release of working capital

Answer 3

initial investment

Correct Answer
The initial investment is a typical cash outflow.

Question 4

Question 34 – Chapter 10
which is not an operating asset?

land held for future use

cash

inventory

plant and equipment

Answer 4

land held for future use

Question 5

Question 37 – Chapter 2
Referring to the information below if the actual manufacturing overhead is $66,600, and Zolton incorporation reports a $400 decrease in cost of goods sold. What is the applied manufacturing overhead?

Variable cost per unit
Direct material $210
Direct labor $420
Variable MOH $300
Variable selling & administrative expense $69

Fixed cost per unit
Fixed MOH $40
Fixed selling & administrative expense $75

$67,000
$66,000
$66,600
$67,400

Answer 5

$67,000
Correct Answer:
A decrease in cost of goods sold means $400 is overapplied, so $66,600 + $400 = $67,000

Question 6

Question 38 – Chapter 8
What is the final step in creating the master budget?

Cash budget

sales budget

direct labor

production budget

Answer 6

Cash budget

Correct Answer:
Cash budget is the end goal of any budget

Question 7

Question 39 – Chapter 5
What is the organizational unit where work is performed on a product as material, labor, or overhead costs are added to the product when using process costing?

processing department

production department

work-in-process department

transportation department

Answer 7

processing department

Question 8

Question 46 – Chapter 6
Stevens ice cream shop had a labor rate variance of $300 unfavorable. Which of the following explains the possible reason behind the variance?

Workers are taking a longer time to make ice cream.

Workers have a contest to see who can make the most cones in an hour and productivity has increased greatly.

More milk was used in the ice cream

Less sugar was used in the ice cream

Answer 8

Workers are taking a longer time to make ice cream.

Correct Answer Workers are inefficient at preparing ice cream