Accounting 225A Quiz 3A – February 11, 2014 Name:__________________________________________ Score:________/15 Show ALL work on these pages, credit may not be given for correct answers with no support. Attempt all questions. True / False (0.5 point each, 2 points total) T/F 1. When production is less than sales for the period, absorption costing net operating income will generally be less than variable costing net operating income. True 2. The production budget is typically prepared prior to the sales budget. False 3. Absorption costing is more compatible with cost-volume-profit analysis than is variable costing. False 4. Variable manufacturing overhead costs are treated as period costs under both absorption and variable costing. False Multiple Choice (1 point each, 5 points total) 5. Fixed manufacturing overhead is included in product costs under: Absorption Costing Variable Costing A. Yes Yes B. No No C. No Yes D. Yes No 6. Which of the following represents the correct order in which the indicated budget documents for a manufacturing company would be prepared? A. Sales budget, cash budget, direct materials budget, direct labor budget B. Production budget, sales budget, direct materials budget, direct labor budget C. Sales budget, cash budget, production budget, direct materials budget D. Selling and administrative expense budget, cash budget, budgeted income statement, budgeted balance sheet 7. Shown below is the sales forecast for Cooper Inc. for the first four months of the coming year.On average, 50% of credit sales are received in the month of the sale, 30% in the month following sale, and the remainder are received two months after the month of the sale. Assuming there are no bad debts, the expected cash inflow in March is: A. $138,000 B. $122,000 C. $119,000 D. $108,000 8. Budgeted production needs are determined by: A. adding budgeted sales in units to the desired ending inventory in units and deducting the beginning inventory in units from this total. B. adding budgeted sales in units to the beginning inventory in units and deducting the desired ending inventory in units from this total. C. adding budgeted sales in units to the desired ending inventory in units. D. deducting the beginning inventory in units from budgeted sales in units. 9. A manufacturing company that produces a single product has provided the following data concerning its most recent month of operations: What is the absorption costing unit product cost for the month? A. $102 B. $130 C. $97 D. $125 Problems 10. (5 points) FosterCorp Company, which has only one product, has provided the following data concerning its most recent month of operations:The company produces the same number of units every month, although the sales in units vary from month to month. The company's variable costs per unit and total fixed costs have been constant from month to month. A. What is the unit product cost for the month under variable costing? (1 point) B. Prepare a contribution format income statement for the month using variable costing. (2 points) C. Without preparing an income statement, determine the absorption costing net operating income for the month. (2 points)11. (3 points) Edwards Company has projected sales and production in units for the second quarter of the year as follows: Cash production costs are budgeted at $6 per unit produced. Of these production costs, 40% are paid in the month in which they are incurred and the balance in the following month. Selling and administrative expenses (all paid in cash) amount to $60,000 per month. The accounts payable balance on March 31 totals $96,000, all of which will be paid in April. Prepare a schedule for each month showing budgeted cash disbursements for Edwards