6. Jim\'s 5-year-old Geo Prizm requires repairs estimated at $3,000 to make it r

Question

6. Jim's 5-year-old Geo Prizm requires repairs estimated at $3,000 to make it roadworthy again. His friend, Julie, suggested that he should buy $3,000 cash. Julie estimated the following costs for the two a 5-year-old used Honda Civic instead for cars Acquisition cost Repairs Annual operating costs Seo Prizm $15,000 S 3,000 $3,000 (Gas, maintenance, insurance) S 2,280 $2,100 The cost NOT relevant for this decision is the: a. acquisition cost of the Geo Prizm b. acquisition cost of the Honda Civic c. repairs to the Geo Prizm d. annual operating costs of the Honda Civic 7. A good budgeting system forces managers to examine the business as they plan, so they a. detect inaccurate historical records b. c. d. set specific expectations against which actual results can be compared complete the budgeting task on time get promoted for doing a good job 8. DeArmond Corporation has budgeted sales of 18,000 units, target ending finished goods inventory of 3,000 units, and beginning finished goods inventory of 900 units. How many units should be produced next year? a. 21,900 units b. 20,100 units c. 15,900 units d. 18,000 units 9. What is the appropriate journal entry if direct materials of $50,000 and indirect materials of $3,000 are sent to the manufacturing plant floor? a. Work-in-Proces b. Work-in-Process c. Manufacturing Overhead 50,000 53,000 3,000 Raw Materials 50,000 Raw Materials 53,000 Raw Materials 50,000 Work-in-Process 53,000 d. Work-in-Process 50,000 Manufacturing Overhead 3,000 Raw Materials 53,000

Explanation / Answer

Question:6

For making decision about which option is best, we need to compare the costs and benefits which we need to incur or we will get by chosing that option.

But, here acquisition cost of old car Geo prizm is irrelevant, since it is historical cost..It was already incurred.

Even if we buy new car or do repairs for this car, that amount will not change, and we will not incurr any additional cost.

So, Answer is ,

a)Acquisition cost of geo prizm is not relevant.

Question 7:

The answer is b)set specific expectations against which actual results can be compared.

Logic:

The budgeting main reason is not to detect inaccurate historical data.so it is wrong.

Completing budgeting tasks in time alone is not the main objective of good budget.

By doing budget, we will not expect promotion to new job.

So, fnally the answer is b)set specific expectations against which actual results can be compared.

Question:8

Budgeted sales=18,000 units.

Opening stock=900 units

Closing stock=3000 units.

So, number of units to be produced= sales+closing stock-opening stock=18000+3000-900=20,100 units

So, number of units to be produced= 20,100 units.

Answer is b) 20,100 units.

Question:9

First when we purchase the materials, it will be debited to Raw materials a/c(for both direct and indirect)

As per costing rules, Direct materials consumed should be transfered to work in progress a/c

and the indirect materials should be transfered to Factory/Manufacturing overhead a/c.

Hence the appropriate entry is,

d) Work-in-progress   a/c   dr         50,000

    Manufacturing overhead a/c dr 3000

                 To Raw materials      a/c                 53,000

So, answer is (d)

Hope it helps,

Thank you.

Related Questions

Navigate

• Browse (All)
• Browse 6
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.