Flexible Budget Variance – Accounting & Finance

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Flexible Budget Variance – Final Test – Accounting & Finance

The key terms in these Accounting chapters include Flexible Budget Variance, Contribution Margin, Favorable Variance, Cowboy Ice Cream, And Bad Debts. Final Test.


What was Cowboy Ice Cream’s flexible budget variance and was it favorable or unfavorable?

$33,750; favorable

$1,750; favorable

500; unfavorable

$32,000; unfavorable

$2,250; favorable

$1,750; unfavorable

$2,250; unfavorable

$32,000; favorable

500; favorable

$4,000; favorable

$4,000; unfavorable

$33,750; unfavorable


What is Cowboy Ice Cream’s expected contribution margin if their sales price is $4 per bar?

13,150


What is Cowboy Ice Cream’s expected net income if their sales price is $4.25 per bar?

6,937


What price would you recommend that Cowboy Ice Cream charge for the ice cream bars in order to maximize their profit?

$3.75

$4.25

$4.00


A company ages its accounts receivables to determine its end of period adjustment for bad debts. At the end of the current year, management estimated that $24,750 of the accounts receivable balance would be uncollectible. Prior to any year-end adjustments, the Allowance for Doubtful Accounts had a debit balance of $675. What adjusting entry should the company make at the end of the current year to record its estimated bad debts expense?

Bad Debts Expense24,750 
Allowance for Doubtful Accounts 24,750
Bad Debts Expense24,075 
Allowance for Doubtful Accounts 24,075
Bad Debts Expense25,425 
Allowance for Doubtful Accounts 25,425

Correct

Accounts Receivable24,750 
Bad Debts Expense675 
Sales 25,425
Accounts Receivable25,425 
Allowance for Doubtful Accounts 25,425
Explanation
    
Desired balance in allowance account:$24,750credit
Current balance: 675debit
Required: adjustment to allowance$25,425credit

What is Cowboy Ice Cream’s expected net income if their sales price is $4.25 per bar?

6,937


What price would you recommend that Cowboy Ice Cream charge for the ice cream bars in order to maximize their profit?

$3.75

$4.25

$4.00


How many of the following variances are unfavorable?

ItemBudgetActual
Sales price$350$380
Sales revenue$15,000$12,500
Cost of goods sold$10,000$9,000
Selling and administrative expenses$3,200$3,500
Labor costs$1,800$1,680
Production volume1,300 units1,260 units

2

5

1

0

4

3

6


On September 12, Vander Company sold merchandise in the amount of $7,100 to Jepson Company, with credit terms of 2/10, n/30. The cost of the items sold is $5,300. Vander uses the periodic inventory system and the gross method of accounting for sales. The journal entry or entries that Vander will make on September 12 is:

Sales7,100 
Accounts receivable 7,100
Sales7,100 
Accounts receivable 7,100
Cost of goods sold5,300 
Merchandise Inventory 5,300
Accounts receivable7,100 
Sales 7,100

Correct

Accounts receivable7,100 
Sales 7,100
Cost of goods sold5,300 
Merchandise Inventory 5,300
Accounts receivable5,300 
Sales 5,300

What was Cowboy Ice Cream’s flexible budget variance and was it favorable or unfavorable?

$33,750; favorable

$1,750; favorable

500; unfavorable

$32,000; unfavorable

$2,250; favorable

$1,750; unfavorable

$2,250; unfavorable

$32,000; favorable

500; favorable

$4,000; favorable

$4,000; unfavorable

$33,750; unfavorable


What is Cowboy Ice Cream’s expected contribution margin if their sales price is $4 per bar?

13,150


What was Cowboy Ice Cream’s flexible budget variance and was it favorable or unfavorable?

$33,750; favorable

$1,750; favorable

500; unfavorable

$32,000; unfavorable

$2,250; favorable

$1,750; unfavorable

$2,250; unfavorable

$32,000; favorable

500; favorable

$4,000; favorable

$4,000; unfavorable

$33,750; unfavorable


What is Cowboy Ice Cream’s expected contribution margin if their sales price is $4 per bar?

13,150


What is Cowboy Ice Cream’s expected net income if their sales price is $4.25 per bar?

6,937


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